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Car Insurance: Difference Between Comprehensive And Third-Party Insurance

Sampurna Mitra|4 min read|08 August, 2022

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As you’re browsing through car insurance plans, you will see that there are 2 kinds available — Third-Party Car Insurance and Comprehensive Car Insurance. They differ on the basis of coverage offered as well as premiums. So, how do you pick the right one?

Let’s dive right in:

What is Third-Party Car Insurance?

A third-party car insurance policy protects the owner-driver of the car against third-party liabilities in the event his or her vehicle is involved in a road accident. What this means is that if the policyholder’s vehicle is at fault for unintentionally causing an accident, resulting in injuries, death and property damage, the insurance company will pay compensation to the third-party. However, this policy does not cover damage to one’s own car in the accident.

Compensation Payable Under Third-Party Car Insurance:

Type of Loss — Maximum amount payable

Property Damage — Up to Rs. 7,50,000

Physical Injuries and Disablement — No upper limit (As per court settlement)

Demise — No upper limit (As per court settlement)

The premium payable for third-party insurance is determined by the IRDAI, and remains the same across insurance companies. The amount you have to pay will differ on the basis of the car’s engine capacity.

According to the Motor Vehicles Act, third-party insurance cover is mandatory for all vehicles in India. If an individual is found to be driving without this cover, he or she will have to pay a penalty. You can ensure you have this cover either in the form of standalone third-party insurance or with a comprehensive car insurance policy.

What is Comprehensive Car Insurance?

Comprehensive can also be termed as ‘completely covering’ or ‘broadly’. So, going by this name, comprehensive car insurance protects you against a wide range of risks involving your four-wheeler. It covers –

i) damage of your car due to road accidents, natural disasters and man-made calamities

ii) theft of your vehicle &

iii) third-party liabilities that can arise because of your car.

Damage of own car:

The own damage component of your car insurance safeguards you against damage to your car. In other words, the cost of repairs would be borne by the insurance company. You can raise a claim if your car has been damaged in an accident or a calamity, like flooding, earthquake, vandalism, riots, etc. This policy will also cover damages to your car that can occur if it’s being transported by air, road and rail.

Types of claim: There are two types of claims you can make under comprehensive car insurance — cashless claim and reimbursement claim.

  • Cashless claim: A cashless claim can be made at a network garage i.e. a garage that the insurance company has tied up with. The policyholder does not have to make payment for the repair work, other than deductible and any other expense mentioned in the policy document. The cost of repairing your car will be paid directly by the insurance company to the network garage.
  • Reimbursement claim: A reimbursement claim can be made at any non-network garage. Once the repairs are complete, you would need to provide all the documents supporting your claim. If everything is in order, the insurance company will reimburse you for the amount that you paid for repairs.

Theft of vehicle

If your car is stolen, you can make a claim for its complete loss. You will have to lodge a First Information Report (FIR) with the police and show the same to the insurance company. You would also need to intimate the RTO about the incident.

Third-party liabilities

Third-party insurance, as seen above, protects you from third party liabilities that can arise in case of an accident involving your car.

While the insurance company determines the premium of the Own Damage Cover component of Comprehensive Car Insurance, the Third-Party Insurance rates are determined by the IRDAI on the basis of the engine’s cubic capacity.

Difference Between Comprehensive And Third-Party Insurance

The difference between Comprehensive Insurance and Third-Party Insurance are as follows:

What’s covered:

Comprehensive Insurance

It secures you against:

  • Damage of one’s own car due to accidents, calamities, etc.
  • Theft of own car
  • Third-party liabilities that can arise due to accidents

Third-Party Insurance

It secures policyholder against third-party liabilities that can arise due to accidents.

Premium in Comprehensive Insurance

Higher when compared to third-party insurance as the benefits offered are more. The premium is fixed based on factors like the location you drive, car’s make/model, date of manufacture etc.

Premium in Third-Party Insurance

The premium is lower compared to Comprehensive Car Insurance as it only covers third-party liabilities. The premium is fixed by the IRDAI.

Add-ons in Comprehensive Insurance

You can avail add-ons on Comprehensive Insurance for extra protection.

Add-ons in Third-Party Insurance

You cannot avail add-ons.

What Car Insurance Cover Is Right For You?

If you’re looking to buy car insurance, it’s recommended to get Comprehensive Car Insurance as it offers wider coverage. On top of that, if you don’t make a claim during a policy year, you can get a discount on renewal premium in the form of No Claim Bonus. Additionally, you can opt for add-ons like Zero Depreciation Cover, Roadside Assistance Cover, No Claim Bonus Protection Cover, Engine Protection Cover, etc. depending on your needs.

If you have only recently started driving or own a luxury car, then you should get a Comprehensive Insurance cover for maximum financial protection. On the other hand, if you don’t drive often, then you can consider getting a standalone Own Damage Cover.

How To Buy Car Insurance On The PhonePe App?

Step 1 — Open the PhonePe App

Step 2 — Click on Car under Insurance and enter details of your vehicle

Step 3 — Choose ‘Third Party’, ‘Comprehensive’ or ‘Own Damage’ under Plan and select the plan of your choice

Step 4 — Enter the required details and proceed to buy the Plan

With car insurance, you can have peace of mind when you’re on the road. It financially secures you for various risks involving your car. The decision between Comprehensive Insurance and Third-Party Insurance must be taken after evaluating your needs and the amount you can pay. It is recommended to go for Comprehensive Insurance for protection against a wide range of risks.

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