If you drive a car you are required to have a valid car insurance policy on it. As per the mandate laid down in the Motor Vehicles Act, 1988, every car in India is required to have a car insurance policy. This mandate makes car insurance a must have. Though you buy a car insurance policy, do you know the details of the coverage and the type of policy?
Types of car insurance
Car insurance policies are of two types –
- Third party liability only policy
Under this cover, if you cause injury to any third party (anyone except you and your car), any financial liability you face in compensating for the injuries caused is paid. If the third party dies due to your car, the financial liability is taken care of by the car insurance policy. Moreover, if you damage any third party property, the financial compensation payable for the damages caused is also paid by the third party policy.
- Comprehensive policy
A comprehensive policy covers two aspects. One is the third party liability wherein your financial liability for injury caused or death of the third party or damages to third party property is covered. Other is the coverage for damages faced by your car and you. This is called own damage cover. If your car is damaged and goes in for repairs, a comprehensive policy covers the expenses incurred on repairs.
Coverage offered
A comprehensive policy covers third party liability as well so let’s understand the coverage features you can get from a comprehensive plan –
- Financial liability faced for causing bodily injury or death to a third party
- Financial liability faced for damaging third party property
- Damage sustained by the car due to natural disasters (lightning, earthquake, flood, hurricane, etc.) or man-made causes (fire, self-explosion, theft, robbery, etc.)
- Damage faced by the car when it is in transit by rail, road, water or air
- Personal accident cover for the owner/driver of the car which covers accidental deaths and disablements up to a specified limit
What is not covered?
There are certain damages which are excluded from the coverage of a car insurance policy. These include the following –
- Consequential losses
- Losses due to normal wear and tear of the car due to usage, a.k.a. depreciation
- Any type of mechanical or electrical breakdown of the car
- Damages faced when the car is being driven against its limitations of usage
- Damages suffered when driving under the influence of alcohol or drugs, without a valid driving license or outside the geographical limits of India.
- Any deliberate damage caused to the car
Car insurance premium
Premiums for a car insurance policy depends on various factors which are –
- Type of policy – a third party policy provides a limited scope of coverage and is, therefore, priced very low compared to a comprehensive policy.
- The Insured Declared Value of the car which represents the value of the car after depreciation based on the car’s age
- Any optional coverage features selected
- The type of your car and its age
- The location where the car is registered
Discounts in car insurance
There are various types of discounts which are available in a car insurance plan. These discounts help in lowering the rate of premium payable. Some popular discounts which you can avail include the following –
- Discounts for installing anti-theft devices and other safety devices in your car
- Discount for availing voluntary deductibles and choosing to pay a portion of the claim from your own pockets
- Discounts for not making a claim in the policy
- Discounts availed if you have a membership of recognized associations
Buying a car insurance plan
A car insurance policy can be bought online by following simple steps. You can visit online brokers or insurance aggregators, compare the available plans and buy one which gives you the best coverage features at the most reasonable premium rates. A car insurance policy is mandatory and you should buy one only after considering its coverage features and cost.