Car insurance policy majorly falls under two types – the third-party policy and the comprehensive insurance coverage. A lot of drivers often opt for the former as regards the legal mandate in countries where it is the required minimum for a driver to possess and also as it’s the most affordable car policy available.
It is however very much important for you to understand what each policy is about and their significant differences – to allow you to choose the policy that best satisfies your insurance needs.
In this article, you’d be taken through what a third-party and comprehensive car insurance policy basically entails and the major difference between these policies. Follow closely.
What is a third-party car insurance policy?
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A third-party car insurance policy as the name itself implies covers only the losses and damages a third party suffers when your vehicle causes an accident. In many countries, it is the minimum car insurance policy required to render your vehicle legally eligible to ply roads (see article on UNDERSTANDING THIRD PARTY CAR INSURANCE) and this often makes many drivers opt for this policy as it is also among other car policies, the cheapest.
Advantages involved in getting a third-party car insurance policy include –
- Provision of coverage against loss or damages your car causes to a third-party
- Helps you stay out of trouble with the law
- Protects you from having to pay heavy fines when you are found without the policy
While the limitations & exclusions involved with purchasing this kind of policy are –
- A third party does not cover for your own losses or damage suffered due to the accident
- It does not provide any coverage if your car gets stolen or is involved in a fire accident
- You will not be provided with any coverage if you were found to have been drunk while driving
- And there will be also no coverage if you are found to not possess a valid driver’s license at the time of the accident
What is a comprehensive car insurance policy?
A comprehensive car insurance policy, also as the name implies, is an all-encompassing policy that covers for the losses and damages you and a third party suffer due to a car accident as well as offers you coverage whenever your car gets stolen or is involved in a fire accident. It is an extensive policy that safeguards you and your car from a lot more risks compared to the third-party policy. You also have the option of adding extra or additional covers such as insurance against medical expense, roadside assistance, depreciation covers among others along with an increase in your premium. It is actually the preferred coverage for many due to its exhaustive nature of coverage policy.
The advantages involved in getting a comprehensive insurance policy for your car are –
- Your car is offered a guaranteed cover against loss or damages suffered due to road accidents, theft and also against loss suffered due to natural disasters such as cyclones, tsunamis, etc.
- You are protected against making payments for a loss or damage you cause to a third party during an accident
- You get the opportunity to customize how extensive you want your coverage to be, i.e., adding extra policies.
Limitations and exclusions involved majorly in this type of policy are –
- There’s no coverage offered for a vehicle loss caused by war
- No coverages will be offered in the instance where you were found to have displayed negligence while driving,
- No coverages will also be made on instances where you were discovered to have flouted traffic rules and regulations or where you do not possess a valid driver’s license
From the above explanation of both policies, a comparison between them highlights a major difference as regards their type of coverage in that while a third-party car insurance plan functions only for covering against risks third-parties suffer from your vehicle accident, a comprehensive car insurance policy covers risks suffered by both you and the third-party and covers against car theft and fire accidents.
It is very important you understand all these so as to ensure you make the right informed decisions when it comes to choosing the right insurance policy your car needs.
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