It is mandatory for every vehicle in India to have a valid insurance policy. There are several factors one needs to keep in check while choosing any insurance policy including the level of coverage one requires.
Insurance companies provide two different types of insurance plans keeping in mind the level of coverage required- Comprehensive and Third Party Insurance.
Comprehensive insurance vs third party insurance is a topic of constant debate, and so this article deals in clearing the difference between third party and comprehensive insurance.
Third party insurance is exclusively for the damage done to the third party, while it in no ways benefits the insured or the insurance company. It is mandatory vehicle insurance as per the Motor Vehicles Act of India and covers the legal liability of the insured for the injury or damage to the third party.
As per the guidelines issued under 3rd party insurance, the third party can file a case against both the insured (the policyholder) as well as the insurance company for any injury, death or any damage done to the property or vehicle. However, this is applicable only if the damage is done by the vehicle issued under the name of the policyholder. The upper limit for the damage done to the property or vehicle of the third party has been fixed at INR 7.5 Lacs while no bar has been kept on the compensation claimed in case of an injury or death.
One should note here that third party does not cover any cost of damages to the insured’s vehicle or the insured itself in the event of an accident. Also, if the insured’s vehicle is stolen or demolished, the insurance company will not pay any cover for it under this scheme.
What is the difference between third party and comprehensive insurance?
As the name suggests, a comprehensive insurance covers all aspects of damage done to a vehicle. It is the highest level of protection you can have for your vehicle as it provides protection cover to damages done to your car which is not at all related to any accident or collision.
It also provides coverage for the injury caused to the occupants in both vehicles along with the damages caused to the third party by your vehicle. This is an extensive policy and its cover includes damage to insured’s car, theft, legal liability to a third party and personal accident.
Not many know but one major difference between third party and comprehensive insurance is that the former protects you only for the damages your vehicle incurs to another person’s vehicle with no policy of covering your own vehicle while the latter provides extra benefits including the ones coming with the third party insurance.
Another factor that highlights Comprehensive insurance vs. Third party insurance difference is that by using third party insurance user gets entitled to limited number of benefits. However, if the same person increases the premium and becomes a part of comprehensive insurance, it gives him all major benefits of comprehensive insurance.