The number of vehicles on the road is rising each passing day, and it is only expected to increase further. In earlier times, having a vehicle was a luxury that only a few could afford. Nowadays, the scenario is different. It has quite literally become a part of daily life. The Motor Vehicles Act has made it mandatory to have at least valid third-party insurance while the vehicle is in use.
A major drawback that is faced in third-party insurance is that it covers the loss and damages suffered by a third party. Still, nothing is paid for damages and losses sustained by the policyholder himself.
This gives rise to a question: is there any policy in force where you can also cover your own damages and losses? The answer to that is ‘YES.’ Such policies are known as comprehensive policies. And the next question is are there any other differences between these two types of car insurance
policies? Well, know more on what are the differences between third-party and comprehensive insurance policies below.
“I drive a 10 years old second-hand car. Which is better comprehensive or third party insurance?” asked Naina.
|Point of Difference
||Third-party insurance is a policy where the losses and damages of the third party are insured in case of an accident between the third-party and policyholder.
||Comprehensive insurance covers the losses and damages of a third party as well as the policyholder in various situations.
||The coverage of third party car insurance & bike insurance policies is limited to third parties’ injuries and damages to their vehicle.
||Comprehensive insurance carries a more comprehensive approach covering third-party damages and injuries and damages and injuries suffered by the policyholder and his vehicle.
|Scope for Add-ons
||Third-party insurance doesn’t have any scope for add-ons.
||A comprehensive policy can be crafted as per your needs. Add-ons are available in comprehensive policies like personal injury protection cover, roadside assistance, engine replacement, zero depreciation cover, among many others. Of course, all of these come with a higher premium price, but a choice is made available.
||● Helps you in compliance with existing laws as third-party insurance is a bare minimum required to run a vehicle on the road
● It covers you from financial risk associated with accidents in relation to third-party.
● It provides you peace of mind that your savings will not suffer any hit in case of any unfortunate event.
● Third party car insurance has a lower premium and is cost-effective when compared to a comprehensive policy.
||● It covers the damages of your vehicle along with third-party expenses.
● You can pick up add-ons and customize your policy as per your needs.
● It covers loss in the event of natural disasters like floods and not-so-natural disasters like fire and theft.
● If you opt for add-ons, it also provides you with road assistance and zero depreciation cover, which can prove very useful in times of need.
● The premium is higher as compared to third-party insurance.
||● The main drawback faced by the third-party insurance policy is that it doesn’t cover the damages suffered by the vehicle of the policyholder.
● In case of situations like theft or fire, this policy will not come to your rescue.
||● It does not cover damages suffered due to the normal aging of the vehicle and wear and tear.
● Certain vehicle parts are not covered in this insurance. So if any damages are suffered by those parts, the expenses are to be borne by the owner himself and not by the car insurance company.
● The policy will be of no use in case of damages due to events like nuclear attacks or war.
||● Cases where damages are due to drink and drive situations
● When the driver doesn’t have a valid driving license
● When the accident is proved to be a deliberate act
● Where the vehicle was used for illegal purposes
● Damages due to any situation other than accident shall not be covered. This means no natural or human-made disaster damages shall be payable.
||● Damages suffered in cases of drink and drive.
● When a person is driving without a valid driving license
● Consequential damages, i.e., the damages that occur after the accident, are not covered unless specifically taken as an add-on.
● Damages due to mechanical breakdown shall not be a part of a comprehensive insurance policy.
● Losses or damages suffered due to war or mutiny or nuclear attack
● Accident being a deliberate act
● A vehicle used for illegal purposes
If your car is second-hand and 10 years old, third-party insurance will suffice as the car’s value is significantly less as of now as compared to its original value, and damages will not cost you very high.
“I have a new and quite expensive car, and I regularly drive to my workplace. Which is better comprehensive or third party insurance policy?” asked Paresh.
It is advisable to have a comprehensive policy as the car value is higher and is new, so in case any damage is suffered by the car, it may hit your pocket badly.