Today, for any car owner, choosing the right car insurance is of utmost importance. A number of elements need to be considered before you decide to buy the insurance. Being the car owner, you need to lay down your insurance requirements based on the insurance coverage, the tenure, the kind of benefits offered, option of add-ons, etc. In India, it is mandatory to have a third-party liability at least. There are a number of reasons why one should avail car insurance:
Due to the number of insurance firms offering competitive car insurance covers, it is always a good idea to compare the various insurance policies available in the market and choose the one that favours your requirements the most. There are a number of online platforms today that allow you to compare various policies from the comfort of your home. You can also visit the designated insurance offices to learn more about the various insurance schemes and buy the most suitable insurance cover.
Out of all the factors, insurance coverage is considered the most vital. Based on the coverage offered, insurance plans are of two types:
Also known as Third-party insurance, this plan provides limited coverage. The plan covers your liabilities towards the third-party involved in the accident. The third party liabilities will include personal losses and/or property damage. Personal losses covered under this plan include accidental death and body injuries. This insurance cover can be availed at a low premium as it covers third-party liabilities alone. This cover allows you to raise a claim under the ‘no-fault liability claims’ category. Here, you are allowed to raise the claim without having to provide proof that suggests your negligence caused the accident. Sometimes insurers provide personal injury protection cover as an add-on for this insurance policy.
Unlike the third-party liability cover, this plan provides an extensive coverage for the policyholder. Also known as ‘other than collision’ cover, this plan covers the following:
The premium for this plan is high due to the extensive insurance coverage the plan provides. Insurers usually provide a number of add-ons that you can opt for under the comprehensive plan. The add-on options are as listed below:
You can choose between third-party insurance and comprehensive insurance depending on your basic insurance coverage needs.
When buying a car insurance policy, car owners have two options - a third-party car insurance policy or a comprehensive car insurance policy. Most car owners that are new to motor insurance readily opt for a third-party car insurance policy as it is a lot more affordable, but apart from it being cost effective, the coverage of a third-party insurance policy is limited. The main difference between a third-party car insurance policy and a comprehensive car insurance policy is the extent of coverage as well as coverage under a number of circumstances.
A third-party coverage which is mandatory as per the Motor Vehicles Act, 1988, is the most basic form of motor insurance and offers coverage for damage only to the vehicle of the third party following an accident or collision. By holding a third-party car insurance policy, no coverage can be claimed by the policyholder for his/her own vehicle. In addition, a third-party car insurance policy offers coverage for medical expenses of the third party if the accident causes injury or disability - be it partial or permanent. Lastly, if the accident between the policyholder of the third-party car insurance policy and the third party leads to the death of the third party, then the third-party car insurance policy offers compensation to the dependents of the third party.
As already mentioned, the biggest difference between a third-party car insurance policy and a comprehensive car insurance policy is the extent of the coverage and coverage under a number of circumstances. While a third-party car insurance policy offers coverage in the case of an accident, a comprehensive car insurance policy offers coverage to the policyholder following an accident, if the car catches fire, if the car is damaged or deemed as total loss following a man-made disaster such as a riot or a strike, a natural calamity such as an earthquake, flood, landslide, lightning, cyclone, etc. A comprehensive car insurance policy also offers coverage if the car is stolen, or is damaged while being transported. As the name suggests, a comprehensive car insurance policy extends coverage to both the policyholder or the first party and the third party involved in the accident. It offers coverage to the property of both parties and also offers coverage for medical expenses if any of the parties or both parties are injured or disabled following the collision or mishap. It even offers compensation if death occurs to any of the involved parties following an accident.
Though a comprehensive car insurance policy offers coverage under a wide range of circumstances, it does not cover some situations and a few parts of the car. To enhance their protection, policyholders can opt for add-on covers that they can purchase in addition to the premium of the base policy. Some of the common add-on covers offered by motor insurers are the engine and gearbox protect cover, zero depreciation cover, roadside assistance cover, key replacement cover, personal accident cover for passengers, etc.
