A third-party car insurance policy is mandatory for all car owners as it provides financial coverage in case of any damages to a third-party individual or property due to an accident involving the insured car. Since it is mandatory insurance, the premium amount of third-party car insurance is decided by the IRDAI yearly and depends on the engine's cubic capacity. In case this policy is not purchased or renewed in time, it can lead to heavy traffic penalties and even imprisonment.
Therefore, it is a must for every car owner to purchase third-party car insurance to drive on Indian roads. However, one must note that third-party insurance does not extend coverage for a policyholder's own vehicle damages or physical injuries.
What is a comprehensive car insurance policy?
Essentially, a comprehensive car insurance policy combines the advantages of a third-party policy with those of an own damage plan. So, what one gets is extensive financial coverage in case of third-party liability arising from an accident and in case of damage to their own car or any physical injuries that they sustain.
Not only does a comprehensive car insurance combine the benefits of both, but it also allows you to choose additional covers that help you enhance the safety net around your car. You can choose from covers such as engine protection, consumables, and passenger, zero depreciation, and roadside assistance.
Difference between comprehensive and third-party car insurance
To comprehend the difference between third-party car insurance and comprehensive car insurance, look at the table below and other differentiation points:
Features |
Third-party car insurance |
Comprehensive car insurance |
Coverage |
A third-party car insurance plan covers financial expenses caused due to damages to third-party properties or vehicles, or persons by the insured car. |
In this type of policy, the policyholder's car is financially covered against damages apart from third-party coverage. |
Add-on cover |
No add-on coverage is available. |
Proposers can get various add-on facilities like zero depreciation cover, roadside assistance, and more with this policy. |
Legal requirement |
Third-party insurance is a legal requirement to ply on Indian roads. |
It is not a mandatory requirement. |
Calculation of premium |
The premium amount depends on the cubic capacity of the engine, and IRDAI revises it annually. |
The premium of such insurance policies depends on the IDV and other factors like the make and model of the vehicle, etc. |
Premium cost |
The premium cost is lower than comprehensive plans. |
The premium cost depends on the coverage chosen. |
Policy exclusions |
Under third-party car insurance, damages caused to the policyholder and their vehicle are not covered. |
Under this policy, damages caused under the influence of alcohol, negligent driving, driving without a license etc., will not be covered. |
Now that you have a clear idea about what comprehensive car insurance and third-party car insurance policies are, you can make an informed purchase decision based on your requirements.
What should you choose: Comprehensive or third-party insurance?
You should evaluate between third-party insurance and comprehensive car insurance based on the coverage and protection you need for your vehicle.
A comprehensive car insurance plan is a good option for a new vehicle that is used regularly. Therefore, one can choose a comprehensive car insurance plan that offers substantial coverage and additional benefits at an affordable premium.