We often hear about car insurance, but at times it can be quite confusing, especially for a novice. Well, that’s not a problem! In this blog, we will break down everything in a bit so that even a child can understand what comprehensive car cover and third-party car cover mean. Also, they will help you understand how the two are unrelated to each other.

What is Car Insurance?

This brings us to the types of car insurance, but first, let’s get a little more basic. Car insurance is like a little drop of Vaseline on a burning torch. Just like you can stay safe by wearing a crash helmet while riding a bicycle, car insurance serves a similar function in case something goes wrong for you and your vehicle, for example, an accident. Car insurance can help in such situations as it can reimburse the policyholder for the expenses incurred in repairing his vehicle or the damage caused to another party’s vehicle.

Having defined what car insurance covers, you are now ready to know its two important components:

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What is Comprehensive Car Insurance?

Comprehensive packages available in the insurance market are like the best armour for your vehicle. It protects you from some problems, not just accidents. For example, when you are travelling in your car, a situation arises that you never imagined. Maybe a tree branch breaks and falls on your car or it gets stolen, or it even catches fire. In all these scenarios, comprehensive insurance cannot help!

It is time to explain the meanings of the factors included in comprehensive auto insurance in detail:

• Accidents – Comprehensive motor insurance handles repairs when the vehicle concerned is involved in an accident that causes damage to the vehicle.
• Theft – This is the situation when the damage to the car is compensated by the insurance company by replacing it with another vehicle.
• Fire – If the insured motor vehicle catches fire, the safety net will repair the car again.
• Act of God – If your car gets damaged due to a lightning strike somewhere, or even due to a storm, you can rest assured that you will not have to worry about the expenses of such repairs.
• Vandalism – If your car is keyed or its windows are broken, comprehensive auto insurance will pay for such vehicle repairs.

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What is Third-Party Car Insurance?

Third-party auto insurance protects other people and their belongings rather than the policyholder. For example, third-party insurance can be used to reimburse expenses incurred in case of being involved in an accident in which another person’s vehicle is damaged or someone is injured. On the other hand, it will not cover the repair of one’s car.

Let’s take a look at the details of a third-party insurance car policy.

• Damage To Another Car – If a person takes a third-party cover and in case of an accident that damages another person’s car, he will be compensated for the repair of the other person’s car.
• Injury To Someone Else – This type of insurance also pays for injuries to outside parties in cases where the insured is involved in an accident and someone gets injured.
• Property Damage – Expenses incurred in case one’s property such as a neighbour’s house burns down, which is covered by third-party insurance if someone does so by accident.

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Key Differences Between Comprehensive and Third-Party Car Insurance

Now that you know what both types of car insurance are, let’s compare them to understand the differences.

Comprehensive Car Insurance	Third-Party Car Insurance
Covers damage to your car	Only covers damage to other people’s cars
Includes theft, fire, and natural disasters	Does not cover theft, fire, or natural disasters
Protects against vandalism	Does not protect against vandalism
Helps repair your car after an accident	Does not cover damage to your car
More expensive than third-party	Cheaper than comprehensive insurance

 

Which One Should You Choose?

The decision to choose full or third-party car insurance varies with individual needs, the person’s vehicle and financial allocation. Let’s take a look at some aspects that will help you decide.

Value Of Your Car

When it comes to buying a new or expensive vehicle, it is advisable to take comprehensive coverage insurance and a full coverage policy. This is because it will allow you to repair or retrieve your vehicle in cases of damage, theft or destruction.

Whenever you have an old respectable car that is not too expensive, third-party insurance may be enough. Since it is less expensive, it will help you set aside some cash to pay for other expenses while protecting others in case of an accident.

Your Budget

Comprehensive insurance costs more as it offers more features. If your resources allow it, it is recommended that you take comprehensive insurance for total coverage.

If your intention is to find the cheapest option, you can choose third-party insurance that is less expensive and still meets the minimum legal requirements.

Your Driving Habits

For people who have extensive driving experience or who live in busy cities, comprehensive insurance would be a better option as it also includes protection against accidents, theft, and disasters.

When a person drives less and is confident of being a safe driver, third-party insurance may be enough to cover the risks he may cause to others.

Why Do You Need Car Insurance?

At this point, you might be wondering what is the need to have car insurance. So let’s take a look at some aspects of why it is important:

• Legal Requirement – ​​In many countries, it is mandatory for a person who owns a car to have at least a third-party insurance cover. This means that in case of an accident, a person without insurance coverage may face legal problems.
• Financial Security – Car repairs are not cheap! If you are involved in an accident and do not have insurance, you will have to bear all the costs and this can cause you a lot of trouble. Insurance provides you with relief from this.
• Peace Of Mind – Having a car insurance policy helps reduce the stress associated with the fear of ‘what if something goes wrong’. Whether it is a fully comprehensive cover or only a third party, insurance seamlessly provides reassurance while driving.

What is Not Covered by Comprehensive and Third-Party Insurance?

While both comprehensive and third-party car insurance protect you in different ways, there are some things that neither type of insurance will cover. Here are a few things that usually won’t be included:

Wear and Tear – Insurance won’t cover the regular maintenance or wear and tear of your car. This includes things like worn-out tires, old brakes, or oil changes.

• Driving Under the Influence – If you cause an accident while driving under the influence of alcohol or drugs, insurance companies might refuse to pay for the damages.
• Racing or Illegal Use – If you use your car for illegal activities, like racing on public roads, insurance won’t cover you.
• Using Your Car for Business – If you use your personal car for business purposes without telling your insurance company, you might not be covered if something happens.