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Third-party insurance Vs Comprehensive insurance

Choosing the right insurance policy for your vehicle is very important. The government of India has made it mandatory for all vehicle owners to possess basic third-party insurance while driving. Not possessing one may lead to serious consequences including a hefty fine and the suspension of one’s driving license. Owing to the mandatory law, most insurance providers in India offer two insurance policies - Comprehensive insurance and Third-party insurance.

What is a Comprehensive insurance policy?

Comprehensive Insurance, as the name suggests, offers extensive coverage that covers both third-party liabilities and own damage. Though this policy is slightly expensive when compared to a third-party policy and is not mandatory, this has been the  most preferred insurance among vehicle owners, due to its exhaustive coverage.

The policy provides your car with utmost protection, in case of an unfortunate event. It covers all the financial and legal consequences including damages and losses caused to any third-party person or property along with the damages and losses caused to you and your own car. Own damage also includes any damage occurred due to a natural calamity like floods, earthquake, fire, vandalism, etc. which saves you from bearing any financial burdens.

Apart from the coverage, an additional advantage is the benefit of NCB i.e., No-Claim Bonus, incase of the car owner not making any claims during the policy year. This can be claimed at the time of your insurance policy renewal. The policy is customizable, so you can include a couple of add-on covers, as per your requirement like the zero-depreciation cover, engine, and gearbox protection, return to invoice, breakdown assistance, etc.

The premium for the comprehensive insurance policy depend on a number of factors such as the city you drive in, your car’s make and model, and the add-ons you choose if any. Though this is slightly expensive, the comprehensive policy is totally worth it for it saves you from a lot of financial and legal troubles..

What is a Third-party insurance policy?

A third-party insurance policy is the most basic insurance policy that provides coverage for any and every liability that includes damages or losses caused to a third-party - person or property. In case of an accident, the insurance policy protects you from any financial or legal complications that arise out of it. This policy has been made mandatory by the government of India to ensure road safety and in a bid to protect the interests of any person involved in an accident. In addition to this, the policy also provides a personal accident cover to protect the vehicle owner from any physical injuries or death.

Though this policy is mandatory, it doesn’t cover losses and damages that occurred to your vehicle. Further, unlike a comprehensive plan where you can customize your policy with add-on cover, the third party has no such provisions. One of the major advantages of a third-party liability policy is that it is a lot cheaper than a comprehensive car insurance policy and the premium amount is determined by the IRDAI. So, if you are one of the people who drives rarely or owns a very old car, then a third-party insurance policy would be sufficient.

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