The primary difference between comprehensive and third-party insurance lies in the type of coverage each offers. A third-party insurance cover protects you against third-party liabilities while comprehensive insurance offers a higher level of protection as an all-inclusive policy.
What Is Comprehensive Car Insurance?
While comprehensive car insurance is considered an all-inclusive policy, it does not cover you in case of a collision. The policy, however, covers your vehicle in case of any losses as a result of:
- Car theft
- Natural calamities
- Windshield damage
- Glass damage
- Fire and explosions
- Vandalism
- Floods
- Civil disturbances
- Falling objects
- Extreme weather such as hurricanes
- Accidents with animals or stationary objects
If you have a comprehensive car insurance policy it may also offer cover for any medical expenses from injuries caused by an accident.
Depending on your insurance provider, you can also opt for add-ons to your comprehensive cover such as engine protector, accessories cover, and zero depreciation cover, among others.
If you have a brand-new financed or leased vehicle, your lender will most likely require you to have a comprehensive insurance cover to protect the asset. Without comprehensive cover, you may have to pay for expensive repairs following unforeseen damages.
Comprehensive car insurance is popular because of its end-to-end coverage which reduces financial strain on the driver’s part. This type of auto insurance pays to repair your car and, in case of a total loss as a result of any of the problems listed, compensates you in full for the value of the car.
Benefits of Comprehensive Car Insurance
- It covers your car’s Damages: The primary goal of comprehensive auto insurance is to protect the car from any damages that may occur as a result of unforeseen circumstances.
- Customizable: Most insurance companies will give you the option to choose which damages to cover when selling you a comprehensive cover.
- Covers damages caused by a natural disaster: Comprehensive car insurance protects your car against damages caused by natural elements even while it is parked in your driveway.
- Covers you in case of theft: Comprehensive auto insurance also protects you against vandalism and car theft.
- Cost-effective: Although comprehensive car insurance might cost you more in premiums, it is still a lot more cost-effective than most policies because it gives you all-around protection and costs you less in repairs.
Limitations of Comprehensive Car Insurance
There are some limitations and exclusions in a comprehensive car policy. These include:
- It does not cover damages caused by wear and tear or depreciation.
- It does not protect some parts of the car which are particularly susceptible to normal aging.
- It does not cover any damages that might occur as a result of events such as war or nuclear attacks.
- Driving without a license
- Drunk driving
- Consequential damages after an accident unless included as add-ons.
- Negligence: This constitutes any behavior that puts your car at unnecessary risk of damage. For instance, driving in a flooded area with prior knowledge that the car might be damaged by the floods.
What Is Third Party Car Insurance?
A third-party car insurance policy is a basic cover that usually compensates for other people’s cars or property in case of an accident. This type of car insurance is usually categorized into two:
- Bodily Injury Liability: This covers medical expenses as a result of injuries to other people involved in an accident but not for the policyholder. This can include lost wages, hospital bills, pain and suffering, and emotional distress as a result of the accident.
- Property Damage: This covers the costs of damages or loss of property as a result of an accident caused by the policyholder. For instance, if you drive into someone’s property they might sue you for landscaping, mailboxes, or other damaged structures.
Benefits of Third-Party Car Insurance
Most states require drivers to have third-party insurance as the minimum requirement to cover bodily injury and property damage liability. Some of the benefits of buying third-party insurance coverage include:
- Legal compliance: Most states including no-fault states have minimum liability coverage. In most cases, a third-party cover is a minimum required to drive legally.
- Protects you against third-party liabilities: The main purpose of a third-party cover is to protect you as the policyholder from any losses or damages caused by your car to a third party. This ensures that you do not suffer financially in case a claim for bodily or property damage is made against you.
- Protects your assets: In case of a claim, the policyholder’s assets such as a home, are safe against any damage claims made by a third party. As a general rule, the more money and assets you have the more you should pay for your third-party liability cover.
- Protects even you in no-fault states: No-fault laws are designed to reduce the amount of money paid out in claims for emotional distress or pain and suffering.
What Is Excluded from Third-Party Car Insurance?
Typically, third-party insurance coverage won’t cover the following scenarios:
Own Damage
A third-party policy only covers third-party liabilities and does not include damage to the policyholder’s car.
Drunk Driving
Like most insurance policies, your third-party insurance policy does not cover you if you are found driving drunk or under the influence of drugs.
Driving Without a License
If you cause an accident while driving without a valid driver’s license, your third-party policy will not cover any damages.
Main Differences Between comprehensive and Third-Party Insurance
| Comprehensive Insurance | Third-Party Insurance | |
| Compulsory | No | Yes |
| Coverage | Coves your car and third-party claims. | Covers only damages caused to another’s vehicle or property. |
| Cost of premiums | Typically costs more than other insurance policies depending on the make and model of your car. | Lower premiums. Typically, the least rates an insurance company can offer. |
| Customization | Customizable depending on the policyholder’s needs and chosen add-ons. | Not customizable. |
| Limitations | Does not cover damages caused as a result of a collision with another car. | Does not cover damages to your car. |
| Key Benefit | Protects you financially in case there is a claim made by a third party and covers any damages to your car as a result of unforeseen circumstances. | This cover protects you financially in case you injure another driver, property, or vehicle so you do not have to pay for damages out of pocket. |
Comprehensive Vs Third-Party Car Insurance, Which One Is Best for Me?
While both comprehensive and third-party car insurance covers have their own benefits and limitations, each of these covers is applicable in different circumstances.
For instance, if you drive an old vehicle, it makes no sense to purchase a comprehensive auto insurance policy.
In this case, you might find a third-party cover is more cost-effective than a comprehensive cover which might end up costing you more than the value of the car in premiums.
If you recently bought a new car, it makes sense to buy a comprehensive insurance cover to protect your new asset.
Drivers with leased and financed cars are also required to purchase comprehensive cover to protect the car against unexpected damages.
Summary
If you are still unsure which car insurance is best for you, we recommend shopping around and comparing rates from different companies. Often you will find that some companies will give you discounts based on your driving history, skills, and other factors.
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