Comprehensive plans provide a No Claim Discount in premium for a complete claim free year.
Since a third-party motor insurance plan is mandatory to ply your vehicle on the Indians roads, there are fines for non-adherence to it as well. Insurance has also gained importance in India over the last decade with motor insurance accounting for 36.5% of the overall industry. This has also been expedited by the strict enforcement of mandatory motor insurance norms by the Government and the IRDAI.
There has been quite a lot of changes in the norms in the last few years regarding third-party coverage and comprehensive coverage especially for new cars and bikes. Long term motor insurance plans have been withdrawn but bundled plans for new vehicles are still being followed.
Before mulling over the difference between the two basic types of motor insurance plans, let us understand each one individually.
Features of Third-Party Motor Insurance Plans
- The coverage is mandated by the Government of India
- Covers damages to a third party vehicle, property or person for whom you would be legally liable to make a payment
- The premium is determined by the Insurance Regulatory and Development Authority of India (IRDAI). It is also reviewed regularly by IRDAI and updated every financial year.
- The premium is low and depends on the engine capacity of your vehicle.
- No other coverage is provided under standalone third party plans except personal accident coverage.
On the other hand, comprehensive plans are way more friendlier as it not only provides own vehicle coverage, but also allows you to customise it with a host of additional benefits!
Features of comprehensive motor insurance
- This policy provides third party liability coverage as well as own damage coverage to your vehicle due to any natural or man-made disasters or theft.
- Most plans have a host of add-on features which can be opted at an additional cost to enhance the coverage of the vehicle. The most common add-ons include engine protection for damage to engines due to water logging, zero depreciation, return to invoice, etc. The add-ons vary from plan to plan and needs to be chosen wisely.
- Comprehensive plans provide a No Claim Discount in premium for a complete claim free year.
Basically Comprehensive Plans are a niche higher than Third Party as it includes Third Party liability + Own Damage and hence priced higher as well. The most obvious differences are:
Which one should you choose?
It is but obvious that a comprehensive vehicle insurance policy is the best bet to provide 360-degree financial protection to your vehicle. The repair costs can be considerable if your vehicle suffers any damage. Moreover, in the case of theft, having a comprehensive policy provides financial relief. A comprehensive policy covers the legal mandate of owning a third party cover and also provides additional coverage for any losses that you suffer from respect to your vehicle.
Though the third party policy fulfils the legal mandate and has a low premium, it does not extend coverage for any damages to your vehicle. If you suffer such damages, which might be probable, you would suffer considerable out-of-pocket expenses, especially in case of theft. The expenses incurred would far outweigh the saving in premium.
Pro Tip: If you use your vehicle sparingly or if the vehicle has become very old, a third party policy would do the trick. In that case, you might skip the comprehensive cover and opt for the mandatory third party policy.
In all other cases, go for a comprehensive policy for all-around protection and to reduce your out-of-pocket expenses.
(By Dhirendra Mahyavanshi, Co-Founder, Turtlemint (An InsurTech Company)