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Car Insurance In India: Types and Benefits

Overview

Car insurance covers the damage to the car in case of an accident or legal action, or any natural calamities. Car insurance is usually bought along with the car. 

Types of car insurance

There are three types of car insurance plans in India

  1. Third-party car insurance 
  2. Standalone own-damage car insurance 
  3. Comprehensive car insurance 

Let’s take a look at each of them. 

Third-party car insurance: It is an insurance where the assets (property, vehicle and life) of a third-party are covered in case of an accident. It also covers all the legal aspects of the third-party. This insurance is mandatory by the government under the Motor Vehicles Act, 1988. But third-party car insurance does not cover the damage and injuries sustained to your assets (vehicle, property or life). Also, you cannot get add-on covers on third-party insurance. However, personal accident cover is available on third-party insurance .

Standalone car insurance: It covers natural calamities such as earthquakes, floods or tornadoes, theft, fire hazards and accidents, including personal accident cover, including bodily injury. But at the same time, the standalone car insurance does not include charges of depreciation sustained every year, electrical or mechanical breakdown of your car, or if you are caught driving illegally under the influence of drugs or alcohol.

Comprehensive car insurance: It is an extensive car insurance plan that includes coverage of third-party car insurance and standalone car insurance. The damages sustained by the third-party are also covered. At the same time, the damages sustained to the own vehicle are also covered with inclusions of damages due to theft, accidents, natural calamities and fire hazards. You can also include add-ons on the comprehensive car insurance, including;

  1. Zero Depreciation Cover – That is, the depreciation sustained every year will be excluded from the claim calculation.
  2. Return to Invoice cover – In case your new car gets totally ruined in a natural calamity, or if it is stolen, you can claim the amount mentioned on the invoice at the time that you purchased the car. 
  3. Breakdown assistance – Many insurance plans offer the benefit of roadside assistance if, in any case, the car breaks down while travelling.
  4. Other add-ons include toolbox protection, gearbox protection, consumables cover, which cover all the smaller parts of the car.
  5. It also gives protection to the co-rider, which is beneficial in case of accidents. 
  6. No claim bonus protection where the insured benefits with a bonus for every year where no claim was made.

But certain things are not covered in a comprehensive car insurance policy, such as;

  • If the accident happens under the influence of alcohol or if the driver was driving without a license. 

Importance of Car insurance 

Now that we have looked at the types of car insurance, let’s understand why buying car insurance is important and its benefits.

  • It covers the damages sustained to the car in case of an accident, including third-party and your own car.
  • It provides cover to accidents, which may have resulted in the death of the driver or the passenger.
  • It also covers your lawsuit fees if the third-party files a case against you (insured).
  • Car insurance can be done through an online or offline process. With an online process, there is minimum paperwork involved. There is no need to pay brokerage to the insurance agent. The process is completed within minutes, and the insured can download the copy of the insurance at the earliest.
  • Having car insurance minimises your liability as a driver and owner. If you don’t have insurance, an accident can put a strain on your finances.
  • Having personal cover also benefits your dependents in case of death during a car accident. The insurance company will pay the death cover to the family.
  • Car insurance also provides a transfer of no claim bonus if you do not claim insurance. 
  • Online providers have a vast network of garage tie-ups. If your car suffers damage, you can get instant repair assistance, and the insurance company will compensate you for all the expenses.

Thus, having proper car insurance is not only mandatory by the government, but also proves to be a necessity. It provides you freedom from the burden of liabilities if your car is damaged in an accident or stolen.

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