When looking for car insurance, the two main factors you consider the most important may be the coverage options available to you as well as the cost of the coverage. Compulsory third-party insurance (CTP) is a legal requirement when registering your car, buy any cover beyond that is optional. This means you may only buy the cover you can afford, rather than the cover you need.
You can consider comparing comprehensive vs third-party car insurance. For instance, you may only choose to cover your liability, as an at-fault driver, for fixing the damage to the car or property of others by buying a third-party property damage policy. Or you may want more coverage that includes things like damage to your car from storms or other unpredictable incidents.
Should I get comprehensive or third-party car insurance?
Third-party car insurance or third-party property damage insurance is meant to provide compensation when claims for car or property repairs are filed against you. It’s not the same as compulsory third party (CTP) insurance, which pays for any costs associated with injuries caused to other people. There’s another type of third-party insurance - third-party fire and theft insurance- which covers damage caused to your car by fire or theft. On the other hand, comprehensive car insurance usually covers everything a third-party policy does plus a range of natural incidents and possibly more.
Given the lower level of coverage, a third-party car insurance policy is usually more affordable than comprehensive car insurance. But when choosing between the two, you should consider your needs as well as the costs involved. As an example, suppose you get into an accident, and your car is badly damaged to the point you can’t drive it. You need to consider if not having a car for even a few days after such an incident is going to affect your life or business critically. If it would impact your life significantly, you’re better off buying a comprehensive car insurance policy which can include cover for a hire car after an accident.
Think about how much driving you’ll do as well since you’re less likely to get into a serious accident if you drive less so third-party insurance may suffice. If you don’t drive often and you’ll be able to easily afford to replace your car, or not need to, you may not need comprehensive car insurance. However, if your car is a high-end, classic or vintage model you’ll have concerns about replacing it. In this case, a comprehensive policy will give you peace of mind. Similarly, those paying off a car loan may find the lender requiring them to purchase a comprehensive policy.
Does comprehensive car insurance include third-party coverage?
A comprehensive car insurance policy includes the coverage offered by both types of third-party policies. On top of covering third-party costs, it also covers your personal costs and costs for damage by almost all natural incidents. Also, most insurers will include roadside assistance and offer the ability to rent a car after an accident. Some insurers may also cover temporary income support after an accident.
Some common elements a comprehensive car insurance policy includes are:
- Injuries to the other driver(s) and you in an accident caused by you
- Damage to cars and property damaged in an accident caused by you
- Incidents such as fire, theft, hail storms, floods, vandalism, riots etc
- Roadside assistance
- Hire-car costs
- Emergency accommodation
- Glass breakage and emergency repairs
- Ridesharing costs
- Temporary income-support payments
A third-party property damage policy will typically cover the first two in this list. A third-party fire and theft policy can cover the first two as well as situations where your car is damaged in a fire or stolen.