Why Is Comprehensive Car Insurance More Expensive Than Third-Party Insurance?

By PolicyBazaar
  | Published: 22 July 2021

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Buying car insurance is sure a lengthy task especially when it comes to making a decisions about changing your car insurance policy. Getting an insurance plan for your car is mandatory in the UAE as well as in many other countries around the world. UAE mandates every vehicle to have third-party liability insurance however, there are several other choices available in the market.

While browsing through the different types of car insurance plans, one question that comes to every car owner’s mind is “why is comprehensive insurance more expensive than third party or any other insurance covers for cars?”. A very legit question indeed. The price difference between comprehensive car insurance plans and third-party insurance plans is pretty huge and one is ought to wonder why is that. In order to understand this, first one must understand the basic difference between the two types of plans.

Comprehensive Car Insurance vs Third-Party Insurance

Third-party insurance plans make the insurance company liable to cover all the legal claims made by a third party in case of an accident that occurred at the fault of the insured. This claim would include the charges it took to repair the damage incurred to the car of the third party as well as any medical services that were given to treat the injuries caused by the accidents. This insurance plan does not cover any damage incurred by the vehicle of the insured or injuries sustained by the insured person.

Comprehensive car insurance plans go the long way and cover pretty much everything that you can think of. Third-party liabilities, damages incurred by the insured in an accident (to the vehicle and the self), protection against natural disasters, man-made disasters, theft, and total loss. Apart from these basics, there are several other coverages that a comprehensive plan provides in form of add-ons like extended protection to passengers, engine protection, depreciation cover, etc. In short, there is little that a comprehensive plan will not protect you against and these exclusions generally include incidents like drunk driving, invalid or no license, war, wilful damages and negligence of the vehicle.

Why the Price Difference?

It is a common rule when it comes to insurance plans – the better coverage they provide, the more expensive they will be. The reason is simple, by increasing the coverage span, an insurance company takes on more risk for the insured because the possibilities of making a claim are higher and so is the claim amount. So, if an insurance plan is going to give you full cover for the total loss of your car, it will be more expensive than the one which does not offer the same facility.

In the case of third-party and comprehensive car insurance, the former is just a small part of the coverage that the latter one provides and hence the price difference. Even in the case of comprehensive plans, if the insured happens to take add-on coverage plans like engine cover and no depreciation plans, the total cost of the plan will go higher and higher for them.

Which Plan Should I Go for?

When it comes to deciding which plan is better among third-party insurance and comprehensive insurance plans, the obvious choice is comprehensive insurance plans. The reason is simple – the vast inclusion and coverage elements. However, that does not mean that it automatically becomes the best plan for you and your car. The best insurance plan for your car should be decided after you have considered all the factors and made comparisons. For example, if your car is new, a top model that contains several extensive features and has a very high market value, you should go with comprehensive plans. However, if your car is old and is in the last few years of its due time then, normal third-party insurance will be the best choice for you. This also applies to vehicles with depreciated market value and the ones which are seldom used.

Take Away

Needless to say, both comprehensive and third-party insurance plans have their charms and benefits and are suited ideally in different kinds of situations. While coverage benefits of comprehensive car insurance plans are better than that of third-party insurance plans, they are still not beneficial in every situation or for every vehicle out there. Compare quotes and expenses thoroughly before you choose a plan and you will surely end up with the right one for your lovely car.