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The term, "comprehensive coverage" is usually used in the context of auto insurance. It is usually sold along with collision coverage. While collision coverage pays for the repair of collision-related damage or for the total loss of the vehicle if appropriate, comprehensive coverage is a little different. It it triggered by occurrences other than collisions, such an vandalism. The precise scope of risks for which comprehensive pays is outlined in the policy.

"Third party insurance" is another way of referring to liability coverage. It serves two main purposes:

1. It provides the insured(s) with a defense in claims brought by third parties against the insured(s) resulting from risks contemplated by the policy. Stated otherwise, if a lawsuit is filed, the liability insurer will hire and pay a lawyer, and will pay related court costs, to defend the insured(s). If a claim is asserted, but no lawsuit is filed against the insured, the insurer will try to settle the claim with the other party if the insurer believes that there is fault on the part of the insured and if the claimant sustained compensable damages.

2. It ensures that a party who has sustained legally recognized damages (for example, bodily injuries or property damage) for which the insured is legally responsible, has a source of recovery for those damages. The amount of recovery from the insurer is capped by the amount of liability insurance maintained by the insured.

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Q: What is the difference between comprehensive insurance policy and third party insurance policy?
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