5 Reasons Why Comprehensive Car Insurance Costs More Than Third Party Liability Policy

Posted on: Oct 10, 2022 | | Written by:

5 Reasons Why Comprehensive Car Insurance Costs More Than Third Party Liability Policy

Published on October 07, 2022. EST READ TIME: 3 minutes

Comprehensive Insurance Costs More Than Third Party insurance

You bought a car recently and are contemplating whether to opt for a comprehensive car insurance policy or a third party car insurance policy. Both policies offer protection to your car albeit in different ways. Though you should buy insurance for your car, choosing the right one can make a world of difference. And we say the right one because the policy premium can be a deciding factor for a lot of potential buyers.

A comprehensive car insurance policy is usually a bit more expensive than merely third party insurance policies. And there are a few reasons for the same. Here, we explore all those reasons why comprehensive plans are more expensive than third-party policy plans.

1. Built On Third Party Insurance

Comprehensive car insurance plans are built on top of third party insurance plans. In other words, whenever you opt for a comprehensive plan, you get the benefits of a third party liability policy as default. And comprehensive plan offers a bit more coverage. Thus, the premiums are higher.

2. More Coverage

Apart from the benefits of a third-party liability policy, a comprehensive plan offers coverage for your own damage. Simply put, the plan lets you claim damages to your car, either due to your mistake or someone else’s mistake. Thereby offering added protection to your car.

3. Add-Ons

One of the biggest perks of a comprehensive car insurance policy is that you can opt for add-ons. These are essentially additional features or coverage that you can plug along with your policy. And you must pay a small premium to add these to your plan. Though you pay a small premium, the benefits can easily outweigh the premiums.

4. IDV

The policy premium for third-party liability policy is decided by the IRDAI. It is based on the engine capacity of your car. However, that is not the case with comprehensive plans. They consider the IDV of your car. The IDV is the current market price of your car, and the insurance premium is majorly based on it. A higher IDV can result in a higher policy premium and your premiums can do down with a lower IDV.

5. Protection Against Disasters

A comprehensive car insurance policy offers your car protection against natural calamities. If there are any damages to your car due to calamities such as cyclones, earthquakes, landslides, etc. you can claim the policy for repairs. Similarly, it also offers protection against man-made calamities such as strikes, vandalism, theft, etc. The added coverage on top of third party liability policy warrants the additional premium.

Difference Between Comprehensive Plan and Third-Party Liability Plan

Apart from the obvious price difference between both the plans, there are a few other differences between them as well. Here are the most prominent ones.

• Coverage

A third-party liability policy offers the most basic coverage. In the event of an accident involving third-party individuals or vehicles, the policy offers financial and legal assistance to the insured. It covers for the damages to the vehicles as well as injuries or even death of any third party individual as well.

A comprehensive plan offers the above and covers damages to your vehicle as well. The damages could be due to accidents, natural calamities, or man-made calamities. Thereby offering more extensive coverage for your car.

• Shortcomings

A third-party liability policy does not offer coverage for your car. Though it offers you protection against damages and injuries to third-party vehicles, individuals, or properties.

If policy premium is your only criterion for choosing a car insurance , policy then a comprehensive plan is a bit more expensive than a third-party liability policy.

• Customization

A third-party liability policy is standard. You cannot add any kind of customization to the policy.

On the other hand, you can make a lot of customizations in your comprehensive policy. There are a lot of add-ons to choose from, that you can use along with your policy. Some of the more popular options include zero depreciation cover, engine protection cover, roadside assistance cover, etc.

• When To Buy One

Third-party liability policies are ideal when you are driving a very old car, or you use your car sparsely. The coverage on offer might just suffice your needs and requirements.

A comprehensive plan is ideal if your car is relatively new or you drive a fair bit every year. Also, if you do not claim your policy during its tenure, you stand to get the NCB or no claim bonus. This discount can help you reduce your policy premiums during renewal.

• Theft

A third party car insurance policy will not offer you any sort of compensation if your car gets stolen and cannot be recovered. If your car gets stolen and it cannot be recovered, the insurance provider will compensate you with the IDV of the car.

• IDV Customization

Third party car insurance policies do not rely on the IDV of the vehicle. The IRDAI decides the premium for third-party policies every year, based on some factors like inflation and claim-related statistics.

A comprehensive car insurance policy allows you to play around with the IDV of the car. As a policyholder or potential policy buyer, you can change the IDV and see how that impacts your policy premiums, before buying a plan. A lower IDV can lower your policy premium but it can have consequences later.

• Advantage

A third-party car insurance policy offers financial and legal assistance if you meet with an accident involving third party individuals or vehicles. Ensuring that you do not have to pay for those expenses out of your pockets. A comprehensive plan, on the other hand, offers the above and covers its own damage. The extensive coverage makes sure that you do not have to pay for damages to your car as well. Thereby saving you money in the long run. Once you decide to buy a comprehensive car insurance policy, buying the policy online can make things much easier for you. It will help you compare policies and save a considerable amount of money. Also, buying online eliminates insurance advisors, which further helps in reducing the policy premiums.

Conclusion

Comprehensive car insurance policies are a bit more expensive than third party car insurance policies for the above-mentioned reasons. They offer a lot more from the perspective of car coverage. Apart from better coverage, they allow policyholders to customize the policy as per their needs. And improve the policy coverage with the help of add-ons. The limited coverage of third-party liability policy results in the policy premiums being more affordable. People looking for a policy that offers them a complete peace of mind as car owners should consider buying a comprehensive car insurance policy.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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