Basically there are 2 types of car Insurance policies, which most of us are not even aware of!
Let us go through each type and understand what it means:
1.Third-Party Insurance Policy
2.Comprehensive Insurance Policy.
Here is the detailed explanation of these both
car insurance policies.
1.Third Party Insurance Policy:
This type of policy covers only the third party in an accident. It doesnt cover the owner or his car. Rather it will only pay for the third person who has been damaged or injured in an accident where the owner is accountable.
This type of plan doesnt cover the expenses, damage, theft or injuries of the owner. It only covers for the amount the owner is liable to pay for the damage done to the third party. This type of plan is made compulsory by the law of India.
For example, Kabir Talwar had a Third Party Insurance Policy only. He met with an accident three months after his car was registered. The person he had hit had to be hospitalized and that persons car suffered a severe damage. The entire liability of Kabir was about Rs 1, 00,000 but his Insurance Policy paid for the entire damage.
However, Kabir Talwars car had also suffered a damage which cost him Rs 45000 but since he had only a Third Party Insurance Policy, the same was not covered under his Insurance Plan. He had to spend the entire amount from his own pocket.
2.Comprehensive Insurance Policy:
This type of plan covers a lot more that the previous type, as in it also covers the owners loss due to an accident and also pays for his damage, injury, etc. This type of policy can be extended to increase benefits as an additional feature.
If Kabir Talwar from our previous example, had a Comprehensive Insurance Policy instead of a Third-Party Insurance Policy, then the damage suffered by his car of Rs 45000 would also have been paid by the Insurance Company and the same wouldnt had to be borne by Kabir Talwar himself.
Thus if we were to evaluate, which one of the 2 types of Policy is better and why, I would say that it is definitely better to take comprehensive insurance as the owners damages, theft and injuries would also be covered along with the third party for whose damage the owner will have to pay.
Thus, it is a more sensible option to opt for a Comprehensive Insurance Policy instead of a Third-Party Insurance Policy because it covers the damage of self over and above the liability of the damages of the third party in case of an accident.
