Car insurance: You can protect yourself against financial losses due to unforeseen events, as well as your car and any other affected parties, with the aid of a car insurance policy. Before operating a vehicle on the road in India, it is necessary to have at least third-party auto insurance, as stated in the Motor Vehicle Act. A car insurance policy offers a number of optional covers to choose from. These include the return to invoice cover, the engine protector cover, and the zero depreciation cover.
What is car insurance?
Car insurance is a type of financial protection that provides coverage for potential losses or damages resulting from accidents, theft, or other unforeseen events involving your vehicle. It is a contract between the policyholder (the car owner) and an insurance company, where the insurer agrees to bear the financial responsibility for certain losses in exchange for the payment of a premium.
Car insurance typically covers two primary areas:
Liability Coverage: This aspect of car insurance protects the policyholder against legal and financial liabilities arising from injuries or damages caused to other parties in an accident. It includes two types of coverage:a. Bodily Injury Liability: This coverage pays for the medical expenses, rehabilitation costs, and legal fees associated with injuries or death of other individuals involved in an accident caused by the policyholder.b. Property Damage Liability: This coverage compensates for the repair or replacement costs of other people’s property, such as vehicles, buildings, or other structures, that are damaged in an accident caused by the policyholder.
Physical Damage Coverage: This component of car insurance provides coverage for damages to the policyholder’s own vehicle. It consists of two main types of coverage:a. Collision Coverage: This coverage pays for the repair or replacement costs of the policyholder’s vehicle if it is damaged in a collision, regardless of who is at fault.b. Comprehensive Coverage: This coverage protects against damages to the policyholder’s vehicle caused by non-collision events, such as theft, vandalism, natural disasters, falling objects, or animal collisions.
In addition to these basic coverages, car insurance policies may offer various optional add-ons or endorsements. These can include coverage for rental car expenses, roadside assistance, medical payments, personal injury protection, and more. The availability of these add-ons may vary depending on the insurance company and the specific policy.
Car insurance is a legal requirement in many countries, and the minimum coverage levels mandated by law may vary. The cost of car insurance premiums depends on factors such as the policyholder’s driving record, age, location, type of vehicle, coverage limits, and deductibles chosen.
It is important to carefully review and understand the terms and conditions of your car insurance policy to ensure you have the appropriate coverage for your needs and comply with legal requirements.
Types of Car Insurance in India
In India, car insurance policies offer various types of coverage to meet the specific needs and requirements of vehicle owners. The two primary types of car insurance in India are:
Third-Party Car Insurance: Third-party car insurance is the minimum legal requirement for all vehicles in India under the Motor Vehicles Act, 1988. It provides coverage for liabilities arising from injuries or damages caused to third parties (individuals or property) in an accident involving the insured vehicle. Third-party car insurance does not cover damages to the insured vehicle itself. This type of insurance is essential for financial protection against legal claims and is mandated by law.
Comprehensive Car Insurance: Comprehensive car insurance provides coverage for both third-party liabilities and damages to the insured vehicle. It offers a more extensive range of benefits compared to third-party insurance alone. The coverage includes:
a. Own Damage: This component of comprehensive car insurance covers damages or losses to the insured vehicle due to accidents, theft, fire, vandalism, natural disasters, and other non-collision events.
b. Third-Party Liability: Similar to third-party car insurance, comprehensive insurance covers legal and financial liabilities arising from injuries or damages caused to third parties in an accident involving the insured vehicle.
c. Personal Accident Cover: Comprehensive car insurance includes a personal accident cover for the owner/driver. It provides compensation in case of accidental death or permanent disability resulting from a car accident.
d. Optional Add-Ons: Insurers offer a range of optional add-ons or riders that can be purchased to enhance the coverage of a comprehensive policy. These add-ons include zero depreciation cover, engine protection, roadside assistance, consumables cover, and more. Each add-on comes with an additional premium.
It’s important to note that the Motor Vehicles Act mandates third-party insurance, but comprehensive car insurance is not compulsory by law. However, opting for comprehensive coverage is highly recommended as it provides a higher level of protection for your vehicle and financial security against potential damages and losses.
When purchasing car insurance in India, it’s essential to compare policies from different insurers, consider the coverage limits, deductibles, and add-ons to find the policy that best suits your needs and budget.
What are Car Insurance Add-ons?
Auto insurance add-ons, also known as riders or endorsements, are optional additional coverages that you can purchase to enhance the protection and coverage offered by your basic car insurance policy. These add-ons provide extra benefits and extend the scope of your policy beyond the standard coverage. While the availability of add-ons may vary among insurance companies, here are some common Auto insurance add-ons available in India:
Zero Depreciation Cover: This add-on ensures that you receive the full claim amount without factoring in depreciation for the replaced car parts during repairs. It is particularly useful for new or expensive vehicles, as it can significantly reduce out-of-pocket expenses in case of a claim.
Engine Protection Cover: This add-on provides coverage for damages to the engine or its components due to water ingression, leakage of lubricating oil, hydrostatic lock, or other related perils. It helps cover the costs of repairs or replacements resulting from such incidents.
Return to Invoice (RTI) Cover: The RTI cover bridges the gap between the Insured Declared Value (IDV) of your vehicle and its invoice value in case of theft or total loss. It ensures that you receive the original invoice price of the vehicle rather than the depreciated IDV amount.
Roadside Assistance: This add-on provides assistance in case of breakdowns, flat tires, fuel assistance, battery jump-starts, towing, and other emergency situations while on the road. It offers peace of mind and ensures prompt assistance in unforeseen circumstances.
Consumables Cover: The consumables cover reimburses expenses incurred on consumable items such as engine oil, coolant, brake fluid, nuts, bolts, and other similar items during repairs following an accident or damage. It helps cover these smaller expenses that are typically not included in the standard coverage.
Personal Accident Cover for Passengers: While comprehensive car insurance policies include personal accident cover for the owner/driver, this add-on extends the coverage to include passengers traveling in the insured vehicle. It provides financial compensation in case of accidental death or permanent disability resulting from a car accident.
NCB Protection: No Claim Bonus (NCB) is a reward given to policyholders for not making any claims during the policy period. The NCB protection add-on ensures that your NCB remains intact even if you make a claim during the policy term. It helps you maintain the discount on your premium in the following years.
It’s important to note that each add-on comes with an additional premium cost, and their availability may vary across insurance providers. When considering add-ons, assess your needs, the value of your vehicle, and the potential risks you may face. Compare the coverage and costs offered by different insurers to make an informed decision about which add-ons are suitable for your car insurance policy.
How to select the best car insurance for your car?
Factors that must be considered during buying the car insurance policy.
- Type of Policy:- If you choose third party insurance, your premiums will be quite affordable. Whereas comprehensive plans can be little costly.
- IDV of Vehicle:- IDV of the car directly affects the premium of car insurance. This also affects the claim amount.
- Add-ons:- Every add-ons have their own prices and coverage therefore, the number of add-ons significantly affect the cost of car insurance policy.
