What Is Comprehensive Motor Insurance Policy?

A comprehensive motor insurance policy offers financial protection against any loss/ damage caused to the insured vehicle, as well as to a third-party individual or their property.

What Does It Cover?

  • Own Damage

    A comprehensive policy provides coverage for the damages caused to your insured vehicle because of unforeseen events like \an accident, theft, etc. Here, the maximum amount the insurance company will pay will depend upon the Insured Declared Value (IDV).

  • Third-Party

    Any injury to a third party person or damages to the property of a third party is also covered under a comprehensive policy. In case of injury or death of a third party, the amount that the insurer will pay to the third party or their family will be decided by the court. There is no upper limit for the same. And in case of damage to the third-party’s property, the amount that will be compensated cannot exceed the limit of Rs. 7.5 lakhs.

  • Add-Ons

    A comprehensive policy allows you to opt for several add-ons that provide extra protection to the vehicle. You can opt for add-ons like Zero depreciation cover, Engine Protector, Roadside Assistance cover, No claim bonus protector, Return to Invoice Cover, etc. with a comprehensive policy.

  • No Claim Bonus Discounts

    For every year you don’t make a claim, a comprehensive policy will offer a No Claim Bonus discount on the premium amount.

What Is Not Covered?

  • Wear And Tear

    Any damages caused to the vehicles due to the factors like ageing, or wear and tear etc. is not covered.

  • Drink And Drive

    Any damages that occur because the driver of the vehicle is under the influence of alcohol are not covered by the insurance company.

  • Consequential Damages

    Claims arising out of consequential damage to the vehicle are not covered.

    Meaning, suppose Akshay’s car breaks down in the middle of the road and requires to be towed to a garage. The tyres of his vehicle got damaged due to rear towing. The damage to the tyres will be considered as a consequential damage and will not be covered by the policy.

  • Driving Without A Valid Licence

    The insurance company will not cover any loss/ damages if the person driving the vehicle does not have a valid driving licence.

  • War And Other Activities

    Damage caused due to war, terror attack, civil war, radiation, nuclear material/weapons, etc. are not covered under a comprehensive insurance plan.

  • Vehicle Being Used For Any Other Purpose

    If you use the vehicle for any other purpose apart from the one specified in the insurance certificate,damages will not be covered.

    So, these are some situations that are excluded under a comprehensive insurance policy.

    Please note, the list of exclusions we have shared above is not exhaustive. So, ensure you check the policy wordings before you go ahead and make the purchase.

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What Is A Third-Party Only Policy?

As the name suggests, a third-party only policy offers protection against loss/ damage caused to the third party individual or property. As per the Motor Vehicles Act, 1988, it is mandatory to have a third-party policy.

What Does It Cover?

  • Death Or Bodily Injury To The Third Party

    A third-party only policy will provide coverage in case of death or permanent disability to the third party.

    For instance, you hit Arjun's car while driving. Arjun gets severely injured. He passes away while on the way to the hospital. In this case, the third-party policy which you have purchased will pay compensation to Arjun's family.

  • Damage To Third-Party Property

    The policy provides protection against any damages caused to the property of the third party, like their vehicle, shops, boundary wall, etc.

    Suppose Raj has purchased a third-party insurance plan for his bike. While he’s on his way to work, his bike hits Gaurav’s car. In this case, the insurance company will compensate Gaurav for the damages caused to his car as per the limits mentioned in the policy.

What Is Not Covered?

  • Own Damage

    Any damages caused to your own vehicle will not be covered.

    For instance, Kinshuk’s car meets with an accident. He damages a shop’s gate as well as his car. In this case, the third party will only cover the shopkeeper’s damages - and not pay for the expenses Kinshuk will have to incur to repair his car as the policy is a third-party only policy.

  • Limitations As To Use

    For the claim to be payable under a third-party insurance policy, every vehicle needs to operate within the 'limitations as to use'. These are limitations on the use of the vehicle other than their purpose. Here are a few examples to help you understand better -

    Car given out for hire: If any loss/ damage occurs when the car has been given out for hire is excluded.

    Carriage of good: If the vehicle is used for carriage of goods, except personal luggage in case of a private vehicle and suppose any damages occur at that time, they will not be come under in third-party insurance policy.

    Organised Racing: When the vehicle is used for organised racing contests and the vehicle gets damaged, the costs won't be covered.

    Pace Making: If the vehicle gets damaged when it is used for setting a pace for race competition, the insurer won't pay for the damages.

    Speed Testing: Using the vehicle for testing the speed and damages caused at that time will not be covered.

    Reliability Trials: When the vehicle is used to test the driver for his skills and it is damaged, the cost of damage won't be covered by the insurer.

    Trading Of Vehicles: Using the vehicle for any purpose in connection with trading of vehicles is not covered under a third-party insurance plan

  • Driving Without A Driving Licence

    Accidents caused when the vehicle is driven by a driver without a valid driving licence are not covered.

  • Accident In The Course Of Employment

    If death or disability has occurred to an employee in the course of employment, a third-party policy won't be liable to pay.

  • Driving Outside The Geographical Area

    If the damage that has occurred is not within the geographical area that is mentioned in the policy document, it will not be covered.

  • Passengers Not Covered

    The insurance company won't compensate for any death or disability caused to any passenger (apart from the employees) travelling in the car under third-party insurance.

  • War And Nuclear Weapons

    Any damage caused to the third-party property or individual due to nuclear weapons or war is not covered under a third-party insurance policy.

    So, these are some situations that are not covered under a third-party insurance policy.

Comprehensive Policy Vs. Third-party Only Policy: What's The Difference?

Parameters Comprehensive Policy Third-Party Only Policy
Definition Comprehensive policy provides protection against own as well as third-party damages. A third-party only policy provides protection against any third-party liabilities only.
Coverage The policy covers any damages caused to the policyholder’s vehicle as well as any damages caused to the third party or their property. This policy covers damages caused to the third party individual or their property only.
Legally mandated It is not mandatory to have a comprehensive policy. It is mandatory to have a third-party insurance policy.
Add-Ons You can choose a variety of add-ons with a comprehensive policy. There are no add-ons available with a third-party only policy.
Premium Premium is higher as it provides a wider coverage. Premium is lower as it provides a limited cover.
Discounts Discounts are available in the form of no-claim bonuses, voluntary deductibles, anti-theft devices, etc. No discounts are available.

So, that is all about comprehensive vs. third-party policy. Hope this article helps you make an informed decision on which type of insurance cover you should buy for your motor vehicle.

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