Comprehensive Insurance: Meaning & Coverage Explained

Comprehensive Insurance Policy

Driving a vehicle is about comfort and convenience. But at times, driving a two-wheeler or a four-wheeler on the road can lead us to unexpected accidents. For such events, buying a Comprehensive Insurance is an action to plan for the time when means of transport owned by individuals crack-up.

What is Comprehensive Insurance?

The insurance policy which pays for the financial interest of the owner at the time of accidental damage to the vehicle and third party (for bodily injury or property damage) is referred to as Comprehensive Insurance.

To rationalize market demand for insurance, the regulator IRDA introduced the Motor Insurance Policy. It is available as a Comprehensive Package Policy and a Third Party Liability Policy.

A Comprehensive Insurance is an assurance of protection of:

a) the vehicle own damage

b) liability of any third party involved in the accident.

For any mishap, the insurance company is liable to settle the claim for repairs unless it is a compensation in the event of death. In the event of death due to a road accident, the nominee of an individual will be indemnified by MACT. The Comprehensive Cover is the maximum cover one can purchase for their vehicle.

What is covered in Comprehensive Insurance?

Unlike Third Party Liability Insurance it is not mandatory to buy a Comprehensive Insurance. It is the choice of the owner to buy a Comprehensive Insurance cover if he/she wishes to protect his/her own damages or not.

The extent of hit and volume of damage can be massive. The amount needed for the repair can be way too much. A Comprehensive Insurance offers coverage to:

Vehicle: The damage to the car for which the repair expenses will be incurred are covered under the comprehensive motor policy. The loss may occur due to an accident. Some other kinds of loss like Glass Damage and Windshield Damage by any external force, hit by an animal, etc. can blow the car leaving it with ugly looking dents. But don’t worry, under this plan- it will be covered!
Third-Party Liability Cover: It is the mandatory part of the comprehensive cover. TP Liability covers injury to the third party or the property caused due to the insured car.
Personal Accident Cover: A mandatory cover that protects the owner-driver for the limit which has been increased from Rs. 2 lakhs to Rs.15 lakhs.
Car Theft: Your car may be lost, stolen or damaged beyond repair despite maintaining all security. The comprehensive insurance will compensate for the same, based on your car and policy’s sum insured.
Natural Calamities: Some calamities like fire, riots and explosion, falling trees and other objects, rocks/ objects falling off by cars, storm, flood, typhoon, hail, wind and earthquakes can harm the car leaving it of no use. The insurance policy will provide the cost of repairs and loss in such cases.
Add-on Covers: Some add on covers, after the payment of extra premium can be added to the basic cover. Examples of such covers are Zero Depreciation Cover, Roadside Assistance, Engine Protection, Passenger Cover, and others.

Difference between Comprehensive and Third Party Liability Policy

Comprehensive Insurance

Third Party Liability Insurance

Coverage

It provides coverage to the vehicle, third party liability for bodily injury or property damage.

The cover provides protection against any liability which may arise due to third party bodily injury or property damage only.

Vehicles

New or a few years old vehicle for which the cost of repairs would be unmanageable needs a Comprehensive Cover. These repairs will be needed after a mishap or road accident.

Vehicles more than 10 years old for which the repair cost could be managed by the owner will need Third Party Liability Insurance only. For these vehicles, the cost of repair will not be high.

Cost of Insurance

A Comprehensive Cover is expensive as it offers wider protection against injuries, damage, and theft.

A Third Party Liability Insurance is cheaper in comparison to that of the Comprehensive Cover.

Price

The price for Comprehensive Cover is variable as it depends on the rates and discounts offered by different insurers.

The Price under the Third Party Liability Insurance is fixed by the Regulator.

Advantages of buying a Comprehensive Policy

To execute the process of keeping the financial liabilities away, it is best to buy a Comprehensive Insurance Policy for your vehicle. It has more advantages because:

Covers Own Damage of the vehicle: Under the Comprehensive cover, the vehicle is covered for its own damage arising out of disastrous incidences. Suppose you happen to bang your car with a tree right in the middle of the road. The car get damaged and needs repair. Your insurance policy will fix it for you.
Covers Third-Party Liability both bodily injury and property damage: It will also cover the liability expenses when the insured is deemed at fault to cause bodily injury and property damage to someone else. Imagine while driving on the highway you lost balance and hit a man crossing the road. The man sustained injuries and it was your fault. You can get such expenses incurred by you under the Comprehensive Policy.
Has a provision of add-on covers: Some added protection is a must buy. zero dep, engine protection, etc. which are not allowed under Third Party Liability Policy. Think of a situation where you need to drive on a rain water clogged road. The engine of the car suddenly stopped working as it got jammed. If you would have purchased the Engine Protection Plan as an add-on, for sure you could have recovered the repair expenses.

Recently the regulator has enhanced the coverage under the motor policy by adding a compulsory personal accident policy of the owner-driver. The minimum limit of this PA cover is Rs.15 lakhs.