Various Car Insurance Coverages Explained

Get An Overview Of The Various Car Insurance Policies Available In The Market


Whether we own a car or not, we are aware that car insurance is something that every car owner needs. This may also be related to the fact that as car owners and drivers we have been stopped at least once by a traffic cop who has demanded to see our car insurance papers. So, what is car insurance really? Is it a just a piece of paper that is to be produced when demanded by a traffic authority? While car insurance is undoubtedly mandatory for vehicle owners in India, it is much more than a policy document. It protects you financially when your vehicle gets damaged, as well as legally when you get into an accident. Many car insurance policyholders are unaware of the various types of car insurance coverages, or what their motor insurance policy entails. The information below might help you gain a basic understanding of the various motor insurance coverages available in the market.

There are two main types of policies offered by car insurance providers in India. They are explained below:

Liability Insurance or Third Party Insurance

Liability insurance is also referred to as third party insurance. According to the Motor Vehicles Act, it is mandatory for every vehicle owner to have third party insurance. Therefore, if a car driver is unable to produce the car insurance policy document when demanded, it can result in a fine and/or imprisonment. So, what does it mean when you have liability or third party insurance? Such type of insurance covers injuries and/or damages to a third party, their car or two-wheeler in an accident. Let’s consider an example to understand this type of coverage better.

Assume a car collided with another two-wheeler, and in the accident, the rider was injured and his motorbike was damaged too. While the car owner did not suffer any injuries, the car was damaged in the event. Since the car owner had a third party insurance for the vehicle, the motor insurance provider will only pay for injuries caused to the third party and the damages caused to the two wheeler, and not for damages to the car.

Comprehensive Insurance

Under comprehensive motor insurance, policyholders are offered third party coverage, along with coverage against bodily injuries or death and damages to their vehicle. While comprehensive car insurance may have higher premium than third party insurance, the former offers more enhanced coverage. Consider the example provided above. If you have comprehensive car insurance, you can also make claims for damages to your car. Moreover, if your car insurance provider has tied up with garages, you can send your car for repairs to a location convenient to you and take advantage of the cashless facility.

Enhancing Coverage

You can enhance the coverage of your comprehensive car insurance policy even further by opting for add-on covers. These add-ons come at an additional cost, but will address your needs that might not be met by your base car insurance policy. For instance, you can choose the zero depreciation add-on cover to offset the effect of depreciation on your car by up to 50 per cent on various parts and paints. The No Claim Bonus secure is another important add-on cover that you can buy with your car insurance policy. It allows you to retain the NCB discount offered by your car insurance provider even after you make claims on your car insurance policy. Another add-on cover that can help you enhance the coverage of your car insurance policy is the engine protect cover. This add-on cover pays you for engine damage caused due to ingression of water/lubricant. This add-on cover will benefit you if you live in a flood-prone area.


How to choose the best car insurance policy

Now that you know what kind of car insurance coverages are available in the market, here are some facts that will help you buy the best car insurance in India

1) Choose car insurance coverage as per the use of your vehicle. For instance, if your car is over 10 years old, a third party car insurance might be suitable for you

2) Choose add-on covers smartly. For example, the zero depreciation cover will benefit you if you are car is new

3) Determine the insured declared value (IDV) of your car appropriately. IDV is the maximum amount your insurance provider pays you in case of damages to your car

4) Read the policy wordings of your car insurance policy carefully

The views, thoughts, and opinions expressed in the artefact above are for marketing purposes only. Before concluding the sale, please refer to policy wordings and prospectus

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