Categories: Resource

Understanding the Coverage Gap Between Comprehensive and Third-Party Car Insurance

When talking about car insurance, there’s a huge difference in the coverage you get based on the plan type you choose. All car owners in India require third-party insurance since it’s a legal requirement. It protects you against third-person liabilities, i.e., damage your car causes to other people, cars, and property. A comprehensive car insurance plan covers third-party liabilities and own damage, such as damage from road accidents, theft, fire, and natural and man-made disasters. To understand which car insurance policy is best for you, it is important to understand the key differences between comprehensive vs third party-car insurance in detail.

Comprehensive vs Third-Party Car Insurance: Key Differences

Car Insurance Policy Comparison	Comprehensive Insurance	Third-Party Insurance
Coverage	It covers damage caused to others (cars, property, and people) and own damage under one plan.	It only offers coverage against damage caused to other people, vehicles, and property.
Legal Requirement	Comprehensive car insurance is not mandatory as per the Motor Vehicles Act of India.	Having third-party car insurance is a mandatory requirement if you wish to drive on the roads of India.
Cost	The cost of premium in full comprehensive car insurance is higher since it offers more coverage.	The cost is lower. The price is determined by the IRDAI according to the cubic capacity of cars.
Add-ons	Several add-ons, including engine cover and zero depreciation, are available with comprehensive car insurance.	No such add-ons are available with third-party car insurance.
Best For	Comprehensive car insurance is best suited for new car owners or those who seek full coverage.	Third-party car insurance is suitable for old vehicle owners and budget-conscious people.

Which is Better? – Comprehensive vs Third-Party Car Insurance

1. Vehicle Age: If you own an older vehicle, third-party insurance is suitable. However, if you have the latest car model, comprehensive car insurance would be best.

2. Budget: Third-party insurance is more affordable and best suited for those on a budget. On the other hand, comprehensive insurance costs more but offers more coverage.

3. Usage: Comprehensive car insurance coverage would be better if you use your car frequently for longer trips. However, if you use your car less frequently and for shorter journeys, third-party car insurance would be sufficient.

Conclusion

Comprehensive car insurance and third-party car insurance are different in terms of coverage. In third-party insurance, damage done to others is covered. However, own damage coverage is not available. On the other hand, in comprehensive car insurance, both own damage and third-party damage are covered.

Regardless of whether you’re looking for the cheapest comprehensive car insurance plan or a third-party car insurance plan, shop around and get one from a reputable online insurer.

Sameer

Sameer is a writer, entrepreneur and investor. He is passionate about inspiring entrepreneurs and women in business, telling great startup stories, providing readers with actionable insights on startup fundraising, startup marketing and startup non-obviousnesses and generally ranting on things that he thinks should be ranting about all while hoping to impress upon them to bet on themselves (as entrepreneurs) and bet on others (as investors or potential board members or executives or managers) who are really betting on themselves but need the motivation of someone else’s endorsement to get there.

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