After a house, a car is probably the second-most-prized possession for people. Usually, buying a car involves a lot of research and price comparison. While cars have evolved from being a sign of affluence to a necessity, people are also becoming increasingly aware of the importance of a good four-wheeler insurance policy.
There are two broad categories of car insurance policies available. These are third-party liability and comprehensive policies. While the former offers protection against losses caused to a third person or property, the latter includes protection for your car and physical injury to you too.
Third-party liability policies are mandatory by law, and hence, most car owners tend to buy them while purchasing the car. However, when they realise that the plan does not cover any damage to their cars, they move to comprehensive plans.
However, how would a car owner decide which policy is better for him? This article will talk about pointers that can help you identify the right time to switch from third-party car insurance to comprehensive car insurance.
Third-Party and Comprehensive Car Insurance
When you buy third-party car insurance online, the coverage offered by the insurer is limited. It is a basic policy mandated by the Motor Vehicles Act in India. If your car meets with an accident and causes damages to a third person or third-party property, then this policy covers the financial losses arising from it provided you are at fault.
On the other hand, when you buy a comprehensive policy, the coverage extends from third parties to you. Hence, if your car meets with an accident and results in damage to your car as well as a third-party car, then this policy offers coverage for both. It also offers coverage for damages caused due to fire, theft, man-made and natural disasters, etc. There are many add-ons available that help you customise the policy to suit your specific needs.
Difference between Comprehensive and Third-party Car Insurance
Here are some primary differences between third-party and comprehensive car insurance policies:
| Third-Party car insurance | Comprehensive car insurance | |
| Coverage | Only for damages to a third person or third-party property. | Includes damages to third person and property. It also includes damages to you and your car. |
| Premium | Premium is determined by the IRDAI. The insurer has no control over the premium amount. | Premium depends on factors like the model of the car, the city of residence of the policyholder, IDV, add-ons, etc. |
| Add-ons | No option of add-ons | A wide range of add-ons that can help you customise the policy as per your needs. |
Switching From Third-Party to Comprehensive Four-Wheeler Insurance
If you are wondering when you should switch from third-party liability insurance to comprehensive insurance, then here are some points that can help you make the decision:
- You need coverage for damages to your car
Third-party car insurance offers cover for damages to third-party (person and property) only. It does not cover damages to you or your car if you meet with an accident. Hence, you have to bear the costs of repairs..
If you live in a high-traffic area or drive on highways where the probability of an accident is higher, then opting for a comprehensive four-wheeler insurance plan makes sense. Also, if you are a new driver, then minor mishaps are highly probable. A comprehensive plan can help you manage repair costs with ease.
- You need a customised plan.
In third-party car insurance, you don’t have the option of add-on covers. Hence, these policies are standard with no customisation options. However, if your driving conditions or use of the car is unique and demands a tailored insurance plan, then you need to opt for a comprehensive car insurance policy. Most insurers offer a range of add-on covers to choose from that can help you customise the policy as per your unique needs.
- Personal Accident Cover
If you are worried about treatment charges if you meet with an accident and sustain physical injuries, then a comprehensive car insurance plan is a better option since it offers personal accident cover too.
Summing Up
While you put in a lot of time and effort to find the right car for your needs, you need to ensure that you put in equal time to find the perfect insurance plan for your car. While a third-party car insurance policy is mandated by law, it does not offer cover for damages to you or your car.
Hence, ensure that you assess your insurance requirements and choose a comprehensive car insurance plan if you need the added benefits offered by these plans. Before you buy car insurance, make sure that you research the market and compare plans.
You can use a car insurance calculator available on the websites of most insurers to calculate the premium amount and compare it across insurers. Also, make sure that you check the claim process and choose a provider that has a good track record of processing claims. For example, the Tata AIG car insurance claim settlement ratio is 98%. Look for providers with a similar claim settlement ratio or higher. Good Luck!
