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As we all know, vehicle insurance policy is mandatory in India while buying a car. In fact, it's a legal requirement as per Motor Vehicles Act, 1988. There's no denying the fact that four-wheeler or two wheeler insurance offers you the safety and security from the loss or damage incurred due to an accident.
But, what type of car insurance should you choose? Vehicle insurance is broadly classified in two types: third-party insurance policy and comprehensive car insurance.
Third-party insurance is a type of insurance that covers the loss or damage caused to other vehicles in case of an accident while comprehensive car insurance policy is a type of insurance that covers the damages caused to both, third party and your own vehicle.
So, comprehensive car insurance or third-party insurance - still confused which one is more apt for you? Read on to know about these policies in detail:
Third-party insurance is a type of insurance policy that protects you from legal liabilities that arises due to the involvement of your vehicle in an accident. Be it injury, death or disability or third party's property damage, your insurance compensates everything. As per the Motor Vehicles Act, it is mandatory to have a third-party insurance for your vehicle.
A few key benefits -
- Quick and easy to buy: You can easily purchase this policy either through the insurance company's office or from its website. Choosing an insurance policy online would be a convenient and hassle-free process.
- Affordable: Third-party insurance is cost-effective and economical. This insurance policy can easily be afforded by all due to lower premiums.
- It offers financial assistance: This insurance policy takes good care of the financial burden that arises due to an accident which causes damage to the third-party. However, neither the policyholder nor the insurance company are direct beneficiaries of the policy.
What's covered under the policy?
Here's a list of things covered under third-party insurance policy -
- Third-Party Legal Liability: An insurance company provides death compensation in case third-party loses his/her life due to an accident. This compensation to the victim is decided by the Motor Tribunal. And in case, third-party gets injured due to an accident, a third-party insurance for vehicle covers from major injuries to minor injuries.
- Personal Accident Cover: Damages or bodily injuries sustained by a vehicle's owner in an accident is covered under third-party insurance.
- Third-Party Property Damage: If the accident results in damage to the property, then compensation for the losses to the property are settled under third-party insurance policy cover.
What's not covered under the policy?
- Loss or damage caused by war, invasion or war-like operations
- Liabilities caused by radioactive contamination or nuclear weapons
- Claims that arise due to contractual liability
- Accidental loss or damage or disabilities are borne outside a particular geographical area
- If the vehicle was driven by someone who isn't a designated driver or owner of the vehicle.
Why choose third-party insurance?
Here's why you need to choose third-party insurance -
- Lower Premiums: Since only damages caused to the third party are covered under this policy, premiums in third-party insurance are lower as compared to comprehensive car insurance policy.
- No Stress: You don't need to worry about paying the repair bills of third-party change to third party property and third-party death/injury in case of an accident as third-party insurance takes care of everything.
Comprehensive car insurance is a type of insurance policy that covers you for loss or damage caused to your own vehicle. Other than damages, this insurance policy helps you to cover damages caused to the third party.
Why choose comprehensive car insurance?
Here's a list of benefits offered by a comprehensive car insurance -
- It's a hassle-free option: It offers peace of mind by saving you from a lot of stress in tough situations.
- It covers several instances: It covers everything right from fire, theft to liability to third-party in case of an accident.
- It is cost-effective: This policy is easily affordable. Comprehensive car insurance policy is cost-effective than a third-party insurance.
What's covered under the comprehensive policy?
Here're some instances that are covered under comprehensive car insurance -
- Road Accident
- Natural Disasters
- Civil Disturbances
- Damages done to one's car by wildlife or animals
- Falling objects
Having a third-party insurance won't cover you from any of these above-mentioned situations, thus it's good to opt for comprehensive car insurance.
What's not covered under the policy?
Here's a list of instances that are not covered under a comprehensive policy. These exclusions are -
- General ageing, wear and tear
- Consequential loss
- Electrical or mechanical breakdown
- Damage caused due to driving with a driving license
- Damage caused by the influence of narcotics or alcohol
- Loss or damage caused outside areas mentioned in the policy document
Why comprehensive car insurance is better than third-party insurance?
Here's why comprehensive car insurance is better than third-party insurance -
- Expensive yet worth: A comprehensive car insurance may seem costly than a third-party insurance policy, but once you will compare the damages they cover, you can gauge that the difference in price is almost negligible.
- It covers your vehicle too: A third-party insurance policy does not cover the damages caused to your vehicle. In fact, all claims are made in favour of third-party. Although, a comprehensive car insurance policy covers your car too.
- It provides enhanced coverage: Buying just a third-party insurance cover can limit your coverage options. But, it's not the same with comprehensive car insurance policy as in case of comprehensive car insurance, you can also buy add-ons to enhance your coverage options.
As we can see clearly, when we compare both of the policies, each stands mighty in its own terms. Go for third-party insurance if you want to cover the damages caused to the other vehicle in case of an accident at your fault and with comprehensive car insurance if you are looking to cover the damages caused to both i.e., third-party vehicle and your own car.