Pros and Cons of Third Party Insurance vs Comprehensive Insurance

Buying two-wheeler insurance is mandatory by the Indian government and third-party insurance is the minimum legal liability coverage that every two-wheeler-owner must have. However, purchasing an insurance policy goes beyond the bare minimum legal requirements and further considerations need to be made before narrowing down on something that can potentially alleviate risk and financial loss. Selecting an insurance policy requires diligent research and a basic understanding of your requirements.

Different insurance companies provide their beneficiaries with multiple options to choose from. When a person is looking to buy two-wheeler insurance, the most common choices would be third-party insurance or comprehensive insurance.

Third-Party Insurance – This type of insurance will protect you from any damage to the vehicle, loss, or injury to a third person.

Pros –

  • Legally required – This insurance policy is mandatory by Indian law making it necessary to purchase
  • Protection – The insurance covers any cost or damage to a third party which reduces the out-of-pocket expenses in case of an emergency.
  • Affordable – More affordable than other insurance policies, it is a cost-effective way to reduce risk, particularly for more cautious drivers.
  • Simple and accessible – The policy and coverage properties are easy to understand without much room for additional details. Third-party insurance is also important to access roads and highways in the country.

Cons –

  • Limited coverage options – With minimum room for flexibility, third-party insurance offers minimal coverage with a focus on damage to third parties. It does not cover any damage to own vehicle or personal injuries.
  • Less protection – In case of theft or acts of vandalism, this insurance would not be liable to cover any costs.
  • More expenditure – Repairs, replacements, damage, etc would have to be paid by you due to the limited customisation options and restricted coverage policy.

Comprehensive Insurance – Another option when you buy 2 wheeler insurance online would be comprehensive insurance which combines the third-party liabilities along with personal injuries or vehicle damage. This policy is not mandatory.

Pros –

  • Holistic coverage – While it offers the bare minimum requirements of third-party coverage, this policy also takes care of any damage to your own vehicle. It is inclusive of accidents, theft, natural disasters, vandalism, etc. The policy can also be customised to protect accessories, repair, or replacement.
  • Covers personal injury – Any medical expenses arising from accidents (including disability or death) can be claimed with this package. This reduces financial loss significantly.
  • Flexibility – Depending on your age, city, cost of vehicle, riding experience, etc you can customise your policy options to suit your needs and cover any high-risk aspects viable for you. Removing certain coverage options is also possible based on your overall budget and tolerance toward risk
  • Network – Comprehensive policy owners are usually connected to a high network of garages, repair shops, mechanics, etc.

Cons –

  • Higher premium value – It is more expensive than a third-party insurance policy and could be an added expense. It is also likely that the rate of premiums can increase in the future.
  • May not be necessary – There is a higher possibility of being over-insured with this package and you may end up paying more premium than is necessary.
  • Longer process – The paperwork and process can be time-consuming and complex, especially in the beginning due to documentation, inspections, other customisations, etc.

It is important to consider different aspects, needs, and budgets before selecting an insurance policy for your two-wheelers. Choose a trusted source to purchase from and be aware of all the options, coverage, and limitations.