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Types of Car Insurance Policy in India

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A car insurance protects the owner of the vehicle from unforeseen risks. In case of a road accident, there is always a possibility of injury or even death of the victim. In such a scenario, the owner of the car can be charged with a claim for compensation. A car insurance policy protects the owner from such unforeseen financial liabilities.

Similar is the case for third party damage to property due to a road accident. There is an insurance policy that covers the cost of repair and any damages incurred by the vehicle owner.

Car insurance coverage is available for a year. Before the expiration of the insurance policy, the same must be renewed by the owner of the car.

Benefits of car insurance

Benefits of Third Party Insurance Policy:

A third party car insurance policy is mandatory for all vehicle owners in India. This policy protects the owner from financial liabilities that arise due to road accidents. These road accidents may result in injury or death of the victim. It may even result in third party property damages. All these may give rise to some unforeseen financial liabilities. Third party car insurance protects the owner of the car from such eventualities.The owner of a car that is on the road without a third party insurance coverage could be punished with steep fines.

Benefits of Comprehensive Car Insurance Policy:

Different types of car insurance policies along with a number of benefits are offered by various insurance companies to vehicle owners in India. These benefits typically include insurance coverage for the cost of repair in case there is damage to the body of the car due to a road accident.

It also offers coverage to the car from any man-made or natural calamities like terrorist attacks, riots, theft, cyclone, earthquake etc. Of course, the reimbursement will depend on the value of the insurance coverage.

Additional benefits of car insurance.

  • Offers financial benefits to the injured or to the heirs of the deceased.
  • Offers third party property damage claims
  • Reimbursement of legal fees and cost of lawsuits due to road accidents.
  • Cost of repair of the damaged car to the extent permissible under the value of the insurance coverage
  • Offers insurance coverage benefits for theft, natural calamities, etc.
  • Individuals who own more than one car all of which are insured with the same insurer can claim discounts on the premiums. It also provides additional benefits such as an extension of the insurance coverage when the car is being driven by someone else with the permission of the owner.
  • If the owner of the car has not made any claim during the period of the insurance coverage, then a “No Claim Bonus” is granted to that owner. Usually this “No Claim Bonus” is adjusted at the time of the renewal subject to the terms and conditions of the insurance policy

Types of car insurance available in India

In India, there are two types of car insurance policy available to vehicle owners.

  • Third Party Insurance Policy
  • Comprehensive Insurance Policy

Features of third party insurance policy:

This insurance policy is cheaper than a comprehensive insurance policy. Only third party damages are covered by a third party insurance policy. It does not cover damages to the owner's car. This car insurance usually takes care of financial liabilities such as injury or death which may result from a road accident. The insurance also covers third party property damages.

Difference between a third party and a comprehensive car insurance policy:

A third party car insurance policy only offers protection to third party damages whereas a comprehensive insurance coverage offers multiple benefits to the car owner

If the value of the car is low, then it is prudent to go only for a third party insurance policy. But if the car is expensive it is better to opt for comprehensive insurance coverage.

A third party insurance policy is cheap whereas the premium of comprehensive insurance coverage is far more costly.

A car owner has to weigh the various pros and cons involving his financial ability, the value of the car and the benefits most needed by him or her when selecting a car insurance policy.

Types of add-on covers for car insurance

Car insurance coverage a few years back was very uninspiring. The insurance companies were offering standard cost for damages and third party liability obligations.

At present, insurance companies are offering various types of car insurance policies which cover different types of risks. These insurance coverages are popularly known as comprehensive car insurance policy.

Further, these comprehensive car insurance policies also allow the policy holder to include add-ons by paying extra premiums.

Some Popular Add-Ons for Car Insurance:

  • Zero Depreciation cover: The entire cost of spare parts of the car which is damaged due to road accident is borne by the insurance company
  • Engine Protection cover: This add-on is very popular with expensive car owners. It takes care expenses incurred on damaged engine repairs up to three years.
  • Return to Invoice: This add-on is very useful in case of a theft. It reimburses the invoice price of the car along with registration cost and the paid road taxes
  • Road Assistance cover: This add-on offers various services like arranging for the mechanic, assistance in case of break-down on the road, etc.
  • Accident Coverage for Car Passengers: This add-on provides compensation of up to ₹1 lakh to any passenger in the car who is injured or has died due to a road accident.

These are some of the most popular add-ons a policy holder can add to their car insurance. Every add-on increases the cost of the premium. A car owner should wisely choose the add-ons to reduce his or her financial burden.

How to choose the perfect type of car insurance for your vehicle?

Selection depends on various factors such as the type of car, the condition of the roads in the city, self-driven or driver driven and third party liabilities. After thoughtful consideration of all these factors, the owner can opt for the most suitable car insurance policy.

Coverage under car insurance policy

The significant insurance coverage which is available to a car owner are as follows:

Liability Coverage:

The financial liabilities arising out of injury or death involved in a road accident. It also covers the medical costs of the injured party.

The compensation is payable for the damages caused to the property of a third party due to road accident.

The third party insurance coverage is compulsory under traffic laws in India.

Coverage for Collision:

The cost of damages in case of collision will be borne by the insurance company

The cost of repairs or reimbursement will depend on the value of the insurance coverage undertaken by the car owner.

In case the car is on lien it is advisable to opt for the collision insurance coverage.

Coverage for Personal Injury:

The car owner can include personal injury coverage in his or her car insurance policy.

This car insurance coverage will take care of all his or her medical bills or the cost of hospitalization resulting from a road accident.

This insurance coverage offers benefits to the car owner regardless of who is responsible for the road accident.

Protection from Uninsured Car:

In case the car is involved in a road accident with an uninsured car the third party benefits will be missing. In such a scenario the insurance company will bear the costs of damages and the medical bills in case of injury.

The car involved in a road accident with uninsured car the third party benefits will be missing. In such a scenario the insurance company will bear the costs of damages and the medical bills in case of injury.

Comprehensive Coverage:

A comprehensive car insurance policy offers insurance coverage to the car owner from any eventualities.

This may include damages to your car, driver of the car, pedestrians, other cars, other car passengers, third party property to name a few.

This insurance policy also covers damages from civil disturbances, natural calamities, theft, fire, etc.

The cost of the insurance coverage will depend on the number of benefits a car owner includes in his or her car insurance policy.

These are some of the insurance coverages that you will get from a car insurance policy.

Car insurance is very important as it offers protection to the owner of a car. It is would be most beneficial to the owner to have a comprehensive car insurance policy that will keep most financial risks at bay.

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