Third-Party vs Comprehensive Insurance

Buy comprehensive. Third-party is the legal minimum, and that is all it is. It pays the person you hurt. It pays nothing towards your own vehicle — not for a crash, not for theft, not for a flood. The extra premium is not a tax on caution. It is the only part of the policy that protects the asset you paid for. If you have already settled that question, our pick of the best car insurance and the best bike insurance policies takes it from there. The one honest exception is an old, low-value vehicle where the own-damage premium starts to rival what a claim would actually pay out. Below that line, third-party plus a repair fund is a defensible choice.

Notified third-party premium — private car, 1000–1500 cc	3,416 ₹ a year
What it means	Base rate set by MoRTH, not by the insurer. Add 18% GST. In force since 1 June 2022; no later revision has been notified.
Fine for driving uninsured	₹2,000 — First offence. ₹4,000 after that. Jail up to three months either way.
Third-party liability limit	Unlimited — The 2022 Rules price third-party cover for unlimited liability.
Cut from a plastic part claim	50% — Standard depreciation on rubber, nylon, plastic, tyres and batteries.

as of 2026-09-06 · MoRTH G.S.R. 394(E), Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 · verified

Third-party vs comprehensive: what changes, line by line

What you are asking about	Third-party only	Comprehensive	Which wins	Why
Meets the legal minimum	Yes	Yes	Tie	Section 146 asks only for third-party cover
Damage to your own vehicle	Nothing	Paid, less depreciation	Comprehensive	Own-damage is a separate section of the policy
Theft of the vehicle	Nothing	IDV paid, less the value of the wreck	Comprehensive	Theft sits under own damage
Fire, flood, riot, terrorism	Nothing	Covered	Comprehensive	All ten are named perils in the own-damage section
Injury or death you cause	Unlimited	Unlimited	Tie	Both are priced for unlimited liability
Owner-driver accident cover	₹15 lakh	₹15 lakh	Tie	Section III applies to both
Who sets the price	MoRTH, by engine cc	MoRTH rate plus a premium the insurer sets	Third-party	Fixed price, so nobody can undercut it
No Claim Bonus	None	Up to 50% off own-damage premium	Comprehensive	The bonus discounts own damage, so it needs own damage to exist

Cover positions from an IRDAI-filed private car package policy wording (UIN IRDAN134RP0003V01201819). Legal position from the Motor Vehicles Act, 1988.

Third-party premium by engine size — the notified rates

Vehicle	Engine size	Base premium a year (₹)
Private car	Not exceeding 1000 cc	2,094
Private car	1000 cc to 1500 cc	3,416
Private car	Over 1500 cc	7,897
Two-wheeler	Not exceeding 75 cc	538
Two-wheeler	75 cc to 150 cc	714
Two-wheeler	150 cc to 350 cc	1,366
Two-wheeler	Over 350 cc	2,804
New private car	Three-year single premium, 1000–1500 cc	10,640
New two-wheeler	Five-year single premium, 75–150 cc	3,851

MoRTH G.S.R. 394(E) dated 25 May 2022, in force 1 June 2022. Add 18% GST to every figure. Electric vehicles get about 15% off these rates and hybrids 7.5%. A vintage-registered private car pays half.

What comprehensive takes off your claim before it pays

Part replaced	Deducted from the claim
Rubber, nylon, plastic, tyres, tubes, batteries, airbags	50%
Fibre glass components	30%
Anything made of glass	Nil
Other parts, car under 6 months old	Nil
Other parts, car 1 to 2 years old	10%
Other parts, car 3 to 4 years old	25%
Other parts, car 5 to 10 years old	40%
Other parts, car over 10 years old	50%

Standard depreciation schedule in the IRDAI-filed private car package policy wording. Paint is cut 50% on the material cost only.

Which one do you legally need in India?

You need third-party cover. Nothing more. Section 146 of the Motor Vehicles Act, 1988 says no vehicle may be used in a public place without it.

Comprehensive is not a second policy. It is third-party cover plus an own-damage section bolted on. So it satisfies the law too. Nobody is ever fined for holding comprehensive.

Driving without third-party cover is an offence under Section 196. The first offence draws a fine of ₹2,000, or up to three months in prison, or both. A repeat offence draws ₹4,000 on the same terms. The Ministry of Road Transport and Highways confirmed this in a public notice in June 2024.

What third-party insurance does not pay for

This is the part most people learn after the crash. Third-party cover pays the other side. It pays for the person you injure or kill. It pays for their car, their wall, their shop front.

It pays nothing for your vehicle. Not one rupee. If you skid into a divider alone at night, you fund the repair yourself. If the car is stolen, you get nothing. If it drowns in a flood, you get nothing.

One thing does cover you. Every motor policy carries a compulsory personal accident cover for the owner-driver, with a sum insured of ₹15 lakh. It pays on death or serious permanent injury. It does not touch your car.

What the extra premium on comprehensive actually buys

The own-damage section names the perils it pays for. Fire, self-ignition, lightning. Burglary and theft. Riot and strike. Earthquake, flood, storm, cyclone, hailstorm. Malicious acts, terrorism, landslide. And plain accidental damage.

That is the whole argument for comprehensive. Three of those perils are common in India and none of them involve you doing anything wrong.

Why your claim comes back smaller than the garage bill

Insurers deduct depreciation on every part they replace. Plastic, rubber, tyres and batteries are cut by half. Glass is cut by nothing. Everything else is cut by the age of the car, rising to 50% past ten years.

