How to Shift from Third-Party to Comprehensive Car Insurance?

As per the Motor Vehicles Act, 1988, all car owners need to mandatorily buy a car insurance policy. The Act mandates a minimum of third-party liability cover. This means that if your car meets with an accident or mishap and a third-party vehicle gets damaged or a third person gets injured, then the policy reimburses the costs. However, it does not cover the costs associated with any damage to self or own vehicle or theft of the vehicle. To avail of better coverage, you need to buy a comprehensive car insurance policy. In this article, we will talk about how you can shift from third-party to comprehensive car insurance policy seamlessly.

Steps to shift from third-party to a comprehensive car insurance policy

Here are some simple steps to switch from third-party to comprehensive or full coverage car insurance in India:

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  1. There are many insurers offering auto insurance in India. Once you have finalized the insurance company and the comprehensive plan that you intend to buy, visit the website of the insurance company.
  2. Visit the car insurance section of the website
  3. Enter the details of your car
  4. The place where you have to enter the previous policy number must be left blank
  5. Select the option to buy a new comprehensive car insurance policy
  6. Enter the Insured Declared Value or IDV of your car
  7. Choose the add-ons that you need to create a policy that suits your requirements
  8. Go through the policy wordings and read all terms and conditions carefully
  9. Use the car insurance calculator to find the premium amount and make the payment
  10. Get the car inspected if the insurer wants to inspect your car
  11. On approval, receive the policy document via email

Things to keep in mind before switching to a Comprehensive Insurance cover

Here are some important things to remember before switching from third-party to comprehensive insurance for car:

1. Policy Price

When you have a third-party liability car insurance policy, it covers third-party-related costs associated with an accident or mishap involving the insured car. Hence, you receive compensation for any damage to third-party property, physical injuries to another person, and legal costs. These policies also offer a personal accident cover. However, any damage to the insured car is not covered by them.

On the other hand, shifting to a comprehensive car insurance policy offers all the benefits of a third-party policy plus coverage for own damage. Therefore, the policy offers a more comprehensive cover compared to a third-party liability policy. Hence, the price increases.

2. Added Coverage

The primary difference between a third-party liability policy and a comprehensive policy is that own damage is covered by the latter. Hence, if your car meets with an accident, then the comprehensive policy offers third-party liability cover and compensates for costs associated with repairs to your car too. 

Further, the comprehensive policy offers protection against damages due to natural calamities, vandalism, fire, riots, etc. If your car gets stolen and the police issue a non-traceable report, then the insurance policy treats it like a total loss situation and processes your claim request, equal to the sum assured (Insured Declared Value). 

Additionally, you also get a choice of multiple riders to further enhance the coverage. Leading insurers offering online four-wheeler insurance, such as Tata AIG car insurance online, offer up to 13 unique add-ons with their car insurance policy.

3. Insured Declared Value

In a third-party liability policy, since own damage is not covered, there is no relevance of the value of the car. However, when you move to a comprehensive policy, you will have to set the correct Insured Declared Value or IDV of your car. This is important because the insurer determines the premium based on the IDV. Insured Declared Value is the current market price of the car, after accounting for depreciation on the Invoice Price. If your car gets damaged beyond repair (total loss) or gets stolen, then the IDV is the maximum amount that the insurer reimburses to you.

  1. No Claim Bonus Benefit

Insurers reward car owners who do not file a single claim in a policy term by offering a discount on the premium amount for the next year called No Claim Bonus or NCB. This is an incremental discount that increases with every subsequent year that you don’t file a claim and can go up to 50% of the premium amount. 

As it is calculated on the own damage component of the car insurance price, NCB is not available with a third-party liability car insurance policy. Hence, when you shift to a comprehensive policy, you can start availing of the NCB benefit.

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5. Deductibles

When your car meets with an accident, the insurance policy reimburses the costs associated with repairs subject to a maximum of the insured declared value or IDV of the car. A deductible is an amount that the policyholder pays to the insurer at the time of claim settlement. This allows the policyholder to shoulder some risk and receive a discount on the premium. There are two types of deductibles:

  • Compulsory Deductible – Set by the IRDAI, every car owner has to pay a fixed amount as a compulsory deductible while getting the claim processed. The amount is based on the cubic capacity of the car.
  • Voluntary Deductible – Insurance companies allow policyholders to declare a deductible amount based on their assessment of the risk of accident with their car. 

Deductibles are not applicable to third-party liability policies. Hence, when you move to a comprehensive policy, you will have to think about the deductible that you want to set.

Common Questions

Q1. What does comprehensive car insurance cover?

A Comprehensive Car Insurance policy covers:

  1. Third-party liability including damages to third-party property, injuries to third-party person(s), and legal costs.
  2. Personal accident cover
  3. Own damage cover including damages to the insured vehicle due to:
    1. Accident or mishap
    2. Vandalism
    3. Riots
    4. Natural Calamities
    5. Fire
    6. Theft

Q2. What is not covered in comprehensive car insurance?

A comprehensive car insurance policy does not offer protection against damages caused due to the wear and tear of the car, depreciation of the car over time, damage to parts made from fibre or rubber, and damages caused due to a war or a nuclear attack. Further, the driver should not be drunk or be driving without a valid license. Additionally, consequential damages and contributory negligence are also not covered under the policy.

Q3. Is it worth getting comprehensive car insurance? Is comprehensive insurance full coverage?

Comprehensive policies offer a third-party liability and own damage cover. Hence, as the name suggests, it offers a comprehensive cover. However, there are many things that are not covered under a comprehensive policy. Insurance companies offer add-ons to allow car owners to customize the coverage as per their needs.