Buying the most basic car insurance plan, i.e. a Third-party Liability policy, helps you be on the right side of the law. It is also cheaper and helps you avoid fines. But is choosing a plan that offers only partial coverage sufficient? Should you go for an extensive car insurance policy even if it is expensive? The following article aims to answer such questions. Especially the most important one, is buying a Third-party car insurance policy really useful? Let’s weigh the available options and search for a concrete answer.
First, let us explain what you get by opting for only the Third-party policy.
What does Third-party Car Insurance mean?
A third party is anyone apart from you (the car owner is the first party) and your car insurance company (the second party). For example, a person riding a bicycle, a pedestrian, drivers of other vehicles, hawkers, etc.
There could be a situation when you accidentally cause harm to such people. You could also damage their property (vehicles, homes, farms, etc.). If that happens, and if you are at fault then you must bear the cost of treatment or compensate them for loss.
Sometimes, the monetary damage could be in lakhs of rupees. For example, say you accidentally hit a person whose net worth is 50 lakh rupees. He died in the accident, and now you must pay compensation to his family.
The Motor Accident Claim Tribunal will decide the compensation amount, and it can amount to crores of rupees. This is where your Third-party Car Insurance Policy comes into the picture. Under this policy, your car insurance company will bear the cost on your behalf.
List of coverages that Third-party Car insurance offers
Here is a list of coverages that a Third-party Car Insurance policy offers.
1. Coverage for Third-party death/disability
It is a catastrophic event when there’s a death in the family due to an accident. While nothing can fill the void, you as a car owner can at least offer fair compensation. The coverage for the death/disability of a third party is available under this plan.
2. Third-party treatment costs
Accidents can lead to injuries that require medical attention and expensive treatments. Your Third-party Car Insurance Policy will bear related costs on your behalf.
3. Legal liabilities of the car owner
Accidents can result in legal disputes. You will need a legal professional to deal with such disputes. Your insurance company would bear this expense if mentioned under the policy terms.
4. Personal Accident Insurance
It is necessary to buy a separate Personal Accident Cover with your basic Third-party policy. This is an accident cover for the car owner i.e. you. It offers death/disability benefits of up to Rs. 15 lakhs.
Note that nowadays it has become very easy to buy third-party car insurance online.
What are the downsides of buying only a Third-party Car Insurance plan?
Buying only a Third-party Car Insurance Policy has some major drawbacks. Here is a list.
- You must bear the repair bill for your car – The main purpose of car insurance is to reduce your financial loss in case of accidents. But opting for only the basic coverage will expose you to major losses if your car gets damaged. You pay the entire repair bill in this case.
- No coverage for car theft – Since your car is not covered under a Third-party Liability plan, you cannot file a car insurance claim for compensation if it gets stolen. You would just file a police complaint and hope that you find the car in a decent condition.
- You can’t customise a Third-party insurance plan – The Insurance Regulatory and Development Authority (IRDAI) decides the cost of a Third-party Car Insurance Policy. Insurance companies cannot change its cost. Thus, they also cannot provide discounts, customisations, or offers of these plans. Neither can you customise the coverage to suit your needs.
Why should you consider Comprehensive Car Insurance?
You should consider buying a Comprehensive Car Insurance Policy for the following reasons.
1. Extensive coverage
While a Third-party policy covers you against third-party liabilities, it does not cover your car. You must bear all the repair bills. But if you opt for a Comprehensive policy, your insurer will bear car-related damages as per policy, including coverage for third-party liabilities
2. Option to customise
IRDAI states the terms of a third-party policy and insurance companies cannot make changes in the coverage. However, insurers can do so with a Comprehensive policy. Car insurers provide additional coverages like Zero Depreciation Cover, Roadside Assistance Cover, Key Replacement Cover, etc. Know more on car insurance add-ons.
3. Competitive prices
At ACKO, car insurance plans like Comprehensive – Super Saver and Zero Depreciation – Smart Saver offer maximum coverage at an interestingly low premium.
4. Option to compare plans
Comparing car insurance plans before buying a policy will help you choose the best possible option. You can compare coverages, exclusions, additional features, and premium. Then buy the policy that you think is the best as per requirements.
Comprehensive Car Insurance comes with a lot of discounts. For example, you can avail of the No Claim Bonus (NCB) upon renewal when you refrain from raising claims. The trick is to judge if losing the NCB is worth it in case there is minor damage to the car.
While you can buy a policy from multiple sources, the easiest way is to buy car insurance online.
Also, read: Comprehensive vs Third-Party Car Insurance
A Third-party Car Insurance Policy is a must-have as per the legal requirements of owning a car. But it is also true that opting only for this basic plan is not beneficial in case you face car-related damage. Thus, comes into the picture an extensive plan, Comprehensive Policy, that offers not only third-party coverage but also Own Damage (damage to your car). Plus, you can customise a comprehensive plan and get offers and discounts on premiums. So, consider opting for a Comprehensive Car Insurance Plan if you are looking for holistic coverage.
Frequently asked questions
Following are some common questions related to Third-party and Comprehensive Car Insurance Plans. Please write to us at [email protected] if you have more questions.
Which is the least expensive car insurance plan?
A Third-party Liability Policy is the least expensive car insurance plan. It also provides the least amount of car insurance coverage to the car owner.Is it legal if I drive a car with only a Third-party policy?
Yes. Buying at least a Third-party Car Insurance Policy is necessary if you want to avoid fines. However, opting only for a basic policy will expose you to financial liabilities if your car suffers damage. What does a paid driver mean in car insurance and can I add a paid drive in a Third-party Car Insurance Policy?
The professional appointed to drive your car is a paid driver. You can add them to your car insurance policy. This will allow you to claim in case of major injuries to the driver. Yes, a paid driver can be added to a Third-party Car Insurance Policy under the Personal Accident Cover.What types of car insurance plans are available at ACKO?
ACKO offers both types of car insurance plans — Third-party Liability Insurance and Comprehensive Car Insurance. Additionally, you will find specially customised plans like Zero Depreciation – Super Saver, Comprehensive – Super Saver, etc. These provide extensive coverage while saving some extra bucks.What are some major exclusions of Third-party Car Insurance?
Exclusions are situations that are not covered under your car insurance policy. Here is a list of some important exclusions of car insurance plans.
- Any damage to your car is not covered under a Third-party Policy.
- Fraudulent claims
Please go through your car insurance policy for a full list of exclusions.
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