Comprehensive Vs. Third Party Car Insurance: What's The Best Option For You?

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Regardless of whether you’re buying your first car or are simply looking to upgrade, choosing the right type of insurance is naturally a vital part of the car purchasing process. This is because car insurance helps protect not only your vehicle and other third-party owned vehicles when out on the road, but also your back pocket, so to speak.

With the right insurance policy in place, you can help safeguard yourself from the risk of accruing great financial debts in the event that you’re found liable for a motor collision.

But of course, there are a few different types of car insurance policies to select from, just like there are different insurance providers to choose from too – and it can sometimes get confusing. Using an online insurance comparison site can be helpful, but can also feel like falling down a rabbit hole of information and conflicting quotes. Let’s be honest, who has the time to sit and read through every term and condition of an insurance plan?

Insurance companies can provide additional information with their quotes, but all the terms they use can start sounding like jargon after a while too. So, let’s break down the two different types of car insurance (comprehensive and third party), go through all the hard-to-understand bits, and help you determine what kind of car insurance policy is the best option for your unique consumer needs.

What is comprehensive car insurance?

First, let’s start with a general definition of both of the two types of car insurance, starting with comprehensive! Comprehensive car insurance is basically exactly what it sounds like. Comprehensive is defined as including, or dealing with, all or nearly all elements or aspects of something.

In terms of car insurance, this means that a comprehensive car insurance plan is likely to cover you for:

  •       Theft
  •       Fire, hail, storm and flood
  •       Accidental damage
  •       Legal liability
  •       Windscreen repair or replacement
  •       Hire car (to use when your car is being repaired)
  •       Emergency repairs (up to a certain value)
  •       Towing
  •       Full payout (at market value or insured value) if your car is damaged beyond repair

Keep in mind, however, that some policies may offer some of the above as extras rather than inclusions. This is why it pays to shop around when searching for insurance policies – and to read the fine print on your policy contracts before you sign anything!

Generally speaking, securing comprehensive car insurance is the best way to cover you against damage to your own car, other people’s cars (i.e. third party vehicles), and any other property that’s involved in motor collisions – regardless of who is at fault. This is what makes comprehensive car insurance the most attractive option for most motorists.

Even if you’re hit by someone else, and they’re not covered by any kind of insurance, or something damages your car in a major way, your comprehensive car insurance will usually ensure that you’ll still be able to repair your car or get a payout to buy a new one if the damage is too extensive.

Let’s remember that comprehensive car insurance can be expensive, however, and understandably so, when you consider the risks that insurance providers take on my offering such a thorough and high-value product to their customers. Insurance companies don’t want to take the risk of having to pay out drivers’ tens of thousands of dollars without being able to make significant profits in return.

Selecting comprehensive car insurance means that you’ll be covered for almost anything, but you’ll be paying more for it in premiums. So be ready to pay a higher premium in order to enjoy the many benefits that accompany taking out a comprehensive car insurance policy.

What is third party car insurance?

Simply put, third party car insurance covers damage to other peoples’ cars (i.e. third party vehicles) if you’re at fault in a road accident, but it does not cover the damage to your own car. This kind of insurance can sometimes be called third party and property car insurance, meaning it also covers other peoples’ property if you’re at fault for damaging it.

If you think you can cover the cost of repairs to your car out of your own pocket, then a third party car insurance policy may be the best and safest option for you. This allows you to be covered against any car or property you may cause damage to, and leaves you to deal with your own car.

Third party car insurance policies are fairly popular amongst motorists who maintain lower cost vehicles that are more likely to have an abundance of spare parts available. For luxury cars and even vintage cars, however, third party car insurance typically provides inadequate cover, as it won’t safeguard their vehicle as a personal investment.

Third party with fire and theft cover

When shopping for car insurance policies, if you decide that third party cover is all you need, you can still choose to include cover to fire (including bushfires) and theft. In this case, your car will be covered if it’s stolen, or damaged by fire or attempted theft.

This option (referred to as ‘third party fire and theft’ car insurance) is good for drivers who want some added peace of mind and cover against theft and fire damage, but aren’t looking for the same level of comprehensive cover for their vehicle that you would get with a comprehensive car insurance policy.

Once again, remember to read up on all the inclusions that accompany any of your shortlisted policies, and be sure to ask prospective insurance providers any and all questions you may have as well.

What does car insurance cost?

Once you’ve selected a type of insurance, you’ll begin to pay what is called a premium each year. Your insurer will work out your premium by estimating how likely you are to make a claim, or how likely you are to use the cover of the insurance. If you do make a claim, you’ll also have to pay something called excess, which is also set by your insurer.

Premium and excess depend on factors such as:

  •       your policy – comprehensive, third party, etc.
  •       your age – those under 25 are typically charged more for insurance
  •       if you’ve made any claims in the past – even if you’ve made one claim, it can increase your premium
  •       if you are the only driver of the car, or if others drive it too
  •       if a previous insurer has denied a claim in the past
  •       the kind of car you own – a more expensive or high-powered car will mean more expensive insurance

How to find the right car insurance policy for you

Before you start shopping for insurance, it’s important to assess your car insurance needs so that you choose the plan that’s right for you. To do this, calculate the value of your car against quotes on premiums and excess from different insurers, then decide which kind of insurance is likely to give you the best combo of cover and value.

Remember, if you’re all about giving your car the best treatment against unexpected snags, go for the comprehensive option. But if you’re just looking to dodge the repair drama and hefty bills of fixing someone else’s wheels, third party insurance policies are likely to have you covered.

So long as your insurance policy aligns with your personal finances and consumer preferences, however, then you should feel comfortable that you’ve secured the right policy to suit your needs.

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