A bumper is plastic. So is a headlamp housing. On a five-year-old car, a ₹40,000 bill can settle well under that once depreciation and your excess come off. A zero-depreciation add-on removes that deduction. On a car under five years old it is usually worth its price. On an older one it often is not.

What you get if the car is stolen or written off

You get the Insured Declared Value, less the value of the wreck. IDV is not what you paid. It is the maker’s listed price cut by an age schedule, which you can work out for your own vehicle on the IDV calculator — 20% off in year two, 40% off in year four, 50% off in year five.

So comprehensive does not make you whole on a total loss. It moves you from losing everything to losing the gap. That is still the single largest thing the policy does.

When is third-party only the right choice?

Run one sum. Compare the own-damage premium against the IDV it is protecting.

On a twelve-year-old hatchback the IDV may have fallen to a small figure. Depreciation on parts is at 50%. A payout after a claim would be modest. If the own-damage premium is a meaningful share of that payout, the cover has stopped being good value.

Two more cases favour third-party only. A vehicle you barely drive. And a vehicle you could replace out of savings tomorrow without pain. In both, you are the cheaper insurer.

Everyone else should hold comprehensive. That includes every car bought on a car loan, because the lender will insist anyway.

Why only one of the two has a fixed price

The third-party premium is not the insurer’s to set. MoRTH notifies it under Section 147(2) of the Motor Vehicles Act, after consulting IRDAI. It is banded by engine size. Every insurer charges the same figure.

The own-damage premium is set by the insurer. It is priced off your IDV, your vehicle, your location and your claim history. This is the only part anyone can discount.

So when a website advertises “60% off car insurance”, read it carefully. The discount can only apply to the own-damage half. The third-party half cannot legally move.

Add 18% GST on top. The GST Council exempted individual life and health policies from September 2025. Motor cover was not included in that exemption.

Frequently asked questions

Is third-party insurance enough for my car?

It is enough to be legal. It is not enough to be covered. Section 146 of the Motor Vehicles Act requires third-party cover only, so a policy that stops there keeps you on the right side of the law. But it pays only the people you harm. Your own repair bill, a theft, a flood or a fire are all yours to fund. For most owners that is the wrong trade.

Why is third-party insurance so much cheaper than comprehensive?

Because it is buying far less, and because its price is fixed by the government. MoRTH notifies the base third-party rate by engine size under Section 147(2). A 1000–1500 cc private car pays ₹3,416 a year before GST. Comprehensive adds an own-damage premium that the insurer prices off your vehicle value, your location and your claim record.

What happens if I drive without any insurance in India?

It is punishable under Section 196 of the Motor Vehicles Act, 1988. The first offence carries up to three months imprisonment, a fine of ₹2,000, or both. A later offence carries the same imprisonment with a ₹4,000 fine. The Ministry of Road Transport and Highways stated this publicly in June 2024 and asked owners to check their own status. Separately, you personally owe every rupee of any claim a victim wins.

Does third-party insurance cover the driver of my own car?

No. It covers people outside your vehicle. There is one narrow exception built into every motor policy: a compulsory personal accident cover for the owner-driver with a sum insured of ₹15 lakh. It pays on death, loss of limbs or sight, or permanent total disablement, and only when the owner-driver holds a valid licence. Anyone else driving your car is not covered by it.

Can I switch from comprehensive to third-party at renewal?

Yes, at any renewal. Understand what you give up. Your No Claim Bonus discounts the own-damage premium, so with no own-damage cover there is nothing left for it to discount. The bonus also lapses if you do not renew within 90 days of expiry. If you may want comprehensive back later, that clock matters more than the saving.

Do I need comprehensive cover on a brand new car?

You are required to hold long-term third-party cover on a new vehicle. MoRTH notifies a three-year single premium for a new private car and a five-year single premium for a new two-wheeler. Own damage is normally bought alongside it, usually one year at a time. On a new car, comprehensive is the clearer decision it will ever be: the IDV is at its highest and depreciation on parts is nil for the first six months.

Does comprehensive insurance cover flood damage?

Yes. Flood, inundation, cyclone, storm and hailstorm are all named perils in the own-damage section of a standard package policy. Depreciation still applies to the parts replaced. Note the general exclusion for mechanical breakdown and consequential loss. Damage you cause by restarting a submerged engine is a common dispute. Call the insurer before you turn the key.

Sources

Ministry of Road Transport and Highways, Government of India — Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 — G.S.R. 394(E), Gazette of India Extraordinary (primary source) — as of 2022-05-25
Press Information Bureau — Ministry of Road Transport and Highways — Plying motor vehicles without valid motor third party insurance is a punishable offence (primary source) — as of 2024-06-11
Press Information Bureau — Ministry of Road Transport and Highways — Notification issued pertaining to base premium for third party insurance for unlimited liability (discounts for EVs, hybrids and vintage cars) (primary source) — as of 2022-05-26
IRDAI — filed product wording — Motor Private Car Package Policy wording, UIN IRDAN134RP0003V01201819 — named perils, depreciation schedule, IDV schedule, No Claim Bonus and owner-driver cover (primary source) — as of 2026-09-06
Press Information Bureau — Ministry of Road Transport and Highways — Draft notification G.S.R. 441(E) proposing Motor Third Party Premium and Liability Rules for FY 2023-24 (primary source) — as of 2023-06-20
Press Information Bureau — Ministry of Finance, GST Council — Recommendations of the 56th Meeting of the GST Council — insurance exemptions (primary source) — as of 2025-09-03