There are several key factors that come in to play while you choose a motor insurance policy for your car. One such point of concern is to decide whether to go for a comprehensive car insurance or a standalone third-party insurance scheme. It depends on numerous factors such as age and price of the car and the probability of your car meeting with an accident.
It’s important to understand the merits and demerits of both types of car insurance before arriving at a conclusion. Read on to know more about the differences between a comprehensive and third-party insurance plan and decide which one is more suitable for your vehicle.
What is a comprehensive car insurance plan?
A comprehensive car insurance policy offers complete protection against the damages to your vehicle in the event of an accident or mishaps like fire, theft, vandalism, or any natural and man-made catastrophe along with a third party liability and personal accident cover. The policy can be further enhanced by selecting additional covers such as engine protector, accessory cover, medical expenses and zero depreciation, etc.
This scheme is highly popular since it provides end-to-end coverage for your car, else you risk paying from your pocket for expensive repairs of your car following an accident or any unforeseen event. Comprehensive car insurance plan in India is often costlier than standalone third-party insurance plans but it provides a lot more benefits to the insured.
Who should choose a comprehensive car insurance policy?
A comprehensive car insurance plan is for those that need bumper-to-bumper protection of their vehicle against any damage or destruction at a higher premium amount. However, it becomes prudent to opt for a comprehensive insurance policy if:
– you own a new car whose value has not depreciated much
– you own a luxury car which can incur huge financial liability for replacement or repair of its parts
– you drive in accident-prone areas, which increases the probability of your car getting hit
What is a third-party car insurance plan?
A third party car insurance policy covers only the financial liability to the third party when the policyholder is at fault. It covers any damages or injury caused by the insured vehicle to any third party or property. A third party liability cover is mandatory for all vehicles in India under The Motor Vehicles Act of 1988.
There is no specific limit on the liability coverage for injuries or death of the third party but the liability cover for property damage is capped at Rs.7.5 lakh. A third party can file a claim for compensation against the damages caused by your vehicle, and your car insurance company will have to bear the claim on your behalf.
Benefits of third-party insurance policy
This type of car insurance covers any legal liability, including death or bodily injury to a third party or damage to their property caused by your vehicle. Since it covers only the third-party liabilities, premiums are lower when compared to a comprehensive car insurance policy.
If the market value of your car is low, it makes sense to buy a third party car insurance policy since the premiums are cost-efficient and can be managed easily. However, it does not cover any damage to your car in the event of an accident, and a comprehensive cover is highly recommended for newer and expensive cars.
So, depending on the age and value of your car, opt for the appropriate car insurance policy.