Buying a new car (or any vehicle) brings an immense amount of happiness. Your happiness levels will reach a new high when you secure your car by investing in the right kind of car insurance. Buying car insurance that is in line with the cost and condition of the car can become a daunting task if you do not have a clear understanding of the difference between third-party and package car insurance.

Car insurance is mandatory in India and not having valid car insurance can lead to traffic violation fines. In some cases, it may also lead to suspension of the driver’s license.

Third-party car insurance provides coverage against third-party damages and losses whereas package car insurance offers coverage for your own damages as well. In this blog, we have a detailed look at the difference between package car insurance and third party car insurance.

What is Third Party Car Insurance

A third party car insurance is the most basic form of motor insurance. As mentioned earlier, this form of car insurance only protects you from the damages that are done to the third-party (i.e. car, person, etc.).

Salient features of a third party car insurance

a. Be it car insurance or two wheeler insurance, the vehicle owner should at least have third party insurance so that (s)he can drive legally on Indian roads.

b. The third party car insurance (as well as two wheeler insurance) only provides coverage for the damages caused to the third party. Consider a hypothetical scenario where your car bumps into another car (or vehicle)☹.

Irrespective of the damages on your car, the third party insurance will only cover the damages caused to the third party (i.e. the other vehicle and the passengers inside the vehicle). 

c. Apart from non-coverage of own damages, third party insurance also does not cover the claims if the driver is driving without a valid driver’s license or driving under the influence of alcohol (or such other substances). It is recommended not to drive under the influence of any such substance☺. 

What is Package Car Insurance

When compared to third party insurance, the package car insurance provides coverage for damages caused to yourself and the vehicle, in addition to the coverage for third party liabilities.

Salient features of a package car insurance

a. Package insurance is the most preferred form of car insurance as it provides all-round protection to the driver, vehicle, as well as third party liabilities.

Apart from accidents and collisions, it also provides coverage for losses due to incidents like fires, etc.

b. Be it car insurance or two wheeler insurance, IDV (Insured Declared Value) for each year is computed as per the depreciation chart in the Motor Tariff. IDV is one of the most important factors that should be considered when buying vehicle insurance.

c. Most insurance providers including Royal Sundaram General Insurance let the vehicle owners customize the package car insurance policy through appropriate add-ons. Though these add-ons increase the premium amount, it also helps in providing the kind of coverage that the vehicle owner believes in.

d. Package car insurance offers coverage against the damages to the car due to natural calamities like earthquakes, cyclones, floods, etc. It also offers coverage for the losses incurred due to car theft.

As the benefits offered by package car insurance outweigh the benefits offered by third party insurance, the premiums are also more for package coverage. Vehicle owners can buy third party insurance and package insurance online.

Insurance providers like Royal Sundaram General Insurance also let the existing policyholders upgrade their policy to a package policy. You may ask, why upgrade?

Why upgrade to a package car insurance

a. It protects your car against damages and losses incurred due to accidents, natural calamities, and more. At the same time, it also provides the benefits offered by third party car insurance.

b. Package car insurance policies from major insurance providers come with a personal accident cover – a must-have in today’s time where we come across reckless drivers on the road! However, personal accident cover is also available in third-party policy.

c. Through relevant add ons, the car insurance policy can be customized to suit your needs. For example, the road-side assistance included in the package car insurance policy acts as the most trusted ally when your vehicle breaks down.

Conclusion

Be it car insurance or two wheeler insurance, the vehicle owner should make a conscious decision to select the insurance that meets the budget as well as the condition (and current pricing) of the vehicle. It is recommended to do thorough research before zeroing on the right kind of vehicle insurance policy.