Difference Between Comprehensive and Third-Party Insurance

Comprehensive car insurance is one of the most preferred types of car insurance policies, as it an all-inclusive car insurance policy.

It covers third-party liabilities and losses and even damage caused to you and your own car in unforeseen events such as an accident, natural calamity, fire or theft. 

Additionally, a comprehensive policy for cars also allows you to customize the policy further by opting for add-on covers.

Third-party car insurance is the most basic and legal form of car insurance policy you will need. As the name suggests, this will only cover damage and injuries caused to a third-party and won’t cover your own damages.

Also, as per the Motor Vehicles Act of 1988, it is mandatory to have at least third-party insurance policy to drive any vehicle in India.

1. Covers for Your Car’s Damages

The primary benefit of getting comprehensive car insurance is that it protects your car from any unfortunate damage and losses due to accidents, collisions, fires, etc.

This way, you don’t only save on unforeseen expenses but also ensure your car will stay in good shape, even in the case of a mishap.

2. Protects your Pocket from Third-Party Liabilities

One of the main reasons people get any type of car insurance is to comply with the law and protect themselves from losses in case of any third-party damage.

What’s great about comprehensive car insurance is that while protecting you and your car, it also protects you from losses in case you damage a third-party person or property.

3. You can Customize your IDV

At Digit, we believe you know your car the best. That’s why, while buying a comprehensive car insurance online, we give you the option to customize your IDV, i.e. the market value of your car. This will directly affect your premium and claim amounts.

4. Opt for Add-Ons for Better Coverage

Most people prefer comprehensive car insurance because you can customize your policy just the way you want, by picking add-ons to extend the kind of coverage your car can receive.

Some of these add-ons include the return to invoice cover, engine and gearbox protection, and consumables cover amongst others.

5. Cost Effective

Although the premium of comprehensive car insurance is higher than that of a third-party car insurance, it still turns out to be a lot more cost effective.

This is because the coverage and benefits you receive with comprehensive car insurance are a lot higher, saving you a lot of money in the long run!

6. Protects your Car During Natural Disasters

Nobody can control nature’s many furies. But, with comprehensive car insurance you can at least protect your car from any damage that is caused due to the same.

So, whether your car is damaged due to a flood, cyclone or earthquake- your car will be protected through it all.

7. Covers You Against Car Theft

Car thefts are the worst! Within minutes you can lose out on one of your most prized possessions.

Thankfully though, comprehensive car insurance can help you in this case by compensating you for the loss of the same.

8. Opt for Breakdown Assistance

A Breakdown Assistance is one of the many add-ons available in a comprehensive car insurance but, what makes this add-on special is that it never counts a claim.

So, whether you’re stuck midway or are having a little breakdown, we’ll just be a ring away and it won’t even count as a claim!

9. Avoid Depreciation with Zero Dep Cover

Everything loses value over time. But, if you’ve opted for a zero-depreciation cover in your comprehensive car insurance, you can keep your car as good as new.

This basically means you can avoid the depreciation on its parts and therefore get more money during claims due to the same! Sounds great, doesn’t it?

However, there are certain limitations too, such as:

• Comprehensive car insurance does not cover damage caused due to normal aging and the wear and tear of your car. 

• It cannot protect your four-wheeler from the depreciation of the value of the car over time.

• Damage to vehicle parts made up of fiber or rubber are not fully covered in the insurance. 

• The policy does not cover damages and losses caused due to a nuclear attack or war.

1. Driving Drunk

Any claims made in a situation where you were driving under the influence of alcohol won’t be covered even in comprehensive car insurance.

2. Driving without a License

As per the law, your claims won’t be covered if you were driving without a valid driver’s license.

3. Driving without a valid License Holder

As per the law, we can’t cover for you if you were driving with a learner’s license, without a valid license holder in the front passenger seat.

4. Consequential Damages

Consequential damage is that that takes place after the accident. Unless covered for in an add-on, such damages can’t be covered for even in your comprehensive car insurance.

5. Contributory Negligence

To simply put it, don’t do things you aren’t supposed to! 😊 For example; if there are floods in your city, don’t take the risk and take your car out. Listen to your manufacturer’s manual as such negligence isn’t covered for in your comprehensive car insurance too.

6. Add-ons Not Bought

This is pretty obvious! In case you haven’t bought a particular add-on while buying your comprehensive car insurance, you can’t claim for its benefits.

