HomecarBest Time to Switch from Third-party Car Insurance to a Comprehensive Plan

Best Time to Switch from Third-party Car Insurance to a Comprehensive Plan

Did you just buy a new car? Before you drive it to the party venue to your excited family and friends, make sure you have covered it with the right car insurance policy. In India, it is mandatory to have third-party insurance to drive your car on the road. Without one, you may face heavy fines, imprisonment, or both depending on the situation. Also, a car insurance policy will save you from third-party liabilities in case of an accident involving a third-party person or property.

While third-party insurance is mandatory, it will not cover the cost of damage to your car in case of a mishap. Yes, you read it right. To make sure your car is protected by insurance, you must opt for comprehensive insurance.

What is Comprehensive Car Insurance?

As per media reports, in Q1FY23, 97% of customers chose comprehensive car insurance, making it the most popular insurance choice. Comprehensive insurance protects you against personal and third-party liabilities. Although not mandated by law, comprehensive coverage helps you gain greater financial protection in case of an accident.

 What is Third-party Car Insurance?

According to the Indian Motor Vehicle Act, every car owner must have third-party insurance. It is the most basic insurance plan. Also known as liability cover, third-party insurance covers losses and damages suffered by a third-party person or property due to the insured car. However, it does not cover the damages caused to the insured car. Since it is mandatory, third-party insurance premiums are set by the Insurance Regulatory and Development Authority of India (IRDAI) to ensure affordability for all.

When to Switch from Third-party Insurance to Comprehensive Insurance?

If you are wondering if you need comprehensive insurance for your car, then consider these factors:

  • Damages to your car 

A third-party policy covers only third-party liabilities. It will not pay for the injuries and damages caused to you or your vehicle. As a result, you will have to pay for repairs. If you live in a high-traffic area or ply on accident-prone roads regularly then switch to comprehensive insurance at the earliest. Also, if you have just started driving, minor accidents are more likely to happen. You can easily manage repair expenses with the help of a comprehensive policy.

  • Customised coverage

Third-party plans do not offer add-on covers and cannot be customised. If you want an all-encompassing plan to meet your needs, then you must choose comprehensive insurance. It allows you to pick relevant add-ons to enhance coverage.

  • Personal accident cover

A comprehensive insurance policy can help you in case you need treatment for injuries due to an accident. The policy comes with personal accident cover and pays for medical care if needed.

Things to Keep in Mind When Switching to Comprehensive Insurance

  • Policy price

Third-party policies provide limited coverage. It covers third-party liabilities including property damage, injuries and accident-related legal liabilities. A third-party plan excludes coverage for own damage. 

While comprehensive insurance covers own damage, it comes at an additional cost. Comprehensive insurance is more expensive than third-party insurance. The brand and model of your car, the cost of add-on covers (if applicable), and the insurance provider will all play a role in determining the premium amount.

  • IDV

Insured Declared Value or IDV is a rough estimate of your car’s current market price. Your car’s IDV plays a significant role in determining your car insurance coverage cost. This is the highest sum your insurance provider will pay you if your car is damaged beyond repair or stolen. Therefore, it is important to set the right IDV when purchasing car insurance. If you choose a lower IDV, you will get less money than you should get. On the other hand, you will have to pay a higher premium for insurance for a higher IDV.

  • Deductibles

The cost that you must pay from your pocket at the time of filing for a claim is called deductibles. Car insurance deductibles come in two variations—voluntary and compulsory. You may choose to pay a higher voluntary deductible to lower the cost of your insurance. But keep in mind that by agreeing to pay a higher deductible amount, you are lowering your claimable amount. The compulsory deductible is a nominal sum you must pay at the claim settlement time.

  • No Claim Bonus

When renewing your car insurance, you will get a No Claim Bonus (NCB) if you have not raised a claim against your comprehensive insurance. This is given as a discount on the premium amount at the time of policy renewal. With each claim-free year, you get a higher percentage of NCB. It goes up to 50% if you manage five claim-free years in a row. It means exhaustive coverage at a lower price. NCB does not apply to third-party policies.


Invest the same amount of time and attention into finding the ideal insurance plan for your car as you did in finding the ideal car. Third-party insurance is mandated by law but does not provide coverage for damage to you or your vehicle. Therefore, evaluate your insurance needs carefully and choose comprehensive insurance for thorough coverage. 

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.


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