Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 21, 2020

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Key takeaways...

  • People who have been hurt in an accident caused by someone else will be able to file a claim
  • Comprehensive coverage ensures that the borrowers will be able to have a vehicle repaired or replaced
  • Comprehensive coverage is required to receive an auto loan

Auto insurance can be very confusing because all insurance does not protect the policyholders’ vehicles as some people expect that it would.

Some auto insurance is only to be reserved for injuries and damages that at-fault drivers cause to other people, and it doesn’t apply toward their cars or bodily injuries.

This would be third-party or liability auto insurance. If the policyholders would like insurance to cover their cars, they need to add comprehensive coverage to their policies.

Enter your zip code in our comparison tool above to compare multiple car insurance quotes for FREE!

Table of Contents

What’s the difference between third party and comprehensive auto insurance?

Third-party auto insurance is going to be what is required of drivers in most states.

They must purchase third party auto insurance because most states’ driving laws mandate that drivers must take measures to pay any medical bills for the people they injure if they cause an accident.

The other part of third-party auto insurance is to take financial responsibility for the damaged property.

In these states, another requirement is that these people be able to demonstrate to the law enforcement officer who asks them that they have purchased third-party auto insurance.

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Comprehensive Auto Insurance Is Optional

Comprehensive auto insurance, on the other hand, is not required of drivers by their states. The states do not have laws stating that drivers take measures to have the financial means to repair their vehicles.

For this reason, comprehensive auto insurance is called optional. Drivers may decide to purchase it, or they can go without.

In some cases, comprehensive coverage is required in order to receive an auto loan.

If anything happens to the vehicle, the comprehensive coverage ensures that the borrowers will be able to have it repaired or replaced. There are many other reasons why people purchase full car insurance coverage.

The Purpose of Third Party Bodily Injury Insurance

Third party auto insurance that is specifically for injuries goes by the name of a bodily injury liability. When people are hurt in tort states, they are entitled to sue the person who hits them.

If this happens, the bodily injury liability coverage will pay the policy holder’s legal bills.

After there has been a judgment against the at-fault driver, the bodily injury liability coverage pays the amount owed to all injured parties.

It is what will keep the at fault-drivers from having to pay the entire bill with their savings.

The Purpose of Third Party Property Damage Insurance

As was described above, third party auto insurance is also for damaged property.

That is why drivers must also purchase property damage liability coverage for anything that may need to be repaired or replaced due to the car collision.

Without this type of coverage, drivers face the consequences their states will give them for not purchasing it as well as the need to pay for all of the repairs by themselves.

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Third Party Auto Insurance Pays for Damages and Loss after a Collision

Another feature that makes third party auto insurance different from comprehensive auto insurance is the fact that third-party auto insurance is only invoked after a car collision.

After an accident, the person who caused it must be determined because the state’s laws assert that the person responsible for the accident must also be responsible for paying the injured third parties’ bills.

People who have been hurt in an accident caused by someone else will be able to file a claim with the at-fault driver’s insurance company if they have experienced injuries in the crash or their property was damaged.

The people who are affected may include:

  • Drivers of other vehicles
  • Passengers in the other cars
  • Pedestrians who were walking on the street and were hit
  • Bicyclists who may have been hit by a car involved in the accident

Comprehensive Auto Insurance Pays When No Collision Has Occurred

Comprehensive auto insurance is a type of optional insurance for the policy holder’s vehicle that did not involve an auto accident.

If the vehicle has been damaged, the policyholders will be able to file claims with their own auto insurance companies for payment through their comprehensive auto insurance.

The policyholders will be able to use their comprehensive auto insurance coverage when their cars are damaged by:

  • A natural disaster
  • Hitting an animal
  • A fallen tree
  • Fire
  • Riot
  • Vandalism

Find Affordable Third Party and Comprehensive Auto Insurance

Drivers, in most cases, must purchase third party auto insurance, but adding comprehensive auto insurance is often a good idea.

To make this more affordable, people can go to our comparison feature and obtain several quotes for this type of auto insurance coverage.

Enter your zip code in our comparison tool below to receive FREE car insurance quotes.

References:

  1. https://www.allstate.com/tools-and-resources/car-insurance/liability-car-insurance-cover.aspx
  2. https://www.investopedia.com/terms/t/third-party-insurance.asp
  3. https://www.statefarm.com/insurance/auto/coverage-options/comprehensive-coverage
  4. https://www.libertymutual.com/auto/car-insurance-coverage/bodily-injury-liability
  5. https://www.iii.org/publications/insurance-handbook/insurance-basics/auto-insurance-basics