When it comes to car insurance, you must know that motor vehicle liability insurance is mandatory, without which no one is allowed to drive on the roads. However, this is a basic type of coverage that tends to only cover third-party liabilities. For full protection, it is advisable to have comprehensive insurance that offers much more than just basic coverage. That’s why it’s important to have the right kind of vehicle policy to adequately cover you when you encounter something unfortunate like an accident, collision, flood or theft.
Here is a guide to help you clearly understand the distinct differences between the two types of insurance, which will further help you decide which insurance coverage will be best for you and your vehicle.
What Is Comprehensive Insurance?
Importance
Comprehensive insurance ensures the widest possible coverage of both third-party and own damage to your car. Let’s understand this with an example:
For example, if your car accidentally hits any third party or any third party property, then all such liabilities arising from that third party to you will be covered by comprehensive insurance that includes both legal and financial assistance. Additionally, if your car is involved in an accident that further causes damage to your car such as a dent, a broken taillight or something else, then comprehensive coverage will also cover all such costs incurred as a result of accidents, collisions, theft or any human caused or a natural disaster and causing damage to your own car.
Comprehensive Insurance IncludedÂ
- Damage to your vehicle due to accidents or collisions.
- Damage to your vehicle due to theft or break-in.
- Damage to your vehicle due to man-made disasters such as riots or vandalism.
- Damage to your vehicle due to natural disasters such as floods, landslides or cyclones.
- Additional covers (optional).
- Exclusions from comprehensive insurance
- No coverage for traffic violations while driving.
- No cover for fraudulent activities carried out by the insured.
- No coverage if the driver was under the influence of toxic substances.
- Consequential damages arising after the accident are not covered.
- Benefits cannot be claimed for add-ons that have not been purchased.
- Additional coverage available with comprehensive vehicle insurance
Comprehensive insurance will adequately cover you and your vehicle if something unfortunate happens to your vehicle, but sometimes comprehensive coverage falls short and at those times, supplementary car insurance can help provide you with an extra layer of protection.
So if you have a comprehensive insurance policy for your vehicle, you can also purchase optional extras covered at an additional cost according to your needs and requirements. These add-on options help enhance your coverage with more protection and keep you fully protected when needed.
Zero Amortization Cover: This is the best selling cover under comprehensive policy which is popularly known as bumper to bumper or zero amortization cover. This coverage helps you realize the full value of your vehicle without including any depreciation costs.
Depreciation causes the vehicle to lose value immediately after its purchase date. However, if you have this cover then the insurer will not be able to deduct any amount based on depreciation at the time of claim, helping you to get cover for the total cost of repairs or replacements carried out.
Always check the period for which the insurance company provides you with zero depreciation cover as this cover is only valid for a certain number of years.
No Claim Bonus (NCB) Cover: As the name suggests, this cover allows you to avail the NCB discount even if you make any claims during the policy year. Otherwise, the NCB discount is a kind of reward that ranges from 20% to 50% of the premium and is given only to those policyholders who do not make any claims during the policy period.
However, once you have NCB protection cover, you can avail this discount at the time of renewal, even if you have made any claims during the policy period.
Engine Protection Cover: The engine is one of the most expensive and important parts of any vehicle, so this add-on becomes very important as it covers all the costs and expenses involved in repairing and replacing the engine or its parts that may be damaged. overheating or insufficient lubrication or due to seals and gaskets in the engine.
Roadside Assistance Cover: This cover is extremely beneficial as it provides emergency assistance at any hour in case the vehicle breaks down on the road due to any mechanical or electrical fault. This additional cover provides you with valuable assistance 24 hours a day, at any time of the day. It is only a matter of the insured person calling the helpline of his insurance company and informing them of his whereabouts.
However, the assistance provided under this insurance may vary from one insurer to another. Therefore, you must carefully check the inclusion or variety of assistance that will be provided under roadside assistance.
Return to invoice cover: This cover is useful as it aims to provide financial assistance in the event of a total loss or theft of your vehicle. Here, the insured can receive compensation that is equal to the invoice value of the vehicle, i.e. the original value of the car at the time you bought it at the car dealership. This supplement only applies in the event of a total loss of your vehicle that cannot be repaired or in the event of theft.
Daily Allowance Insurance: Thanks to this add-on, the vehicle owner will receive a daily allowance from their insurer if their vehicle is being repaired and garaged for a certain period of time after an accident. This allowance will help you cover the cost of alternative transport that you could use in the absence of your vehicle.
Consumables Cover: This cover allows the insured to cover the cost of replacing consumables such as coolants, oil, power steering oil, oil filters, AC gas oil, lubricants and all such items except fuel.
What Is Third Party Insurance?
Meaning: Third party insurance is the most basic and legal form of car insurance which only covers damage or any loss caused to a third party from your vehicle and does not provide any cover for your own damages.
Third party insurance also includes personal accident cover (PAC) to protect you against injury or death. The premium payable under this policy has an Insurance Regulatory and Development Authority of India (IRDAI) prefix, which is relatively low and affordable compared to comprehensive insurance.
Inclusion of Third Party Insurance
- Death of a third party.
- Bodily injuries of a stranger.
- Damage to other people’s property.
- Built-in personal accident cover for owner-drivers.
- Third party insurance exclusions
- Own damage to own vehicle.
- Driving drunk.
- Driving without a valid license.
- Additional covers.
- In case of violation of road traffic rules.
- In the event of any fraudulent conduct by the insured.
For a More Detailed Article on Third Party Insurance, See Our Article What Is Liability Insurance and How Does It Work?
The difference between third party car insurance and comprehensive car insurance
As we have seen, liability and comprehensive car insurance are quite different from each other in terms of coverage, purpose and role. Let’s find out in detail the main difference between the two, which will further help you make a better decision when buying car insurance.
Which Car Insurance to Choose: Third Party Car Insurance or Comprehensive Car Insurance?
While third party insurance is mandatory, comprehensive insurance for your vehicle is optional. You may have to pay more money when buying comprehensive insurance, but it is totally worth it because the scope of coverage is much higher.
After this comparative analysis between third party insurance and comprehensive insurance, one thing is clear that comprehensive insurance is a suitable choice if one wants to fully protect his vehicle. In addition, a comprehensive policy comes with lots of customization options, a wide range of services and a higher level of protection, saving you money in the long run.
Forbes Advisor India advises you to purchase ‘Comprehensive Vehicle Insurance’ which takes care of all possible expenses that may arise while driving a particular vehicle. Opting for comprehensive insurance cover will not only offer you extended comprehensive cover but also provide maximum financial protection so you can enjoy peace of mind while driving.
