Insurance: Comprehensive or third-party liability, what’s the difference?
Knowing the main difference is key to making a decision that works for you
“Comprehensive” insurance and “third-party liability” (TPL) insurance are two types of auto insurance coverage that offer different levels of protection.
What’s the difference?
In a nutshell, TPL is the cheaper of the two. It covers only the damages your car may cause to another vehicle.
Comprehensive car insurance, on the other hand, extends coverage to include damages to your own vehicle as well.
Insurance is a regulated industry. In most jurisdictions, a basic car insurance plan like TPL cover is mandatory, while opting for comprehensive insurance is optional.
Here's an axample of the price difference between comprehensive vs TPL insurance in the UAE for a typical vehicle. As of April 18, 2024, and depending on the insurer, indicative insurance rates for a Honda City EX 1.5L, 2017 Model, range from Dh1,092 to Dh1680 per year for a comprehensive insurance and Dh630 to Dh787.50 per year for a TPL.
Look closer at the fine print, and you will discover some of the major differences:
Comprehensive insurance
- Comprehensive insurance provides coverage for a wide range of damages to your vehicle that are not caused by a collision with another vehicle.
- This includes damages from events such as theft, vandalism, fire, natural disasters (like floods or earthquakes), falling objects, and collisions with animals.
- It also typically covers expenses related to glass damage, such as windshield repairs or replacements.
- Comprehensive insurance is optional but is often recommended for drivers who want more extensive coverage beyond basic liability protection.
- This type of insurance usually comes with a deductible, which is the amount you must pay out of pocket before your insurance coverage kicks in.
Third-party liability insurance
- Third-party liability insurance is mandatory in most jurisdictions, as it helps protect other drivers and property owners from financial losses in the event of an accident.
- Third-party liability insurance, is cheaper than comprehensive insurance, as it provides coverage for damages you cause to other people's property or injuries you cause to other people in an accident for which you are deemed legally responsible.
- It does not cover damages to your own vehicle or injuries you sustain in an accident.
- The coverage limits for third-party liability insurance vary depending on the policy and the insurer.
- It typically covers costs such as property damage, medical expenses, and legal fees if you are sued as a result of an accident.
Important note
However, it’s important to note that cost is not the only difference between the two.
While a comprehensive insurance cover may initially require a higher investment, the broader scope of coverage it offers justifies the expense.
In addition to protecting your vehicle comprehensively, there are also long-term benefits.
Why are comprehensive car insurance plans more expensive?
Comprehensive insurance provides coverage for any eventuality affecting your car outside of accidents, including “acts of nature” or natural disasters (like floods, quakes, etc).
This coverage is usually paired with a collision policy that covers damages caused by accidents. Given its broader coverage, is comprehensive insurance worth the higher cost?
Why do many opt for third-party car insurance?
In a nutshell, it's more budget-friendly. Its pricing is also regulated, ensuring fairness for consumers based on the coverage provided. TPL insurance is often preferred as it offers the most basic coverage available in the market. Numerous insurers provide this option.
When does a TPL coverage make sense?
If you’re on a shoestring budget, own a vehicle of relatively low value, or if repair costs are affordable out of pocket, then taking out third-party car insurance makes sense.
TIP:
When taking out insurance, get quotes from multiple providers. This boosts your chances of finding an affordable policy.
In general, opting for comprehensive car insurance is advisable as it provides complete protection not only for other vehicles like third-party insurance does but also for damages to your vehicle and any injuries to the owner-driver.