What Is The Difference Between Comprehensive And Third Party Insurance?

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Updated on Nov 14, 2022

Keeping in mind the increasing number of accidents that Indian roads experience in a day, there are some strict rules laid by the Motor Vehicle Act of India. One such rule is to have a valid car insurance policy for your vehicle. Now, there are two types of motor insurance offered by the general insurance companies, one is third-party insurance and the other one is a comprehensive policy.

According to the Indian government, it is mandatory to have at least third-party insurance done for your vehicle in the interest of a third person if he/she gets injured by your vehicle. 

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Third Party Insurance Meaning

The question is “what is third party insurance?”. A third-party insurance policy is a mandatory motor insurance policy for you to have before driving on the Indian roads. In case your vehicle injures a person, causes his death, or damages anyone’s property, you become liable to pay for their expenses. This is wherein third-party insurance comes in and pays the financial liabilities on your behalf.

Benefits of third-party insurance:

  1. Allows you to drive on Indian roads legally.
  2. Saves you from legal consequences and penalties.
  3. Pays the financial liabilities on your behalf if your vehicle has met with an accident and injured someone or damaged their properties.

What is Comprehensive Coverage and what are its benefits?

Let me now explain comprehensive insurance. Comprehensive meaning is overall or complete, so a comprehensive motor insurance policy includes all the benefits of a third-party insurance policy along with extended coverage for the owner’s own damage. This is a comprehensive type of motor insurance policy that comes with several benefits like add-on features and therefore, is preferred by most vehicle owners.

Benefits of a comprehensive insurance plan:

Comprehensive insurance meaning an overall coverage of own damage of the vehicle along with third-party legal liabilities. Here are the benefits of the same:

  1. Saves you from legal consequences and covers third-party liabilities on your behalf.
  2. Compensates for damages or loss caused to your vehicle due to natural or man-made reasons.
  3. You get the option to choose your vehicle’s IDV so that you get the right compensation from your insurer at accurate premiums.
  4. This policy allows you to modify your plan at the time of renewal and you can even switch your insurance provider. 
  5. The wide coverage offered makes this plan cost-effective.
  6. Can also cover the personal and pillion rider’s accidental expenses.

Difference Between Comprehensive And Third Party Insurance:

Third-party insurance  Comprehensive motor insurance
Coverage  Offers financial coverage on your behalf if your vehicle has damaged someone’s property, injured the person, or caused the death Along with the third-party liability coverage, it offers compensation for your own damages, caused to your vehicle due to fire, theft or any other reasons
Compulsion  Compulsory  Not compulsory
Add-on facility  Not available Available 
Premiums  Available at lower premiums due to the lesser coverage Demands higher premiums due to the extended coverage offered
Discounts  No discounts are applicable  Discounts are offered by the insurance providers in the form of no-claim bonuses and voluntary deductibles
Profitability  Profitable for your pocket in case of damages caused to others Protects your vehicle apart from handling third-party liabilities, also offers added benefits
Claims payable  The insurance company is liable to pay an amount decided by the motor accidents authority, on behalf of the owner. The company is liable to pay compensation to the owner depending on the type of policy, IDV of the vehicle. 

In third-party liability cover the company is liable to pay an amount decided by the authority on the behalf of the owner.

Limitations  Provides coverage only for other’s loss Provides extended coverage but is expensive in comparison to third-party plans

Comprehensive vs third party insurance Who should buy what?

After reading about the similarities and differences between comprehensive and third-party insurance you must have understood more about them. However, these points will help you select the right plan if you are still confused; 

  • If you own an old vehicle and do not use it frequently then a third-party cover is good enough for you. 
  • If you cannot afford higher premiums, this policy can work for you.
  • If you are a learner or own a new/ premium vehicle or are a frequent user of your vehicle, then comprehensive coverage can be highly efficient for your pocket. 
  • A comprehensive plan though slightly high on premiums offers a wider range of coverage and is recommended by all.

Conclusion

It is important to follow the rules and regulations set by the Motor Authority of India to save yourself from any legal trouble. Understanding your requirements as an owner, estimating the frequency of usage of your vehicle, analyzing your driving skills, and checking the affordability of plans are the steps that should be followed before buying a motor insurance policy. Also thinking about unforeseen consequences and comparing the plans online can help you avail the best motor insurance for your vehicle.

Also Read: Top Benefits of Comprehensive Online Bike Insurance Policy

What is the Difference Between 1st Party and 3rd Party Insurance?

Sep 30, 2021
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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