Which is better, buying a comprehensive or third-party car insurance?

Understand the difference between a comprehensive and third-party car insurance policy to choose the one that suits your requirement.

2 mins
27 Jan 2023

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:


Third-party car insurance

Comprehensive car insurance


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.


Insurance is the subject matter of solicitation. Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited and ManipalCigna Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. Visitors are hereby informed that their information submitted on the website may be shared with insurers. BFL is also a distributor of other third-party products from Assistance Services providers such as CPP Assistance Services Pvt Ltd, etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective value-added service provider or Assistance company.

Note – While we have made all efforts and taken utmost care in gathering precise information about the products, features, benefits, etc. However, BFL cannot be held liable for any direct or indirect damage/loss. We request our customers to conduct their research about these products and refer to the respective product’s sales brochures before concluding their sale.