Choosing the right car insurance policy in India can be confusing, especially with frequent IRDAI rule updates and recent GST reforms in 2025. Two types dominate the Indian motor insurance landscape: Third-Party (TP) Insurance and Comprehensive Insurance.

By the end of this article, you’ll know exactly which policy protects your wallet, keeps you legally compliant, and suits your driving needs.

Quick Overview: TP vs Comprehensive

IRDAI Update 2025: All new private cars must have minimum 3-year third-party cover, and a 10–25% TP premium hike is under consideration. This makes comprehensive coverage increasingly valuable.

What is Third-Party Insurance?

Third-party motor insurance is the legal minimum required to drive on Indian roads. It covers liability if you cause:

• Injury or death to a third party

• Damage to someone else’s vehicle or property

Important: TP insurance does not cover damage to your own vehicle or theft.

Example:

• You accidentally scratch a neighbor’s car, causing ₹30,000 damage.

• With TP only, the insurer pays the third party, but your own car repairs are out-of-pocket.

What is Comprehensive Insurance?

Comprehensive insurance bundles TP coverage with Own Damage (OD) protection. It covers:

• Your vehicle from accidents, fire, theft, natural disasters, and vandalism

• Third-party liabilities (same as TP)

• Optional add-ons like zero-depreciation, engine protection, return-to-invoice, roadside assistance

Example:

• You hit a pole, damaging your bumper (₹40,000) and another car (₹25,000).

• Comprehensive cover: ₹25,000 paid to third party + ₹40,000 for your repairs (subject to deductible).

Real-World Examples

Example 1: Theft of Vehicle

• Scenario: Your Maruti Swift is stolen in Mumbai.

• TP only: No payout; you bear total loss.

• Comprehensive: Insurer pays Insured Declared Value (IDV), possibly with Return-to-Invoice add-on.

Example 2: Flood Damage

• Scenario: Monsoon floods damage your Hyundai Creta’s engine.

• TP only: No coverage; all repair costs out-of-pocket.

• Comprehensive + Engine Protect add-on: Engine repair/replacement costs covered.

Example 3: Hit-and-Run

• Scenario: Another vehicle hits your car and flees.

• TP only: You must find the other driver for compensation; your car remains unrepaired.

• Comprehensive: Own-damage section covers your repair costs; insurer may later recover from the at-fault party.

Premium Comparison Snapshot (Indicative)

Note: Premiums depend on car age, city, IDV, driver age, claims history, and selected add-ons.

Popular Add-ons

How to Choose the Right Policy

• Only TP: Car is old / low value / rarely used

• Comprehensive: New / financed / mid-to-high value cars, or if you drive daily in traffic or flood-prone cities

• Targeted add-ons: Choose based on local risks and car age

Pro tip: Weigh small repairs vs NCB impact — sometimes paying out-of-pocket for minor damage preserves your discount on next year’s premium.

Case Study: Monsoon Flood

• A 2022 Hyundai Creta owner’s car engine flooded; minor body damage added up to ₹6 lakh.

• With TP only: Entire cost out-of-pocket.

• With Comprehensive + Engine Protect: Full repair covered; claim settled in 15 days.

This illustrates why comprehensive cover is increasingly recommended in flood-prone Indian cities.

FAQs

Q: Is TP always cheaper?
Yes — TP covers only third-party liabilities; comprehensive covers your own car too, hence higher.

Q: Can I add zero-depreciation to TP?
No — this add-on applies to comprehensive OD cover only.

Q: What documents are needed for a theft or total loss claim?
Police FIR, RC book, policy documents, keys, claim forms; RC surrender often required for total loss claims.

Conclusion

Third-party insurance keeps you legal but exposes you to high repair/theft costs. Comprehensive insurance protects both you and others, with flexible add-ons for evolving Indian risks like floods, theft, and accidental damage.

Best for you if…
✅ New or financed car → Comprehensive with zero-depreciation + engine protect
✅ Old or rarely used car → Third-party only
✅ Flood-prone city → Comprehensive + targeted add-ons

Invest in comprehensive coverage for peace of mind — your car, wallet, and family will thank you.