Car insurance provides financial protection against any loss or damage to the car, its occupants or any third party involved. It is a contract between you – the owner of the vehicle and the insurance company. As long as you pay an annual fee, called a premium, the company will pay for the damages to the vehicle.
Motor vehicles are obviously one of your very prized possessions. Hence it is also essential to protect it properly. An accident or severe damage may sometimes require a hefty amount to repair. Therefore it’s important to protect the vehicle with insurance. It is mandatory in India to have insurance for your vehicle to drive on the roads. If you are found driving without insurance, the authorities can find you a good penalty. If you meet with an accident in a vehicle without insurance, you’ll have to pay the whole amount by yourself to repair it.
Based on the type of coverage, vehicle insurance can be divided into two.
Type of Car Insurance:
- Third-party Insurance: This is the most basic form of insurance and the cheapest. It is also referred to as liability-only insurance or act-only plan. The coverage of this insurance includes protection for the third party in case of an accident involving the insured vehicle. It does not offer insurance for the insured vehicle or the owner/driver. Some insurance companies provide personal accident coverage along with a third-party insurance plan. The maximum amount offered for the third-party property damages is Rs 7.5 Lakhs and there is no upper limit on the amount a third party can receive in case of death or disability. However, the final claim amount is decided by the court.
- Comprehensive Motor Insurance: This policy provides more exhaustive insurance protection as it covers both the third-party and own damage cover. It also provides personal accident cover to the owner/driver. The own damage cover includes the protection of the insured vehicle from the following events:
- Accidental damages
- Damages while in transit via rail, road, waterways etc
- Damages caused by natural calamities such as earthquakes, floods, hurricanes etc
- Damages from man-made disasters such as riots
The third-party liability cover of the comprehensive motor vehicle insurance protects the policyholder from legal liability to a third party from accidental injuries/death or property damages. The maximum amount for this insurance is unlimited in case of death or injury but it also has an upper cap of Rs 7.5 Lakhs in third-party property damages. However, the final claim is decided by the court.
Apart from the above-discussed policies, the insurance companies also offer add-on covers that can enhance the coverage of the base policy. It should be purchased from the same insurance provider at an additional amount.
Add-on covers offered by Insurance Companies:
- Zero depreciation cover: Also known as bumper-to-bumper policy, this will make the insurer bear the expenses for the depreciation of vehicle parts, which normally the owner has to bear. It offers significant savings at the time of the claim.
- Engine protect cover: It will protect the vehicle from mechanical or electrical damage to the engine which is usually not covered in the comprehensive motor vehicle insurance plan.
- Return to invoice (RTI) cover: This adds on plan protects your vehicle from total loss expenses. For example, in case of car theft, it provides you with the actual invoice value of the vehicle, without accounting for its depreciation with age.
- No claim bonus (NCB) cover: It is a bonus offered to owners/drivers who refrain from raising a single motor vehicle insurance claim in a policy year.
- Loss of personal belongings covers: Just like the name, this adds on provides coverage for the loss of expensive belongings such as laptops in the insured vehicle.
- Personal accident cover for passengers: This add-on can offer coverage for the passengers of the insured vehicle.
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Motor vehicle insurance can also be segregated on the basis of the type of vehicle as well such as private vehicles and commercial vehicles.
The things that are not covered in the insurance policy:
- Depreciation, wear and tear and any consequential loss
- Damage caused by the driver under the influence of alcohol/drugs
- Damage caused by driving the vehicle without a valid driving license
- Loss or damage caused due to radioactive/nuclear-related activities.
Steps to claim the Insurance:
- The first and foremost thing is to inform the insurance company and get a few important details in hand like policy details, loss details, and contact details.
- A survey will then be arranged upon submitting the detailed estimate of repairs from the repairer.
- Submit duly filled and signed claim form along with documents such as the registration certificate of the vehicle, driving license, etc. Also, it is mandatory to update PAN and Aadhaar card details.
- In the case of third-party death/injury or any damage to property, you need FIR from the police station.
- If all documents are found to be correct and in order, then a cashless facility will be arranged by the insurance company.
- You need to produce your vehicle for re-inspection if requested by the surveyor.
Vehicle Insurance can be bought for all vehicles, private or commercial, car, bike, scooter, tractor and any other similar road vehicles.
Please Note: It is very crucial to read the terms and conditions before buying car insurance. Because some insurance policies will protect your vehicle against damage caused by natural calamities like floods, and earthquakes, while others will shield it from human-made calamities like accidents and theft.