If you ride a 4 wheeler or a 2 wheeler it’s mandatory to have a motor insurance policy. Generally, there are two types of the insurance policies: third party policy and a comprehensive Policy. For 4 wheelers such as cars, there is also Zero Depreciation policy. This article talks about What is the difference between Third Party Insurance Policy and Comprehensive Policy? Which policy should you go for? How does a Third Party Damage work? Which documents must you carry while driving? Choosing the correct insurance policy matters. Not all insurance types offer widespread coverage.
Table of Contents
Overview of Types of Insurance
Motor insurance is an insurance for cars, motorbikes, scooters, and other commercial vehicles. It is mandatory to get insurance for damage caused to another vehicle or individual or property. You can also get insurance for any damage or loss to your car or motorbike. Broadly, there are two types of the Insurance policies as given below. A Comprehensive bike or car insurance is more useful than a Third-party insurance.
Third-Party Insurance Policy: The Third party is any person other than you, another vehicle or property involved in an accident.
- It covers damages caused to another person, their vehicle or property due to collision or accidents.
- It does not cover damages to your own vehicle or bodily injuries which you may suffer.
- Third Party Liability coverage is mandatory in India.
- In case of injuries/death, one has to approach a tribunal.
- Third-party property damage for two-wheeler is compensated up to Rs. 1 lakh.
- Third-party property damage for four-wheeler is compensated up to Rs. 7.5 lakh.
Comprehensive Insurance Policy
- It covers damages caused to your vehicle, or to you, or another vehicle or person due to collisions, stealing, natural calamities such as flood, man -made calamities and even fire.
- It covers all kinds of damages, except for the loss suffered while drinking under the influence of alcohol or drugs or without a policy or license.
Zero Depreciation Insurance Policy
This is an Add-on to a Comprehensive policy for 4 Wheelers such as cars. The value of your vehicle reduces due to wear & tear and ageing. With this add-on, the insurer ignores such depreciation and pays the whole vehicle value to you during claims.
Accidents in India
Indian roads are not particularly safe this is why vehicle insurance becomes so essential, not only does it protect the lives and property of you and your loved ones, it also mitigates the financial impact of damage or injuries caused to third parties.
As per the report compiled by the Union road transport and highways ministry, Transport Research Wing said road accidents killed 150,785 people across India in 2016 , a 3.3% jump from 2015 when 146,000 lakh road fatalities were reported — indicating Indian roads continue to be one of the deadliest in the world. Ref
India has 55 road accidents and 17 deaths every hour in 2016 which is one of the highest in the world.
The Two Wheeler Insurance refers to the insurance policy that provides a cover for any kind of damage that may occur during a mishap like an accident, natural disaster or act of any thief that occur to the bike or scooter. A two-wheeler plan is a one-year contract renewable every year though many companies are now providing longer duration insurance policy for 2-3 years.
The Car Insurance policy is an agreement between you and your insurance company – you agree to pay a premium each year in return for a promise from your insurance company to cover damages caused to your car or liabilities caused to a third-party. It is only available for 1 year.
There are many insurance companies that provide Two Wheeler Insurance and Four Wheeler Insurance to their customers.
Types of Motor Insurance
Choosing the correct insurance policy matters. Not all insurance types offer widespread coverage.
The purpose of a third-party bike insurance is to help you avoid paying for damage to someone else’s injury or death or his vehicle. So, if your bike or car cause a dent in another car or bike, then you can approach your insurer to pay for other person’s car or bike’s repair. Any damage to your own vehicle is not covered.
A comprehensive insurance for a bike or car helps you take care of another party’s losses and your own repair. Comprehensive insurance has a mandatory Third-party cover. It also covers any damage or loss other than an accident. For example, dents in your bike are caused by wall or tree falling or damage caused by fire or rain or even theft is covered by the policy.
A Comprehensive bike or car insurance is more useful than a Third-party insurance.
Add-on Coverage to Insurance Policy
You can increase the protection your car insurance offers with the help of add-ons. The more the add-ons on your insurance policy, the higher the car insurance premium.
The four common add-ons are:
- Engine protection for times when the monsoons are at their destructive worst, and leave your car’s engine vulnerable to flooding.
- No Claim Bonus (NCB protection): To continue enjoying a discounted premium on your no-claim bonus year-on-year, even after making a claim during the policy period.
- Invoice cover: To recover as much as the car’s on-road price or Insured Declared Value, in case of total loss (such as theft or a really bad accident).
- Personal Accident cover (paid driver or passenger)
- ZERO DEPRECIATION COVER: For the repair or replacement expenses of plastic, rubber, glass and other materials which would otherwise not be covered by a regular policy. With a Zero Depreciation cover, the value of your car decreases with time which is called as depreciation. Your insurance company only pays a portion of the bill as the remaining amount is deducted on the account of depreciation. As per this add-on, your insurer will pay the maximum payable amount of the whole bill without considering depreciation.
Difference between Third Part Motor Insurance and Comprehensive Insurance
Examples of Which Type of Motor insurance will be useful
Your car goes missing or stolen. If you have a Comprehensive Car insurance policy that covers theft, you will receive money equivalent to your car’s value (IDV) back.
