Islamic Ruling on Car Insurance
it should be remembered that if one is obliged by law to have an insurance cover for ones car, then it would be permissible for one to have insurance up to the minimum level required by law. Since the third party insurance is mandatory by law in many countries, it would be permissible to take up this insurance, for it is impossible for one to avoid it.
Thus, what you explained to your family that only third party insurance is permissible according to Shariah was correct indeed. It is impermissible (in normal cases) to take up fully comprehensive insurance.
it should be remembered that since third party insurance is a mandatory legal requirement for every car-owner, he can effect this kind of insurance, because it is not possible for him to avoid it.http://www.central-mosque.com/fiqh/Car.htm
If a Muslim needs to claim on their car insurance policy, can they benefit from the entire amount of money?
And Allah knows best in all matters