1. Covers for Third-Party Liabilities

The main purpose of a Third-Party car insurance is to cover you from losses and damage caused to a third-party due to your own car. So, this includes situations such as if you bump into a car or damage, one’s personal property. In such cases, your third-party car insurance will cover the losses incurred.

2. Helps Comply with Law

As per the Motor Vehicles Act, every vehicle needs to at least have a third-party car insurance to drive legally on Indian roads.

3. Protects your Pocket from Traffic Fines

Since at least having a third-party car insurance is mandatory by law, not having one can lead you to pay hefty penalty fines. Therefore, having a third-party car insurance can protect your pocket from spending on traffic fines!

Now, let’s look at some disadvantages of third-party liability insurance:

• You do not have the flexibility to buy add-ons with a third-party plan, hence, you cannot enhance the coverage of your plan.

• It does not provide coverage against the damage caused to your vehicle and covers only third-party liabilities.

• Having only a third-party policy might allow you to comply with the law, but it does not provide enhanced coverage when compared to a comprehensive car insurance plan. 

1. Own Damages

As the name suggests, a third-party car insurance will only cover third-party related liabilities and damages to one’s own car won’t be covered under this policy.

2. Drunk Driving or Without a Driver’s License

A third-party car insurance won’t cover your third-party claims if you are found driving under the influence of alcohol, or without a valid driver’s license.

3. Driving without a valid Driving License holder

If you hold a learner’s license and were driving without a valid driving license-holder in the front passenger seat - then your claim in those situations won’t be covered. 

Upgrading from a third-party car insurance policy to a comprehensive car insurance policy comes with a few benefits, depending on your needs, such as:

1. To Cover for Your Own Damages

Get covered for your own car’s damages and losses that could arise due to unforeseen circumstances such as accidents, collisions, monsoon floods, fire, etc.

2. To Cover for Third-Party Liabilities too

Also get covered for all third-party related liabilities such as if you hit and damage someone’s vehicle, injure a third-party person or damage someone’s property.

3. To Customize your Policy for Better Coverage

Customize your car insurance further by opting for different add-ons and covers that would give your car better coverage. 

For example: Opting for breakdown assistance/roadside assistance in your policy gives you the benefit of asking for help for matters both big and small. Similarly, opting for a zero-depreciation cover ensures your insurer doesn’t deduct your car’s chargeable depreciation during claims.

4. You can Customize your IDV

Under our comprehensive car insurance policy, you also have the option to customize your car’s IDV. The increasing or decreasing IDV also affects the premium; however, if you go for a higher IDV remember that the payout will also be higher.

5. Personal Accident Cover Included

With a comprehensive car insurance policy, you don’t need to separately opt for a personal accident cover as a comprehensive policy automatically covers it all. 

Note: If you currently have a third-party liabilities policy that is yet to expire, you can go for a separate Standalone Own Damage Policy, to get coverage on your own car as well.

If you are confused which among the two car insurance policies is the best for you, consider the following factors before choosing the most suitable policy:

Understand Your Needs

Determine your car insurance needs and then opt for a policy that meets those requirements. For example, if you live in a traffic-congested city or flood prone city, getting a comprehensive car insurance policy with addons like breakdown assistance, consumable cover, etc., can be a good deal.

Consider Your Car’s Age and Value

If you have just bought a new car or own an expensive one, you will benefit more from a comprehensive car insurance policy, customised with appropriate add-ons. Whereas third-party coverage is often enough for older cars, depending on your risk tolerance and budget. 

Also, if you do not use your car much, whether it is new or old, you can go for a third-party liability policy only as you will be complying with the law and will be providing minimum protection for your car.

Compare Coverage

A comprehensive insurance policy provides wider coverage than a third-party policy. So, if you want enhanced coverage for your car, go for a comprehensive plan. However, if you want minimal coverage or just want to comply with the Indian motor laws, third-party plan is the best choice.

Check Cost of Policy

Since a comprehensive plan covers your own damage as well as third-party liabilities, it is more expensive than a third-party policy. Therefore, if a comprehensive policy is over your budget, you can always go for the 3rd party policy. 

However, remember that it is better to be safe than sorry and if you want peace of mind when you hit the road, it's better to go for a comprehensive plan with customised add-ons for overall protection.

So, don't forget to add an extra layer of protection to your car with a car insurance policy!