You are driving and a child suddenly crosses the road. The child is safe, but you bump into another bike. It could easily cost you Rs 50,000 in medical bills AND repair.
- The Third-party cover pays for damages caused to the other two-wheeler.
- If you have a comprehensive policy, your Bike Insurance’s Personal Accident cover pays for your medical bills;
- the Own Damage cover compensates for the bike’s repair.
The kids in your colony are bursting crackers on Diwali. A cracker strikes the unattended petrol tank of your vehicle. Your vehicle catches fire. The fire was doused immediately. The damage could still cost nearly Rs 75,000 to repair. If you only had a Third party then policy, then you would end up paying from your pocket.
The table below shows the Difference between Third Part Motor Insurance and Comprehensive
| Coverage | Third-Party Insurance | Comprehensive Cover |
| Damage to you or your vehicle due to collision | No | Yes |
| Damage to a third-party vehicle/person | Yes | Yes |
| Your vehicle is Stolen | No | Yes |
| Damage due to natural causes | No | Yes |
| Damage due to fire | No | Yes |
| Depreciation of vehicle | No | No, Optional Add On |
| Personal Accident cover | No | Yes |
| Engine protection | No | Optional Add-on |
| NCB protection | No | Optional Add-on |
| Invoice cover | No | Optional Add-on |
Third Party Insurance Premium
IRDA has standardized the insurance premium rates for third party liability. IRDA (Insurance Regulatory & Development Authority of India) revises the rates for this each year
For bike insurance rates with effect 1st April, 2017 as below:
| CONDITION RELATING TO ENGINE CAPACITY | APPLICABLE PREMIUM RATE |
| Loss of baggage/personal documents | Rs. 569 |
| 75- 150 cc | Rs. 720 |
| 150- 350 cc | Rs. 970 |
| Above 350 cc | Rs. 1,114 |
For cars, rates are as follows
| Engine Capacity | Premium Rate |
| Less than 1,000cc | Rs. 2,055 |
| Above 1,000cc but less than 1,500cc | Rs. 3,132 |
| More than 1,500cc | Rs. 8,630 |
How does Third Party Damage work?
In a third party insurance policy.
- The first party is the insured
- The second party is the insurance company.
- The third party is any third person.
If you damage another person’s vehicle or property or individual then the other person, called as the third party, can file a claim for compensation for damage, injury, death caused by your vehicle a car or motorbike. Third can also claim compensation for physical disabilities.
If there is a death or injury to an individual, then a case can only be taken by the tribunal.
But As per IRDA norms, there is a limit to damages covered for damage to other vehicles. If damages are more than the upper limit, the balance has to be paid by the policyholder himself.
- The third-party damages are covered up to a sum of Rs. 1 lakh for 2 wheelers.
- The third-party damages are covered up to a sum of Rs. 7.5 lakh for 4 wheelers.
Motor Accidents Claims Tribunal
If there is a death or injury to an individual, then a case can only be taken by the tribunal. Third party can also claim compensation for physical disabilities.
The victim, the legal envoy of the departed, or the victim make an application against the owner of the vehicle for a third-party.
First, the Third-party must file a FIR with the Police along with the following details and obtain charge sheet.
- Registration number of the motor vehicle that met with an accident
- Driver’s License Number
- Witnesses’ name and contact details
The case for claiming compensation under the third party will be filed against car owner who hit and his insurance company. The case will be filed with special court Motor Accidents Claims Tribunal through motor claims lawyer. Civil courts cannot decide road accident compensation claims. The case can be filed in the tribunal with jurisdiction over the area:
- Where the accident occurred or
- Where the claimant resides.
- Where the defendant resides.
Medical expenses can also be claimed for treatment of the injury that was the cause of death.
For vehicle or property damage, one needs to quantify the loss so motor vehicle inspection report, surveyor’s report and original bills are required.
The court then hears both the sides, examines the evidence, and fixes the liability. One has to establish the other party’s fault. After the court decides the full amount the insurance firm has to pay the total compensation
In third-party claims involving bodily injury or death, the turnaround time is one to two years.
Documents you must carry while driving
When driving a vehicle, it is mandatory to carry the following documents with you. Documents to carry with you while riding any vehicle are:
- Driving License
- Insurance Policy
- Certificate of Registration: An RC or Registered Certificate copy is a document which proves that your vehicle has been duly registered with the RTO authorities.In many states one now receives the RC copy in the form of a Smart Card.
- Emission Test Certificate
Note: All the documents have to be original and photocopies even the colored photocopies are not allowed. Sometimes the police may excuse you from paying the fine if you are carrying a photocopy of these documents but according to the law (MVA), all these documents should be produced in original form.
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Just because you have insurance. Please don’t make minor claims. For minor scratches or dents, not only the process is painful but one loses no-claims bonus advantage. Which type of insurance policy have you taken? Have you ever claimed the damage from a car or bike insurance company? What suggestions or tips would you give to others based on your experience.
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