Listed below are the key differences between choosing a third-party car insurance policy and a comprehensive car insurance policy:
A third-party car insurance policy is mandatory as per the Motor Vehicles Act, 1988, but is the most basic car insurance policy. As the name of the policy clearly suggests, the third party insurance is for legal liabilities that arise due to an accident where a third party is injured or suffers damages. The coverage is for damage to the property of the third-party and coverage for medical expenses if the third-party is injured following the accident or is hospitalised. In addition, coverage covers medical costs if the accident leads to disability of the third-party and if the third-party dies, compensation will be extended to the dependents of the third-party. The coverage is up to a maximum of Rs.7.5 lakh as set by the Insurance Regulatory and Development Authority of India (IRDAI).
On the other hand, a comprehensive car insurance policy offers coverage for the third-party involved in the accident and the policyholder as well. It offers coverage for damage to the property of both parties and coverage for medical expenses or hospitalisation if the accident leads to bodily injury or death of any of the involved parties. In addition, a comprehensive car insurance policy offers coverage if the car is damaged following a natural calamity such as a landslide, earthquake, lightning, flood, etc. It also offers coverage if the car catches fire or if it is damaged following a riot, strike, or any malicious activity.
For a third-party car insurance policy, the premium rates are revised every year by the Insurance Regulatory and Development Authority of India (IRDAI) and are based on the engine capacity of the car. However, a comprehensive car insurance policy is a lot more expensive as the coverage is more and is based on several other factors such as the make and model of the car, engine capacity, Insured Declared Value (IDV) of the car, the driving history and personal details of the policyholder, the area where the car is registered and used, etc. When it comes to comparing the premium cost, a third-party car insurance policy is a lot cheaper than a comprehensive car insurance policy but the coverage is limited as well.
With the third-party liability car insurance policy, the policyholder has the option of availing just the personal accident add-on cover for themselves or the driver of the vehicle. On the other hand, with a comprehensive car insurance there are a number of add-on covers that the policyholder can choose from to enhance his/her coverage and reduce the out-of-pocket expenses following a claim. Some of the add-on covers that a policyholder can buy in addition to the premium cost of the base policy are, the zero-depreciation cover, No Claim Bonus protect cover, engine and gearbox cover, key replacement cover, roadside assistance cover, etc.
Since the key differences between a third-party liability car insurance policy and a comprehensive car insurance policy are the coverage and the cost of the premiums, with a comprehensive car insurance policy having better coverage but being priced much higher than a third-party liability car insurance policy, the policyholder has to decide which policy will be suitable based on the age of his/her car.
For example, if the car is older than say, 5 years or more, a comprehensive car insurance policy will offer better coverage but due to the depreciation factor, the payout will be reduced by quite a bit. For this reason, policyholders should assess which policy will suit their finances and their needs with regard to the coverage that they wish to have for their car.
Due to a majority of the vehicles on the roads of India being uninsured and the low penetration of motor insurance policies in the country, the Supreme Court has recently made the long-term third-party car insurance policy mandatory. Previously, the long-term insurance policy was offered by insurers only for two-wheelers. Now, four-wheelers need to have the three-year third-party insurance policy and two-wheelers need to have a five-year third-party insurance policy. The mandate by the Supreme Court will ensure that car owners will be insured for a longer span and will not need to renew their insurance policy every year - a fact why most vehicle on the roads of India are uninsured.
While this is good news in a way, now, new cars are all set to cost more and obviously, the third-party premiums will increase as of 1 September 2018. According to the Insurance Regulatory Development Authority of India, for cars, the premium of the third-party insurance policy will be Rs.5,286 for four-wheeler with an engine capacity of less than 1,000cc, for cars with an engine capacity between 1,000cc - 1,500cc, the premium will be priced at Rs 9,534, and for cars with an engine capacity more than 1,500cc the premium will be set at Rs.24,305.
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