Suppose you want to buy a new car. You go to the showroom and choose your desired model. Along with the car, the dealer sells you a three-year bundled Third-Party Policy. You feel that since this is mandatory, it is enough.
Now a few months later, your car gets involved in an accident and both parties suffer losses. While your Third-Party insurance covers the damages sustained by the other car, it is not going to pay for the heavy expenses to get your own car fixed. This is when you realize that you need to get motor insurance that gives you and your car all-round protection.
A Comprehensive Policy comes to your rescue. As the name suggests, it gives complete, all-inclusive coverage of both first-party and third-party damages.
So how do you upgrade your third-party insurance to a comprehensive policy? Let’s find out!
We’ll begin by understanding the difference between the two types.
What is a Third-Party Insurance?
It is a car insurance policy that has to be purchased mandatorily as per the Motor Vehicles Act, to drive your car in public places. Without this, you will have to suffer legal repercussions. This policy gives coverage only against the damages caused to a third party or their property. Any damages caused to your vehicle will not be covered.
And What is a Comprehensive Policy?
It is a car insurance policy that gives a much broader coverage. It protects you against both your own-damages and third-party liabilities. Besides the damage caused to the vehicle in the event of an accident, it also covers theft of the car and even the accessories. Damage or loss due to fire, floods, vandalism, and other such probable causes are also covered. Situations we wouldn’t normally expect to occur, for instance - riots or civil disturbances, etc. – also come under the scope of a comprehensive cover. Depending on the policy details, there could be more scenarios factored in.
Why Should You Switch to a Comprehensive Policy?
If you are still not convinced about the benefits of a comprehensive policy, the following points will give you a clear reason to go for an upgrade policy.
It Gives You Own-Damage Cover
A third-party policy will protect you only against the damages caused to the third party and their property, and any damages caused to your own vehicle remain uncovered. Whereas, a comprehensive policy will provide you coverage against both own-damages as well as third-party legal and financial liabilities.
It Provides Customization Options
A comprehensive policy gives you an option to add riders to your policy to increase the coverage, and to customise it according to your needs. This option is, however, not available with a third-party policy.
It Minimises Expenses
Any repair work that happens on the vehicle will cost you quite a lot, and if there are accidental damages, the costs may go up. Such repair/replacement expenses will be covered only by a comprehensive policy. Also, in the case of any total loss or theft, third-party-only insurance will not cover the heavy expenses, but a comprehensive policy will provide coverage.
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When is A Third-Party Cover Good Enough?
Although a comprehensive cover is recommended, you should opt for a third-party-only policy, if -
You are looking for just a legal cover that takes care of third-party liabilities without exhausting your savings.
You own an old car and you don’t drive it frequently, and you don’t want to spend a lot of money on its maintenance.
You want a reasonable policy that’s rewarding in terms of cost and premium rate.
Depending on the usage and value of your car, you should decide on taking the cover that suits your needs.
Let’s take an example to understand how both the policies work
Naveen got his new car with a third-party cover because it was available at lower premiums, and it fulfilled the legal requirement to own the basic insurance policy. One day it was raining heavily, and while driving, the car lost its grip on the road and slid across the surface. It got into an accident with Riya’s car, which was insured with a comprehensive policy with some added riders. Fortunately, nothing happened to Naveen and Riya physically, but their cars got severely damaged.
Now let’s take a look at the losses their respective insurance policies covered.
|Naveen With A Third-Party Policy
|Riya With A Comprehensive Policy
|The insurer covered only the third-party liabilities involved in the accident.
|The insurer paid for all the damages her car incurred and replaced the broken stereo system (as a part of her Accessories Cover). The insurance policy also took care of the car engine that got damaged since water seeped into the vehicle (as a part of the Engine Protector Cover she had added).
Therefore, as you can see - as opposed to a Third-Party policy - a Comprehensive plan acts like a total shield against all sorts of possible damages a car can suffer.
So How to Convert a Third-Party-Only Policy into a Comprehensive Policy?
To make an upgrade, you need to follow the below procedure
Inform The Insurance Company
The first and foremost thing to be done is to inform the insurer about your decision to upgrade your policy to a comprehensive one. You can do this by calling them on their toll-free number or by dropping them an email.
After intimation, the insurer will ask you to submit certain documents, like an RC copy of the vehicle, and provide them with your personal details, etc.
Determine The IDV
You will have to inform the insurer about the desired Insured Declared Value (IDV) that you want to select for the vehicle. IDV is the approximate current market value of your car. The cover amount of your car insurance policy will be based primarily on your car’s IDV. Also, discuss the add-ons/riders that you wish to add to the comprehensive policy.
After the insurance company has received all your details, they will verify the same and calculate the premium according to the coverage selected by you.
Before making the premium payment, the insurer will require your vehicle to be inspected in order to check the condition of the vehicle. The inspection can be scheduled as per your convenience and the insurer will send their inspection agents to check your car. Some insurers may send an inspection link, where you will have to upload photos of your vehicle.
Premium Payment And Policy Issuance
Once the vehicle inspection is done and the report is approved by the insurance company, they will send you the premium payment link to make the payment.Once the link is sent to you, you can verify the details and make the payment. Post receiving the payment, the insurer will issue you the insurance policy.
Keep in mind
Let's suppose that some parts of your vehicle are damaged. In that case, the insurer may either not provide any coverage for those damages, or deny your insurance policy, and ask you to repair your vehicle first and apply for the insurance policy again.
Changing Your Insurer
If you do not wish to continue with the same insurer, then you can contact the insurer of your choice and follow the same procedure. Or you can also visit their website for more details.
- If you already have a third-party policy, then instead of going for a comprehensive plan, you can purchase a standalone own-damage policy. This can be done by following the same procedure as above.
- While doing this, please remember that the due date of both the policies will differ as the two policies were purchased on different dates. You will have to keep a track of this, so you do not miss the policy renewal due dates.
Factors to Keep in Mind While Converting to a Comprehensive Policy
Here are some things you need to know before switching -
A comprehensive policy provides coverage for the own damages of your car as well. Make sure that you take an adequate Insured Declared Value (IDV) for the vehicle. You can check the cover amount of a second-hand model of your vehicle, and then set the value.
While purchasing your policy, you can customise it add-ons to expand the scope of the policy and the coverage. Some add-ons that are available with motor insurance policies -
If your motor vehicle gets damaged following a collision, you can claim the total cost of wear and tear of any of its body parts. The depreciation value of your vehicle won’t be deducted from your claim amount.
This covers you against damages caused to the engine due to water seeping into the vehicle, leakage of lubricating oils, etc.
If your vehicle breaks down in the middle of the road, leaving you stranded, this cover helps you get roadside assistance.
This add-on cover provides financial protection against death, permanent total, and permanent partial disability caused due to an accident.
These are indicative examples. The add-ons may vary across insurers and products.
The cost may increase or decrease depending on the IDV and the add-ons that you have selected. Please note that the premium may be more than a normal third-party policy, as the comprehensive plan provides a wider range of coverage.
An ideal car insurance plan will protect you against all damages caused to yourself, your vehicle, or to a third party. The rate of accidents occurring each day is rapidly increasing, and therefore, travelling on Indian roads has become quite risky. Hence, it’s important to be a part of an active insurance plan that gives you all-round coverage. Invest in a good Comprehensive Policy, and stay secure.