Comprehensive Insurance Vs Third-Party Car Insurance

Owning a car is a wishlist item for many people, especially if it’s your first four-wheeler. You pay extra attention to ensure it doesn’t bear any scratches or meet with a collision. However, given the condition of Indian roads, keeping your car safe is daunting. That is where a four-wheeler insurance plays a crucial role. A car insurance is not only essential to protect your peace of mind and finances, but also mandated by law.

There are three major types of car insurance – third-party liability coverage (which is mandatory by law), comprehensive policy, and own damage or standalone own damage. But which one is ideal for you? We will discuss this through clear distinctions.

Key Distinctions Between Comprehensive Insurance Vs Third-Party Car Insurance

1. Meaning

1. Comprehensive or package car insurance

As the name implies, comprehensive or packagecar insurance provides complete protection for your four-wheeler. Suppose your car sustains damage due to a collision, natural calamities, or human-caused disasters like riots or vandalism. In that case, the insurer will cover the repair charges or the cost of the components requiring replacement.

The policy also covers damage caused by fire, provided it is not intentional. If your four-wheeler is stolen from your residence, office, or elsewhere, you will be compensated up to the car’s current market value after deductibles are factored in.

2. Third-party liability car insurance

On the other hand, third-party liability is basic coverage. According to the law, if your vehicle is not covered by this insurance and you are found driving, traffic authorities will impose penalties and can seize your vehicle in case of repeated offences.

Third-party coverage typically compensates for the costs of treating injuries caused by your car, provided the person is not a driver or passenger in your insured vehicle. It also compensates for property damage caused by your car.

3. Standalone own damage insurance

A standalone own damage insurance or own damage (OD) insurance, as its name suggests, covers the damage caused to your own car. It secures your car against damage caused due to accidents and natural disasters. It also provide coverage against theft, among other points covered in the policy document.

2. Premium

1. Comprehensive car insurance

The premium for comprehensive coverage is expensive. That is because it includes components of both third-party liability coverage and standalone damage insurance. The third-party liability portion of the premium is pre-decided by the insurance regulator, while the insurer decides the cost of covering damage to the car.

2. Third party car insurance

Third-party liability insurance is very cost-effective. As mentioned earlier, the IRDAI (Insurance Regulatory and Development Authority of India) decides its premium based on the cubic capacity (displacement size) of the vehicle's engine, and it remains the same across makes and models.

The third-party liability premium is subject to regular revisions. According to recent updates, here are detailed insights into the liability coverage premium proposed by IRDAI.

For Single-Year Plan:

Engine Size	Premium Amount
Below 1000cc	₹2,094
Between 1000cc and 1500cc	₹3,416
Over 1500cc	₹7,897

For Three-Year Plan:

Engine Size	Premium Amount
Below 1000cc	₹6,521
Between 1000cc and 1500cc	₹10,640
Over 1500cc	₹24,596

3. Standalone own damage car insurance

The premium for OD car insurance is a percentage of the Insured Declared Value (IDV), as mentioned by the Indian Motor Tariff.

3. Riders

Riders are available by paying an additional amount over and above the standard premium. They boost the policy coverage by covering scenarios that your standard plan excludes.

When you only havethird party car insurance, you cannot increase the coverage scope through riders. However, if you have also bought standalone own-damage insurance alongside this basic coverage, you can choose any or all of the riders available with your insurer.

Conversely, with comprehensive coverage, riders are accessible without any terms and conditions.

Here are your options:

• Roadside assistance cover: This comes in handy if your car is damaged in a remote location with no service centre nearby. The insurer arranges and pays for the towing charges to a garage.
• Engine protection cover: This reimburses the expenses associated with a damaged engine caused by water ingress or lubricant oil leakages.
• Zero depreciation cover: This rider is also known as a bumper-to-bumper or nil depreciation cover. With a zero depreciation cover, when a policyholder makes a claim, he or she does not have to pay the depreciation value of the replaced or damaged parts, and can get the full claim amount under a package car insurance.
• Return-to-invoice cover: If your vehicle is damaged beyond 70% and repairing it seems impossible, your insurer usually pays only the IDV of your car. But with this cover, the insurer will pay the actual value at which you had bought the vehicle.
• Tyre protection cover: If your car’s tyre is damaged, the insurer will pay for the repair and replacement cost of the same, in addition to the labour charges.
• Engine protect cover:This optional rider will help cover the repair and replacement cost of your car’s engine in case of damage due to lubricating oil leakage or water ingression.

It is worth mentioning that you should pay extra attention when choosing riders, as not every add-on is suitable for your four-wheeler.

Conclusion

Choosing between third-party liability and comprehensive coverage should never be a tough choice. Consider buying the latter, as it provides complete coverage and ensures peace of mind while on the road. However, if you own an old vehicle, are planning to replace it soon, or use it rarely and only for shopping for groceries and other necessities from the neighbourhood, you may consider third-party liability coverage.

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