Opting in to an insurance policy would require a considerable amount of homework. Questions such as which policy is best suited for my car, what are the add-ons that I should buy, what is the insured declared value of my car, what is the voluntary deductible limit of the policy etc. need to be answered before one can narrow down on the right car insurance policy. To help you out, two such insurance policies that are popularly opted in by car owners after careful consideration are discussed below.
The Differences Between Comprehensive and Third-party Car Insurance Policies
| Basis | Comprehensive Insurance Policy | Third-party Insurance Policy |
|---|---|---|
What is it?
| It is a wide-ranging, inclusive cover that offers the insured protection for the damages caused to the car as well as covers for third-party liabilities. | An ‘act only cover’ is a type of liability insurance purchased by the owner of the automobile, for protection against the claims of a third-party in case of damages and losses suffered during an accident. |
Premium price
| It is higher than third-party insurance due to higher coverage and benefits. | The premium is one of the lowest amongst the different kinds of car insurance policies available in the market. It is determined by the Insurance Regulatory and Development Authority of India (IRDAI). |
Customisations
| There is scope for customisations in the form of add-ons such as Road Assistance, NCB Protect, etc. | There is no scope for customisation. |
Advantages
| Covers both own damages and third party liabilities. Also, the insured can claim a No Claim Bonus at the end of the term in case there have been no claims made against the policy. The insurance policy will also provide basic legal assistance (including basic investigations and verifications) to the insured. | It covers all damages to the property of the third party and any form of bodily injuries. |
Limitations
| The policy does not cover wear and tear costs at the time of settlement of claims. Nor does it cover damages caused due to wear and tear of the car over time. Also, certain vehicle parts and associated damages such as fibre and rubber are not fully covered by this insurance. | There is no choice involved regarding the purchase of this policy. It is mandatory. Also, it does not cover own damages. |
Coverage details
| Offers coverage for eventualities such as theft, fire, damage caused to or by third parties, riot damage, arson or vandalism, natural disasters etc. | The third-party eventualities covered under the policy are –
|
Who should opt for it?
| It can be opted for by almost everyone. However, those individuals who have little use for their car or are using a very old car needn’t purchase this. | It is mandatory for all car owners as per the Motor Vehicles Act, 1988. |
Benefits of Comprehensive Policies
The following benefits are offered in comprehensive car insurance by the insurer –
- It covers both own damages and third-party liabilities.
- One can opt-in,third-party for add-ons to enhance coverage of the policy.
- Some insurance companies offer the insured the privilege of customising the Insured Declared Value (IDV) i.e. the market value of the car.
- It protects the automobile from natural disasters such as floods, earthquakes, storms, etc.
- It also offers compensation in case of theft of the vehicle.
- It also offers compensation in case of vehicle damages due to fire.
Exclusions in Comprehensive Policies
Some standard exclusionary clauses under comprehensive policies are –
- The vehicle was being used for any illegal purpose at the time of the accident.
- The damages and losses were suffered during a war or nuclear attack.
- The accident was caused as a result of consumption of alcohol or other intoxicating substances.
- The person driving the car was either underage or lacked a valid driver’s license.
- The damages were caused as a result of consequential damages that occurred after the occurrence of the actual accident.
- The damages are a result of contributory negligence i.e. the insured has not exercised caution/due care.
- The vehicle is stolen thereafter and is not in the possession of the insured.
- The accident was premeditated.
Benefits of Third-party Policies
The benefits that accrue out of third-party insurance are as follows –
- Helps the insured drive legally on the roads and by extension frees them of any adverse legal repercussions. For example, it protects the pocket from hefty penalties or traffic fines.
- It has a very quick and easy process for purchase.
- The coverage offered is affordable.
- It prevents the insured from facing any financial stress arising from an unforeseen incident.
Exclusions in Third-party Policies
- Third-party insurance will not cover own damages i.e. damages caused to the vehicle of the insured or if the insured has suffered some bodily injury to him/herself.
- In situations where property damages arise, the insurer will cover a maximum of INR 7,50,000. All additional costs will be borne by the insured.
- The vehicle was being used for any illegal purpose at the time of the accident.
- The accident was caused as a result of the consumption of alcohol or other intoxicating substances.
- The person driving the car was either underage or lacked a valid driver’s license.
- The vehicle is stolen thereafter and is not in the possession of the insured.
- The accident was premeditated.
Summary
A comprehensive car insurance policy is full of promises – it offers coverage for own damages, provides compensation in case of theft and natural disasters, and a chance to customise the IDV and the policy through add-ons. An upgrade to this policy is definitely worth considering if you would like to offer your favourite car improved protection.
