What does car insurance typically cover? An in-depth look

0
74

Car insurance is a necessity for any driver on the road. It provides financial protection against unforeseen events such as accidents, theft, and natural disasters. But what exactly does car insurance cover? In this blog post, we will look in-depth at what car insurance typically covers to help you better understand your policy.

What is car insurance?

Car insurance, also known as four-wheeler insurance, is an agreement that protects a vehicle against monetary losses caused by unanticipated situations like accidents and natural disasters. The vehicle owner and the car insurance provider sign it.

When driving, car insurance protects you, your car, and other pedestrians from life’s unforeseen turns.

When unfavourable things happen, having car insurance will protect your finances from dangers and losses. It guarantees that you abide by the laws and covers third-party responsibilities.

Importance of car insurance

Before diving into the details of what car insurance covers, it’s important to understand why having car insurance is crucial. Accidents can happen at any time and without warning. Without insurance, you would be responsible for covering the costs of repairs or medical expenses out of pocket. Car insurance helps protect you from financial ruin in case of an accident.

Types of car insurance

There are 3 types of car insurance. They are:

  1. Comprehensive car insurance

The most extensive type of auto insurance coverage is called comprehensive, and it holds an insurance company responsible for the insured person’s personal vehicle damage and any financial obligations they may have toward a third party. The coverage applies to incidents involving vehicles and natural or man-made disasters, such as explosions, fires, theft, self-ignition, or lightning.

Features of comprehensive car insurance

  • If your car is damaged by natural or man-made sources, your comprehensive auto insurance plan will cover the loss.
  • The owner or driver of the vehicle has access to personal accident coverage with a maximum insured amount of Rs. 15 lakhs. In the event of an accident-related accidental death or permanent total disability, the coverage pays an amount.
  • The comprehensive coverage also pays the Insured Declared Value (IDV) if the car is stolen.
  • You can receive cashless claim settlements under comprehensive plans if you take your automobile to a networked garage for repairs.
  • If you choose a voluntary deductible, join an automobile organisation, install safety equipment in your vehicle, etc., you can receive premium discounts, which lower the premium’s price.
  • Add-on covers are extra perks of optional coverage that you can select with the comprehensive plan. Many of the insurance companies comprehensive auto insurance policy offers a variety of add-on covers for full coverage.
  1. Third-party insurance

Driving a car in India requires third-party auto insurance coverage. This coverage is also known as a Liability-Only Car Insurance Policy because it is the most basic type of auto insurance policy. Under this coverage, the insurance provider is responsible for paying for any third party’s physical injuries, temporary or permanent disability, and death resulting from an accident involving the insured’s vehicle.

Features of third-party car insurance

  • A third-party liability arises when you are held financially responsible for someone else’s bodily harm, death, or property damage. These obligations are covered by third-party auto insurance. If you are held liable, the policy pays the third party on your behalf.
  • Up to the sum determined by the motor tribunal, the third-party policy covers bodily harm and death. The coverage will pay for the liability amount, no matter how high. Up to Rs. 7.5 lakhs is insured for property damage.
  • As per the Motor Vehicles Act of 1988, a third-party auto insurance policy is a need. Therefore, you must purchase third-party coverage if you own a car.
  • India’s Insurance Regulatory and Development Authority (IRDAI) sets the rates for third-party auto insurance policies. The low rates are based on the car’s segment and cubic capacity.
  • Third-party coverage is permitted for an extended period of three years on new cars. The policy does not need to be renewed annually.
  1. Own Damage car insurance

Third-party liability insurance is legally required in India to operate an automobile on Indian roads. Not only that, but owning damage auto insurance is also seen as a wise financial move to protect you from the enormous costs that could result from an accident. A minimum requirement to meet the necessary regulatory requirements is third-party auto insurance. However, it only shields you from monetary and legal obligations for harm done to other people or other cars.

Features of Own Damage Car Insurance

  • The length of the damage coverage is one year, after which you can renew it for ongoing protection.
  • Several premium discounts are available for the damage premium. These savings bring down the cost of the premium.
  • You will receive an annual no-claim bonus if you never file a claim under your personal damage auto insurance. You can apply the no-claim benefit as a premium discount during renewals. After five consecutive years without making a claim, the incentive increases from 20% to 50%.
  • You receive compensation for the significant financial loss you incur if the car is stolen. The money you get can be used to settle an outstanding auto loan or to replace the lost vehicle.
  • The damage insurance covers the losses incurred by the vehicle. These losses may result from man-made or natural disasters. For example, if the car is destroyed by an earthquake, flood, landslide, storm, fire, ignition, strike, riot, etc., the damage cover will cover the repair expenses. The loss incurred is reimbursed even if the car is totalled.

The bottom line

Car insurance offers comprehensive protection and peace of mind for your vehicle. It covers damages from accidents, theft, fire, and natural disasters. Additionally, it includes third-party liability, ensuring legal compliance and protection against claims from others. 

With optional add-on covers, you can customise your policy for enhanced coverage, such as zero depreciation, engine protection, and roadside assistance. Choosing the best insurance provider ensures financial security and robust support in the face of unexpected events, making your driving experience safer and worry-free.

DAILY BUSINESS POST