Compare — Third-party Vs Comprehensive Car Insurance

One can buy one of two type of car insurance policies available in India. The first one is a Third-party Liability Policy and the second one is a comprehensive insurance policy. In this article, we will compare these types of car insurance policies. First, let’s understand what each type means.

What is Third-party Car Insurance?

A third-party car insurance policy is the most basic type of car insurance that can be bought in India. It covers the policyholder against the cost of third-party damages. The third party is any person other than the policyholder, insurer, or the passengers of the insured vehicles. Thus, pedestrians and other drivers become the third party. If the insured car causes damage to any third party or their property like vehicles, house, crop, etc. the third-party can be compensated under the third-party insurance. It is important to note that any damages to the insured car are not covered under third-party car insurance. Buying a third-party car insurance policy is mandatory under The Motor Vehicles Act, 1988. Every vehicle owner should comply to this rule in order to fairly compensate the third party for their loss. Compensation for the death of the third party is also covered under third-party insurance.

What is Comprehensive Car Insurance?

Comprehensive car insurance goes beyond offering a cover for third-party injuries or damage. Apart from including a third-party cover, comprehensive car insurance also covers damages to the insured car. Buying this type of car insurance is not mandatory as per the law, but it is highly recommended due to its extensive coverage. For example, if driver A got into an accident leading to damages to his car as well as other cars plying around him. His insurance company will pay for the damage of all the vehicles involved in the accident as driver A has bought a comprehensive car insurance policy for his car. The coverage offered by a comprehensive policy is not limited to third-party damage or own damage due to accidents. One can also make a claim for getting the car repaired in case of damage from natural calamities like earthquake, landslide, floods, etc. Or in case the car gets damaged due to man-made calamities like vandalism, sabotage, riots, etc.

Third-party Vs. Comprehensive Car Insurance

Here is the coverage comparison for third-party and comprehensive insurance:

Coverage Third-party cover Comprehensive cover A personal accident cover for the policyholder or the driver Covered Covered Injuries caused to the third party Covered Covered Death compensation to the family of the deceased third party Covered Covered Damage caused to third-party property Covered Covered Legal liabilities arising due to an accident Covered Covered Damage caused to the insured car due to an accident. Own damage Not Covered Covered A theft cover that pays an amount approximately equal to the car’s current market value Not Covered Covered Damage to the insured car caused due to the occurrence of a natural calamity like flood, earthquake, landslide, etc. Not Covered Covered Damage due to a man-made calamity like vandalism, sabotage, riots, etc. Not Covered Covered Extended coverage as per the Add-ons bought along with the policy.

Popular ones are:

Zero Depreciation

Consumable Cover

Passenger Cover, etc.

Not Covered Depends on the cover chosen by the policyholder

5 tips to maximize the use of your car insurance

The general need when it comes to car insurance is of compulsion and not security. Yes, car insurance is compulsory but it can also prove to be a vital financial security cover in case of a mishap involving your car. People that are not informed about the benefits of car insurance might consider it as a waste of money. However, reading and understanding about car insurance can help you realize that car insurance offers value for money, provided you make the right choices. Read ahead to know 5 tips that can help you to maximize your car insurance policy while buying and at the time of car insurance renewal

Compare and Insure

Irrespective of the type of car insurance policy you choose, it is important to compare policies before purchasing. Comparison should be made based on the price, coverage, and claim settlement service offered by the insurer. Digital-first insurance companies might provide lucrative offers on their websites.

You can check the price and coverage of a policy with the help of a car insurance calculator by visiting different insurer’s websites. Alternatively, you can also visit web aggregator websites that compare car insurance policies for you and then purchase car insurance online.

You can buy or renew vehicle insurance within minutes. Research by spending some time online to check car insurance quotes offered by various online insurers. However, do not be blinded by just the car insurance quote. Insights regarding an insurance company’s claim settlement can be gained by checking their Claim Settlement Ratio, going through online user reviews, and speaking to friends, acquaintances, and relatives about the service offered by an insurance company.

Choose your coverage wisely

Opting for a Comprehensive car insurance policy is any day more beneficial than choosing the basic Third-party liability policy. A Comprehensive policy includes the mandatory car insurance aspect, it covers own damage and allows you to strengthen your policy with the help of suitable Add-ons.

You can ensure that you get value for money for your policy by going for only most-suited Add-ons. Add-ons are extra covers that increase your premium but provide additional coverage. Therefore, you don’t want to pile up Add-ons just or the sake of it. For example, if you do not drive around with a laptop or other expensive personal belongings in your car, you might not need the Personal Belongings Cover.

Think before you claim

It is not necessary to raise a claim for smallest of issues. Note that every insurance company provides a No Claim Bonus to those who do not raise a claim against their Comprehensive car insurance policy. This discount can be availed while renewing the policy. NCB can be as high as 50%, provided no claim is raised for five consecutive years.

If you raise a claim, you lose out on this discount. Your NCB will reset to zero the moment you raise a claim. Thus, you need to be judicious. In case of a damage, calculate the impact it might have on your NCB before raising a claim for it.

Install Anti-theft Device

Installing an anti-theft device is a good precautionary measure against vehicle theft. Car insurance companies acknowledge this precautionary measure by providing a discount on the premium charged if you have installed an anti-theft device. Such a device needs to be certified by Automotive Research Association of India (ARAI).

Review and Renew

Car insurance policies need to be renewed from time-to-time. Driving a car without a valid car insurance policy is a punishable offence. It is as bad as driving without car insurance.

You can switch insurance providers while renewing your policy. Thus, you do not need to stick to your previous insurer. If you have had a negative insurance experience, you should switch your insurance provider while renewing your policy.

Even if you have had a decent insurance experience with your previous insurer, you can check out new, digital-first insurance companies that offer low-priced insurance policies without compromising on their coverage. Such insurers also offer quick, convenient, and satisfying claim settlement process.

Respect the law, follow rules, ride safely, and stay insured.

Originally published at Espreson a Digital Magazine.