The Difference between Comprehensive & Third-Party Motor Insurance

Third-Party Motor Insurance

After purchasing a new or a second-hand car, the next important step is to obtain an adequate motor insurance policy. Motor insurance is a mandatory requirement under Saudi Arabia’s traffic regulations. However, given the various types of insurance policies available in the market, choosing an insurance policy that suits your needs may be confusing.
To simplify, motor insurance policies can be divided into two types: compulsory (third party) insurance or comprehensive motor insurance.
Below, we explain the key difference between both these types and how you can choose the right insurance policy for you

1. Definition

Compulsory Insurance (Third-Party Insurance)

This is a mandatory insurance policy stipulated by the traffic regulations in the Kingdom of Saudi Arabia, as well as in many countries around the world. Under this insurance, the owner of the motor insurance policy is covered against any damage caused by them to other drivers, their vehicles and property. The damage caused to others in motor accidents is covered 100 percent by this policy.

Comprehensive Insurance

This is an insurance policy that covers the loss or damage to the insured vehicle, including its accessories, as a result of any accidental collision or due to mechanical failure or malfunction caused by prolonged use of the vehicle. This also includes damages that are not a direct result of an accident (subject to the terms and conditions mentioned in the policy).

2. Insurance Coverage

Compulsory Insurance (Third-Party Insurance)

The purpose of this insurance is to protect the insured person from financial liabilities incurred due to damage caused to third parties, whether arising from use of the car or while the car is stationary in Saudi Arabia. As such, the insurance company is obliged to indemnify third parties in line with the terms and conditions stated in the policy for all amounts that the insured owner or the driver is required to pay to such parties. This includes:

  • Damage caused to third parties inside and outside the vehicle
  • Physical damage outside the vehicle

Comprehensive Insurance

Comprehensive motor insurance is designed to cover damage to the insured car, as well as to the property of others as a result of an accident. The insurance coverage usually includes:

  • Insurance coverage for the insured vehicle
  • Third-party liability
  • Cost of emergency medical care
  • Coverage for natural disasters (Sandstorms are usually excluded)
  • Incidents of theft and fire
  • Transportation costs to auto repair workshops

A comprehensive insurance policy may also include some additional options, such as repairing the vehicle at the repair workshop of the official dealership, providing a temporary car while the vehicle is being fixed and expanding the geographical coverage of the policy to include other countries.

3. Main Features

Compulsory Insurance (Third-Party Insurance)

  • It is compulsory to insure all vehicles in the Kingdom of Saudi Arabia, with at least a Third-Party insurance policy.
  • This policy is usually cheaper than a comprehensive insurance policy.
  • The price of the insurance policy is usually not subject to the value of the car but may depend on the type of car.

Comprehensive Insurance

  • Comprehensive insurance is optional for motor vehicle owners.
  • The price of insurance mainly depends on the type and value of the car.
  • This type of insurance includes more coverage and benefits compared to the compulsory insurance policy.
  • The coverage of this policy can be extended to include damage to the insured car due to accidents occurring outside Saudi Arabia at an additional cost.
  • It provides additional optional coverage that offers a number of features that are not included in basic insurance policies.

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