Comprehensive and Third Party Car Insurance

Car insurance companies in India provide two kinds of policies - comprehensive and third-party car insurance. Though the third-party cover is cheaper and covers the third-party liability damages, however,  the comprehensive cover offers wider coverage and hence, it is slightly expensive. There are numerous key factors that should be considered while choosing the car insurance. The substantial mental dilemma starts while deciding whether to choose the comprehensive car insurance scheme or standalone third-party motor insurance. In India, generally, most of the insurers sell both comprehensive and third-party car insurance covers. While the comprehensive motor policies cover both the personal damages of the insured and third-party liabilities, the standalone third-party car insurance cannot be used for the personal damages of the insured.

Comprehensive Car Insurance

A comprehensive policy provides complete protection against the damages to both parties inculpated in the accident. This scheme is all-inclusive as it covers the costs to the damaged car, theft, legal liability to the third-party, and the personal accident cover. The policy coverage can be further enhanced by opting for add-ons such as accessories cover, engine protector, zero depreciation cover, and medical expenses, among others. This coverage is prevalent among the car owners since it provides end-to-end coverage and hence ensures the financial safety for the policyholder.
Without the comprehensive insurance cover, the owner gets into the risk of paying from the pocket for expensive repairs of damages after an accident.
The comprehensive car insurance often includes the coverage for theft, fire, vandalism, falling objects, natural disasters like a hurricane, earthquake or a tornado, damage done to the car by animals, floods, civil disturbance, such as the riot that consequently damages the car and damage to the third-party.

Essential Components of Comprehensive Car Insurance Policy

It is always recommendable to get insured through the comprehensive insurance even though if this insurance is not mandatory. With the comprehensive insurance plan, one can rest assured that the insurer would take the potential losses due to accidents care. Some of the essential factors of comprehensive car insurance are mentioned below:

• It protects against the damages to both the parties from accidents, even if you are responsible for it.
• It provides end-to-end security for the vehicle against theft or damages caused by the natural calamities.
• Add-on covers such as zero depreciation and engine protection covers are also available along with the comprehensive insurance covers.
• No additional premium is required for covering the third-party liabilities in the case of accidents.

Exclusions of Comprehensive Car Insurance

• Aging, wear and tear of the car.
• Depreciation of the vehicle.
• Electrical or mechanical breakdown.
• Damage to tires and the tubes. However, if the vehicle is also damaged at the same time, the liability of the company will be restricted to 50% of the replacement cost.
• Damage caused by the person who was driving without a valid license.
• Damage caused due to drunken driving or driving after consuming drugs.
• Loss/ damage caused by the war, mutiny or any nuclear risk.

Third-Party Car Insurance

It offers cover against any legal liability to a third party caused when the insured owner or car driver is at fault. It covers any damage or the injury caused by the insured, to another person or the property. The law mandates a third-party liability cover in India under the Motor Vehicles Act, 1988. There is no particular limitation on the liability coverage for injuries or death of a third-party. However, the liability coverage for the property damages of a third party is limited to Rs.7.5 lakh.

Benefits of Buying Third-party Car Insurance

This kind of car insurance protects the owner in case of any legal liability owing to the death or injury to another person or damage to the property caused by the insured vehicle. The Motor Vehicle Act specifies that in the third-party claim made under "no-fault liability claims" where the claimant(victim) is not under obligation to prove other party's(claimant) negligence, the compensation entitlement will be capped as per the Motor Vehicle Act,1988. However, in "fault-liability claim" the claimant proves the negligence of the vehicle, responsible for causing the accident. In this case, the claimant is not restricted for the entitlement of compensation on account of death or injury. However, in the case of property damage, the payment of up to Rs7.5 lakh will be borne by the insurer, and the remaining amount is required to be paid by the vehicle owner.
 

Exclusions of Third-party Car Insurance

The third-party car insurance policy doesn't cover the cost of damages to a vehicle or the belongings in the car of the insured, in case of an accident. It will also not provide cover if the car or belongings in the vehicle are stolen or damaged.

Difference Between the Two Insurance Covers

One significant difference between the third-party insurance and comprehensive insurance is the range of protection offered to the insured and the vehicle. While the comprehensive plan provides multiple protection covers for the insured member and the car, a third-party cover is limited to provide protection only against the claims of a third- party. The strengths and weaknesses of these two kinds of car insurance depend on various underlying factors. It is essential to understand the following variables to compare, analyze and decide about the suitable car insurance scheme.
 

a. Cost of the car: If the value of the vehicle is of low cost, it is better to take the third-party motor insurance since the repairs to damages incurred would be cost-efficient. It is cheaper to pay for the repairs as compared to the payment of high premiums associated with the comprehensive cover. Though in the case of the brand new and expensive car, the comprehensive coverage is a better option.

b. Coverage: The third-party insurance protects the insured from damages of property and injuries caused to the third party in an accident. Some companies might charge extra for third-party property coverage in the insurance. This insurance cover has become a priority these days since the cost of repairing the car damages is high.

c. Cost of the insurance: The comprehensive cover is expensive than a third-party cover.

Which Insurance Cover is Apt For You?

If you are looking to protect yourself and the vehicle, a comprehensive car insurance policy is a must. It is an extensive coverage plan since it has provisions for the third-party as well. Choosing the right insurance cover depends on the specific requirements. If you own a luxurious car, it is recommendable to opt for a 'comprehensive cover' that provides maximum protection to the vehicle. One can also choose additional covers such as engine protection to ensure that the vehicle is well-protected. The 'standalone third-party cover' could be purchased for old vehicles.

Whichever insurance cover you choose,  it is always advisable to check the terms and conditions before taking the policy.

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