Comprehensive vs Bumper-to-Bumper Car Insurance: Which Option Should You Get?

Let’s imagine a situation. You’ve just invested in a brand new vehicle – A sedan that has cost you quite a bit of your savings. A week after purchase, you take your vehicle out, and a rash motorist rides right into the passenger side of your car. It’s definitely not your fault, but the damage has been done. What happens now? This is where car insurance comes in. 

In India, there are several types of insurance options available. The government has, in fact, mandated a third-party insurance cover to be taken by all vehicle owners, as per the Motor Vehicles Act 1988. Third-party insurance is liability insurance where the insured (first-party) purchases the insurance from an insurer (second party) for protection against claims made by a third party. These claims could be due to physical injuries suffered or damages to their vehicle or personal property. However, this type of insurance does not provide any coverage to the insured.

This is why only having third-party insurance is not a wise thing to do. When you’re buying a vehicle, it is crucial to go in for either comprehensive or bumper-to-bumper coverage to safeguard your vehicle against damages in the event of an unfortunate mishap. 

Comprehensive insurance offers coverage against natural disasters, civil destruction, fire accidents, glass damages, vandalism, etc., as well as damages to third parties. However, a comprehensive policy will not cover the regular wear and tear of your vehicle. Hence, in the event of damages, you will still end up paying a certain part of the expenses out of your own pocket. 

On the other hand, bumper-to-bumper insurance, also known as nil depreciation or zero depreciation insurance, offers complete coverage to your vehicle and provides 100% of the claim value. The depreciation of the vehicle is not considered, and the insurance company will pay the entire cost of replacement of parts (except tires and car batteries). 

Let’s go into the differences between comprehensive and bumper-to-bumper insurance.

Comprehensive insurance Bumper-to-bumper insurance
Premium amount The premium cost will be lower than in bumper-to-bumper insurance A higher premium will be payable compared to comprehensive insurance
Coverage The compensation claimable excludes the depreciation value of the parts The full value of damages can be claimed, with no deductions for depreciation
Age of the car A vehicle of any age can take a comprehensive insurance policy (but usually up to 15 years only) Only new vehicles, up to a certain number of years (usually 3 or 5 years), can take on a bumper-to-bumper policy 
No. of claims There is no restriction on the number of claims in a year It depends on the insurance company, but usually, a restricted number of claims are allowed each year
Compensation for plastic/metal components You will need to make a partial payment for any repairs or replacements of plastic, metal or fibreglass components of your car The insurance company will pay for any repairs or replacements of plastic, metal or fibreglass components of your car

When is it more advisable to go in for bumper-to-bumper insurance?

It is advisable to pay the extra premium and go in for bumper-to-bumper insurance in certain situations, such as-

  • Your car is a brand new vehicle
  • Your car falls in the luxury or semi-luxury segment
  • You’re an inexperienced driver or do not have a good driving track record
  • You are concerned about small dents in your car
  • You live in an area prone to accidents
  • Your car’s spare parts are costly

It is important to note that bumper-to-bumper insurance will not cover damages due to oil leakage, water ingression, and standard wear and tear of clutch plates, tyres, bearings, etc. You will need to carefully read your policy document’s terms and conditions before you take on your insurance policy.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in

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