The difference between third-party Two Wheeler Insurance and comprehensive insurance

Despite the Motor Insurance Act, 1988 - making third-party insurance for two and four-wheelers mandatory - according to a survey published by New India Assurance, almost 70% of two-wheeler and 30% of four-wheelers on the roads of India are not insured. Considering the average annual death toll in India due to accidents is way above a lakh, having an insurance is imperative. Apparently, most people choose not to avail an insurance because of the difficulty in purchasing one and the hassle when it comes to a claim settlement. However, with insurance companies completely shifting their processes online - making it convenient, the aforementioned reason stands invalid. That said, the next hurdle is to enlighten people on the difference between a third-party insurance and a comprehensive insurance and the dire need of an insurance if you’re riding a two-wheeler or driving a four-wheeler.

Third-party Insurance Vs Comprehensive Insurance

The third-party insurance was made mandatory for all vehicles on the road as of the Motor Insurance Act of 1988. As the name suggests, a third-party two-wheeler insurance cover the costs of the damages or injury caused to the third-party only. The first-party being the insurer, the second-party being the insurance company. In case of an accident involving the policyholder, the third-party files a case against the policyholder and the insurance company. In the case of damage to the third-party, the compensation is capped at a maximum of Rs.7.5 lakh. In the case of death or serious injury, there is no set compensation. In short, holding a third party insurance only covers the costs of the damages caused to the third-party, no compensation is granted to the policyholder in the case of an accident. In addition, a third-party insurance is limited to the eventuality of an accident. This is where the advantage of holding a comprehensive insurance comes into play.

__The Advantages of Comprehensive Insurance __

As the name suggests, a comprehensive insurance offers the policyholder complete coverage. In this case, the first-party and the third-party are liable to coverage in the case of an accident. In simple, a comprehensive insurance will cover the cost of damages or injury caused to both parties following an accident. A comprehensive insurance coverage on the other hand is not limited to just the eventuality of an accident, the insurance policy will offer coverage to the policyholder in case of a natural calamity, flood, theft, etc., - basically any damaged met by your vehicle not arising from negligence.

As the stats prove, most people fails to recognise the value of a motor insurance and how it can get you out of a tight spot in the case of an accident, natural calamity, etc. In such cases, the policyholder is not required to use his/her own pocket to covers the damage costs, the insurance policy will play its part and ensure that you do not go stiff broke following an eventuality. If you still haven’t purchased a motor insurance, go ahead and get one right away and keep in mind the additional benefits a comprehensive insurance comes with - one that might just be a lifesaver.