Car insurance is an essential requirement for every car owner. It is a mandatory requirement to drive on Indian roads and is a responsible investment that protects both the car owner and the public. There are primarily three types of car insurance policies - Own damage, third-party and comprehensive car insurance . A standalone own damage coverage is similar to a comprehensive policy but without the third-party liability coverage. On the other hand, comprehensive and third-party policies offer different kinds of coverage, and it is essential to understand the differences between the two before making a purchase.
In this article, we will explain the difference between third-party and comprehensive car insurance policies, their benefits and drawbacks, and how they work.
What is Car Insurance?
Car insurance is a policy that covers the cost of potential accidents or damages that may happen while driving. It is a contract between the car owner and the insurance company that protects them from any losses and expenses that may be incurred.
Different types of car insurance policies offer different coverage and protection options. The two most common types of car insurance policies are third-party and comprehensive car insurance.
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Third-Party Car Insurance
Third-party car insurance is the most basic form of car insurance policy. It is mandatory by law for vehicles to have third-party insurance to be on the road, it covers death, injuries or property damages caused to a third party by the insured car. If the insured car damages someone's property or causes bodily harm to an individual, the insurance policy covers the financial expenses for the same. Third-party insurance does not cover damages or injuries caused to the insured individual or their car.
Comprehensive Car Insurance
Comprehensive car insurance offers a broader range of coverage and financial protection in the event of an accident, theft, fire, or natural calamities. The policy covers the insured individual, their car, and any third-party liabilities or injuries caused by the insured car.
Benefits of Comprehensive Car Insurance
The primary benefit of comprehensive car insurance is that it offers extensive coverage. This policy covers damages or injuries caused to the insured individual, their car, and any third-party liabilities caused by the insured car. It offers financial protection against theft, fire, or natural calamities like floods or earthquakes.
Another benefit of comprehensive car insurance is that it offers add-on coverage options that can be added to the policy for an additional premium. These add-on options include no-claim bonuses, personal accident coverage, engine protection, and zero depreciation covers, among others.
Comparison of Comprehensive and Third-party Car Insurance Policies
Features |
Comprehensive insurance |
Third-party insurance |
Coverage |
Provides coverage for both own damage and third-party liability. |
Provides coverage only for third-party liability. |
Own Damage |
Covers damages to your own vehicle due to accidents, theft, fire, etc. |
Not covered. |
Third-party Liability |
Covers death, injury or property damage caused to third parties. |
Provides coverage for death, injury or property damage caused to third-party. |
Personal Accident Cover |
Usually included as standard or available as an add-on. |
Not included by default but can be added as an optional cover. |
Cost |
Generally higher premium due to broader coverage. |
Lower premium compared to comprehensive insurance. |
Legal Requirement |
Optional but highly recommended for comprehensive protection. |
Mandatory by law for all vehicles on Indian roads. |
Add-on Covers |
Additional coverage options are available, such as zero depreciation, engine protection, roadside assistance, etc. |
No options for add-on covers. |
Conclusion
In conclusion, third-party and comprehensive car insurance policies offer different coverage and protection options. Third-party insurance is a mandatory requirement for vehicle owners while to get own damage cover, you need to pay an additional premium for enhanced coverage. A car owner should consider their car's value, their driving habits and frequency, and their budget before selecting a car insurance policy.
Disclaimer: T&C Apply. Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalum MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. URN No. BFL/Advt./23-24/316