Are you stuck between comprehensive and third party insurance? Don’t know which one should you go for? Then fortunately, you landed on a right place. Motor insurance is something that we always need and every year we spend reasonable money on renewals. Therefore, choosing a right car insurance is very much crucial.
Here in this comprehensive vs third party insurance comparison, I will walk you through pros and cons of both polices so you can readily decide a best policy for your vehicle.
There are many factors that we need to take care of such as vehicle condition, policy premium, while choosing a car insurance policy.
Let’s first understand why do we actually need a motor insurance policy.
Whenever we see an accident on the road, we thank God for keeping us safe and hope we would never face such situations. But the bitter truth is that everyone prays for that and accidents still happen.
So lets face the truth and always be prepared to tackle such circumstances. Here preparation includes obeying all traffic rules, taking all safety measures, and most importantly having a motor insurance policy, be it comprehensive or third party insurance. These policies help us fulfill our legal liabilities toward third parties, their belongings or properties (in case your vehicle hits someone) and restore personal damages.
Many people do not buy auto insurance because they think they don’t need it. They think that they drive very carefully and take all safety measures. If you’re one of that kind person then I just want to let you know that statistics show that in a large percentage of road acidents victims do not have any fault.
So here your excuse for not buying a compulsory third party insurance or comprehensive auto insurance vanishes away.
Once you realize that you should have insurance for your vehicle then eventually another question pops up into mind that, “Which one to buy – compulsory third party insurance or comprehensive auto insurance?” In this post, we will compare comprehensive vs third party insurance for your help.
After reading this post you’ll be able to decide which motor insurance policy would be suitable for your vehicle. This post could help you decide between compulsory third party insurance and comprehensive auto insurance. Read on to know more.
Types of motor insurance policies
Basically, you get two options in vehicle insurance: compulsory third party insurance and comprehensive auto insurance.
As per Motor Insurance Act, to run a vehicle on road, it should have third party liability insurance to fulfill legal liabilities toward the third party; in case vehicle damages someone or his property. Therefore, third party insurance is imposed by law and you cannot ignore it.
On the other hand, comprehensive insurance policy is tailored to protect insured vehicle and its owner or driver against financial losses. It also provides all the benefits that a third party insurance policy offers but you’re not obligated to buy it.
Third party insurance is imposed by law. On the other hand, comprehensive auto insurance is tailored to protect insured vehicle and its owner or driver against financial losses and it also provides all the benefits that a third party insurance policy offers but you’re not obligated to buy it.
Comprehensive vs third party insurance
Let’s compare both comprehensive vs third party insurance policies.
| Third party policy | Comprehensive policy |
|---|---|
| According to motor insurance act, no vehicle can run on road without third party insurance, which cover third party legal liabilities. | A comprehensive policy is a complete cover policy which covers both insured and third party’s liabilities caused by road accident. |
| It only covers third person and property who suffer loss caused by insured vehicle. | It’s obvious both parties suffer loss during collision. So comprehensive policy covers insured vehicle, its driver, third person and his property. |
| Third party policy premium is significantly less as compared to package policy. | Policy is expensive than third party liability only policy. |
| It does not include coverage for theft, natural disasters, and fire. | Other than collision, it also covers vehicle against man made and natural calamities such as theft, fire and similar loses. |
| Benefits are limited. | Compared to third party insurance, benefits are enormous. |
Comprehensive car insurance
Comprehensive car insurance policy is tailored to cover own damages (damage to vehicles and driver) along with all third party liabilities. Comprehensive auto insurance AKA package policy is usually expensive than liability policy because it offers a bundle of extra benefits and protects your vehicle against almost all damages including theft.
These policies also allow you add riders to them so you can insure an event of loss that is not covered. For your knowledge, riders are extra benefits that you add to your policy after paying some extra money.
Those who own new or expensive vehicles, this policy is a must have thing. It is noticeable that these polices are subject to depreciation and exclusions. So before opting a policy, you should read, “what does your policy cover and doesn’t cover?”
Insurers do not provide full compensation for the damage which means you would have to pay a percentage of amount from your own pocket so clear your doubts before buying a package policy.
If your vehicle is old and less expensive then comprehensive auto insurance would not be a better option for you. In that case, compulsory third party insurance could be a better choice. But note that liability policies only cover third party liabilities. These do not cover you and your vehicle.
Compulsory third party insurance
These policies are designed, as per law, to cover third party liabilities if your vehicle causes damage to third party or his property. It covers damage or loss caused by insured vehicle to third person or property. It’s noticeable that third party insurance pays claim only when insured at fault.
Such policies are much cheaper than comprehensive policies. Here keep in mind that you and your vehicle’s loss will not be indemnified.
Which one to buy?
As per above explanation, if you own a new or an expensive vehicle then you should buy comprehensive car insurance. Otherwise, third party insurance would be suitable for your vehicle. Because comprehensive policies are subject to depreciation which means old vehicles get less compensation because of wear and tear.
However, you should keep in mind that comprehensive policy is not limited to vehicle. You can pick comprehensive insurance policy if you’re unable to bear your hospital expenses; in case of physical injury caused by accident.