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When should you switch from third party to comprehensive car insurance?

Vehicle insurance is required in India when operating a vehicle, according to The Motor Vehicles Act.

When should you switch from third party to comprehensive car insurance?
You must have understood how comprehensive insurance can be a better option than third-party insurance.

Car insurance is not a document that should be taken lightly. Rather it should be given the same place that a person gives their driver’s licence or car registration papers. If any person, at any point, is found driving their vehicle without proper insurance, there are severe penalties that they would have to face. The Government of India has made having at least third party car insurance mandatory; however, there were still a lot of individuals who were not paying heed to this requirement and were driving without insurance. Thus, the Government introduced stricter penalties for traffic rule-breakers. 

Now, if you talk about general human psychology, people usually want to get away with doing the bare minimum. When people were told they needed to have at least third-party car insurance, they did not want to know their options beyond it. That option worked for them as it was one they paid the least for. They did not even want to consider how comprehensive insurance could help them. However, people with third-party insurance will feel the need for comprehensive insurance when they are in need.

Let us look at an example. Mr Mahesh bought the mandatory third-party car insurance for himself. He was happy with his insurance as his premiums were lower than what he would have to pay for comprehensive insurance. However, he could not turn to his insurance for assistance when he was implicated in an accident where his car was severely damaged. He only received help where third-party liability was concerned, however, he had to bear the burden of repairing his car alone. It was then that he regretted not getting comprehensive insurance for his car. 

Keeping this scenario in mind, let us look at third-party and comprehensive insurance. 

What is Third-Party Car Insurance?

Car insurance is required in India when operating a vehicle, according to The Motor Vehicles Act. It pays third parties back for losses or damages brought on by the covered four-wheeler. The most common and mandatory form of car insurance is third-party coverage. It offers financial support if you cause harm to a third party or harm their car or property. For instance, if a third party’s vehicle were harmed in an incident involving your car, this plan would pay for the repairs.

What is Comprehensive Car Insurance?

As the title implies, this policy’s coverage is more robust and extends beyond the Third-Party insurance’s more limited parameters. Any harm to your car resulting from an accident or other event is included here, in addition to the standard coverage to a third party. The possibility of your car being damaged or suffering a loss is just as likely as that of the opposing party in any accident. Any car owner does not relish the idea of taking their car to the shop and paying a hefty repair charge. Therefore, having a policy that protects your vehicle might be very reassuring.

Comprehensive Car Insurance vs Third-Party Car Insurance

If you wish to know the difference between comprehensive insurance and third-party car insurance, you can look at the points below. They will help you better understand what to expect when buying either. 

  • Coverage- Comprehensive insurance includes many events, including theft, natural disaster damage, accidents, and mishaps. It pays for these damages to your car and those of a third party in a collision. Third-party insurance protects you from taking on financial responsibility if you have caused a collision, causing damage to a third-party person or property. 
  • Prices- The rates of a third-party car insurance policy are annually determined by the Insurance Regulatory and Development Authority of India (IRDAI). However, the rates for comprehensive insurance are determined by the kind of car you are driving, the IDV, the cubic capacity of the vehicle and the location where the car is being driven, among other things. 
  • Compulsion- There is no compulsion to buy comprehensive car insurance. People who buy this plan generally do so because they understand the benefits. However, having at least third-party car insurance is compulsory. 

Why Should You Buy Comprehensive Insurance?

You must have understood how comprehensive insurance can be a better option than third-party insurance. However, if you are still in doubt, there are some ways in which comprehensive insurance is better than third-party insurance. 

  • Rates- One may argue that the cost of third-party insurance is lower than comprehensive insurance. But with the extension to the limit of coverage, comprehensive insurance is a much better value for money. 
  • Price Reductions- It is possible to get some price reductions when buying comprehensive insurance in the form of NCB, voluntary deductibles and installing anti-theft devices in your car. However, there is no scope for discounts when buying third-party car insurance. 
  • Customisations- You can customise your comprehensive plan per your requirements with a bevvy of add-on plans. These add-ons increase the safety of your car and provide you with a greater degree of protection in times of need. However, third-party insurance does not allow any degree of customisation. 
  • Risk- Your car is protected from a greater degree of risk when you have comprehensive insurance compared to third-party insurance. 

Conclusion

Having car insurance can save you from traffic fines, but driving on Indian roads is much more than just staying in your lane and dodging the cops’ attention. And just in case you get into an accident and wreck your car, only having comprehensive car insurance can save you. It can pay for your repairs as well as for any third-party liability that might occur. Thus, having comprehensive insurance can prove to be a great help to you in the long run. 

Disclaimers: 

  1. This article has been produced on behalf of Tata AIG
  2. All the people mentioned in this article are fictional, and all the examples have been incorporated as case studies. Any resemblance to a real case/person is purely coincidental and completely unintended. 

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