There are several types of auto insurance policies, and they all work under different conditions. Whichever car insurance policy you choose, understanding its details can help you decide what works bests for you. This article discusses the difference between third-party insurance vs comprehensive insurance and other things you should know.
What is the difference between Third Party Insurance vs Comprehensive Insurance?
Third-Party insurance only covers you against third-party damages and losses (i.e in an accident, only the other person’s vehicle is covered). Comprehensive insurance on the other hand covers both third-party damages and yours.
What is Comprehensive Auto Insurance?
Comprehensive auto insurance or comprehensive car insurance is a type of insurance policy that not only covers third party damages and losses but also those caused to you and your vehicle.
It provides comprehensive coverage for death, bodily injury, accidental third-party property damages, and those sustained by the insured car. It also takes care of liability incurred during an accident.
What Comprehensive Insurance Covers
Here are the areas comprehensive insurance covers:
1. Any loss or damages to your car due to accidents, theft, fire or explosion, civil disturbance, natural disasters, etc.
2. Physical injuries or disabilities
3. Property damages
4. Death
What Comprehensive Insurance Does Not Cover
Here are some exclusions of comprehensive car insurance plans:
Driving under the influence of alcohol
Any claims made in a situation where you were drunk driving is not covered.
Driving without a driver’s license
Your claims won’t be covered if you were driving without a valid driver’s license.
Aging
Comprehensive car insurance does not cover damages due to the normal aging of your car.
Consequential Damages
Consequential damages are those that happen after the accident. After an initial damage assessment, there is no protection against consequential damages.
Value depreciation
A comprehensive insurance policy cannot protect your car from the depreciation of its value over time.
Negligence
Any damage that occurs as a result of negligence is also excluded
Nuclear Attack
The insurance policy does not cover damages and losses due to a nuclear attack or war.
What are the Benefits of Buying a Comprehensive Auto Insurance Plan?
Here are six benefits you as the insured get to enjoy purchasing a comprehensive car insurance plan:
Covers Your Car
This is the main benefit of buying comprehensive insurance. You get to save on unforeseen third-party expenses and liabilities while protecting yourself and your car.
Access to Add-Ons for Better Coverage
Comprehensive car insurance gives you access to more add-ons to customize your insurance policy the way you want. Some of the added benefits include car accessories cover, engine cover, gearbox protection, etc.
Cost-Effectiveness
Comprehensive insurance may seem more expensive than third-party insurance at first, but it saves you more in the long run because of the benefits that come with it.
Protection from natural disasters
With comprehensive auto insurance, you can protect your car from any damages due to floods, earthquakes, or other natural disasters.
Compensation for theft
If someone gains possession of your car without your consent, comprehensive insurance also covers that.
Zero depreciation cover
With time, everything loses value, but with zero depreciation coverage, the insured does not have to pay the depreciation value of the damaged parts.
What is Third Party Car Insurance?
Third-Party Car Insurance is a type of insurance policy that protects you only from damages and losses caused to a third party but not your own. It provides the policyholder coverage against any legal liability arising out of injuries to a third party and is the most basic form of car insurance policy you need.
What Third Party Insurance Covers
Here are the areas third party car insurance covers:
- Third-Party Injuries/ Death
- Third-Party Property Damages
What Third Party Insurance Does Not Cover
Here are some limitations and exclusions of third party car insurance plans:
- No insurance cover for own damages
- No insurance cover for personal accidents.
- No insurance cover for an expired policy or wrong documentation.
- No cover for violating the terms and conditions of the policy
- No cover for situations arising out of drunk driving or driving without a valid driver’s license
What are the Benefits of Buying a Third Party Insurance Plan?
Here are three benefits you as the insured gets to enjoy purchasing a third party car insurance plan:
Third-Party Liability Coverage
This is the main benefit of buying third-party car insurance. It covers you from losses and damages caused to a third party due to your own car.
Legal Compliance
Owning car insurance is mandatory. Every car should have at least third-party car insurance to drive legally on Nigerian roads.
Protection from Fines
Since having third-party car insurance is mandatory, not having one can lead you to pay hefty penalty fines if you get caught.
Difference between Third Party Insurance vs Comprehensive Insurance
| Third Party | Comprehensive | |
| Compulsory | Yes | No |
| Coverage | It covers the damages caused to another individual or their property due to the insured car. | You and your car in addition to third-party coverages |
| Cost & Premium Price | Lower. Premium is cheaper than comprehensive policy | Higher. The premium is higher and based on factors like the car make and model, etc |
| Limitations | Does not cover damages to your own car. | More expensive than third-party car insurance. |
| Customization | No customizations | You can customize by adding specific add-ons such as the zero-depreciation cover, engine, gearbox protection, etc |
| Which to choose | If you do not use your car much or it’s pretty old,
you can opt for third-party insurance. |
For relatively new and active cars, this gives you complete coverage. |
People Also Ask: What Is Collision Insurance?
You may have noticed that comprehensive insurance doesn’t cover collisions and wrecks. That’s where collision insurance comes in.
Collision insurance covers vehicle damages from:
- A wreck with another vehicle
- Collision with an object like a fence
- Single-car rollover accidents
In short, collision insurance covers events within your control or when another driver hits your car. Conversely, comprehensive insurance covers events out of your control.
Collision coverage has its own premium and deductible. But you can bundle collision and comprehensive insurance together into one policy.
Which Auto Insurance Should I Buy?
To help you determine which type of insurance is best for you, first assess the condition of your car.
If you drive a relatively new or expensive car, comprehensive insurance that offers maximum protection is a good idea. Since the limit is the value of your vehicle, your limit will be higher and cover most accidents.
You should also include collision insurance if you are in a total wreck.
On the other hand, if you drive an old car or something that isn’t in great condition, you may want to consider third-party insurance. You don’t want to overpay on insurance to cover a vehicle that doesn’t have as high of a value.
Additionally, third-party insurance is probably best if you don’t drive a lot. Less driving means fewer chances to get in an accident.
Also, consider your driving skills. If you’ve been in past accidents, you want to lean toward a comprehensive policy. But if you have years worth of good driving, third party coverage may be enough for you.
Your insurance agent can help you make the right choice for your specific situation.
Get Insured Today
Now, we know the primary difference between third-party car insurance and comprehensive car insurance is coverage. Having car insurance protects you from damages, theft, losses, damages due to collision, flood, and more.
While third-party insurance is mandatory, comprehensive insurance is optional. However, here at Leadway, we can help you determine the best auto policy for you. Contact us today, and we’d be happy to assist you.
FAQs
Which is better- fully comprehensive or third-party insurance?
Comprehensive insurance is better than third-party insurance as it provides coverage for a wide variety of damages/injuries/losses.
Is third-party insurance the same as comprehensive?
No. Third-party insurance only covers damage to another person’s vehicle and property while comprehensive insurance covers both you and the person.
Do I need both comprehensive and third-party insurance?
No. Comprehensive cover is not compulsory.
Which is cheaper third-party or comprehensive insurance?
Third-party is cheaper as it offers less protection for your car.
Which type of insurance is best for cars?
Comprehensive car insurance is generally the best cover for a car as it offers complete protection.
I drive carefully and have never had an accident. Do I still need to buy car insurance?
It does not matter how good you are behind the steering. You need to have at least an insurance policy that covers third-party liabilities.
Is it worth having fully comprehensive insurance on an old car?
If you have just purchased a new car, a comprehensive policy is ideal. However, if you do not use your car much or it’s pretty old, you can opt for third-party car Insurance.
Watch this video to learn how to get comprehensive insurance:
