If you own an automobile in India, you would have to get your car covered within car insurance. This rule has been made mandatory according to the Cars Act, 1988. As per the Act, every vehicle, including a car, must have a valid insurance policy onto it. Otherwise, you, the owner could be held responsible for violating traffic rules and face heavy penalties.
Given the necessity of a valid insurance cover, there are different types of auto insurance policies available for sale. Let's know very well what these coverage is –
Types of car insurance in line with the kind of car
There are a couple of types of auto insurance policies in line with the kind of car that is being insured – private car insurance or commercial vehicle policy. Private auto insurance plan covers privately operated four-wheelers while vehicle plans cover taxis along with other commercially used cars.
Types of car insurance according to coverage
This is, perhaps, the most common and popular basis which auto insurance policies are differentiated. In line with the coverage offered, there are two kinds of car insurance plans –
- Third-party liability only plans
- Comprehensive plans
Let's understand these plans in details –
Third-party auto insurance plans
Third-party policies cover the legal and financial liability that you simply face whenever you hurt or damage another individual due to your car. The policy covers the following kinds of claims –
- Financial liability faced when an individual gets killed due to your car
- Financial liability faced when an individual gets hurt from your car
- Financial liability faced whenever you damage an individual's property
Third-party plans are mandated by the Motor Vehicles Act, 1988. For those who have 3rd party coverage in your car, you're fulfilling the required rule from the Act.
Comprehensive car insurance plans
While third party plans are legally compulsory, car insurance plans are voluntary in nature. You can decide to purchase the insurance policy for a wider coverage on your car. Car insurance plans are recommended simply because they also cover the damages suffered from your car near the third party liability that you simply face. Thus, in comprehensive plans, you receive coverage for the following contingencies –
- Financial liability faced when a person gets killed due to your car
- Financial liability faced when a person gets hurt by your car
- Financial liability faced when you damage an individual's property
- Financial loss suffered once the car is damaged by natural causes like lightning, earthquake, floods, storms, cyclones, landslides, etc.
- Financial loss suffered when the car is damaged by man-made causes like explosion, implosion, fire, malicious activities, riots, etc.
- Financial loss suffered when the car is stolen
- Financial loss suffered once the car is damaged while being transported
Comprehensive car insurance plans, therefore, possess a wider scope of coverage and canopy 3rd party liability in addition to damages suffered through the car.
There is also a mandatory personal accident cover which is available in both third-party and comprehensive car insurance policies. This cover is available for INR 15 lakhs and covers accidental death and permanent disability suffered because of an accident.
Types of car insurance plans according to coverage duration
As per a guide passed by the insurance coverage Regulatory and Development Authority of India , if you buy an automobile on or after 1st September 2021, you would have to buy a long-term car insurance plan on it. The rule mandates a long-term third party cover for three years and so, in line with the rule, the next kinds of auto insurance plans can be found in the marketplace –
- Long term liability-only policy
This policy covers only third party liabilities for a continuous duration of three years
- Long term comprehensive policy
This policy is really a comprehensive car insurance plan which is offered for three years
- Bundled policy
Since a long-term comprehensive cover might prove unaffordable for car owners, a bundled policy can also be issued. Underneath the bundled policy, 3rd party liability cover is allowed for 3 years as the comprehensive cover is allowed for just one year.
For cars bought before 1st September 2021, one-year third party or comprehensive cover applies.
Thus, auto insurance policies could be differentiated on the following types –
Making claims under various kinds of car insurance plans
Claims under auto insurance policies depend on the policy offered by the policies. Thus, you should be aware of process of creating a claim under each kind of plan. So, here is a brief look into the claim process of the third party and comprehensive plans –
- Claim under 3rd party policies
In the case of third party policies, the claim is reported towards the Motor Accidents Tribunal where the financial liability is decided. The operation is the following –
-
- Inform the insurance company when the claim occurs
- File a police FIR and also the claim would be come to the tribunal
- The tribunal rules out the liability that you simply face and also the insurance provider pays the liability towards the third party
- Claim under comprehensive policies
Under comprehensive policies, 3rd party claims are made as per the above-mentioned process. However, in case your car suffers damage, the claim process is really as follows –
-
- Inform the insurer immediately. The company then tells you the location of the nearest garage where one can claim cashless repair services
- Take your vehicle towards the networked garage from the company where a surveyor would assess the damage and make preparations claims report
- Based around the surveyor's report the insurance company approves the claim. Once the claim qualifies, repairs in your car begin
- After the repairs are carried out the insurance company settles the bill directly using the garage. You may have to pay for a part of your claim and then take delivery of the car
- In case you get the repairs done at a non-networked garage, you have to bear the repairs and then get the costs reimbursed by the insurer
Customising your car insurance policy through add-ons
Comprehensive policies offer various kinds of auto insurance add-ons. You can add these add-ons to increase the policy advantages of your policy. Some of the most common and popular add-ons range from the following –
- Roadside assistance
Under this add-on, you receive the commitment of round the clock assistance from the insurance company for just about any car breakdowns that you simply face
- Zero depreciation
This add-on improves the claim payable under the policy by taking out the deduction for depreciation on the parts of the car which have been repaired or replaced
- No Claim protect
This add-on protects the accumulated no claim bonus under your car insurance policy even after you are making a claim
- Engine protect
The add-on covers engine damages which happen because of water seepage in to the engine
- Return to invoice
The add-on pays the invoice value of the car in the event of theft
- Medical expenses
In case of an accident involving your car if you are hospitalised and incur medical expenses, the expenses would be covered underneath the add-on
Amidst the different types of auto insurance plans available for sale, choose the policy which suits your coverage needs. An extensive cover is usually recommended as it pays for the repair costs of the car. You may also boost the coverage with available add-ons and enjoy a wider insurance policy. Since car insurance is required, choose the best plan and avoid legal hassles.
Frequently Asked Questions
- Do add-ons require additional premiums?
Yes, since add-ons provide additional coverage, they require additional premiums. For every add-on that you select you would have to pay an additional premium.
- Will there be premium discounts basically buy three-year comprehensive coverage?
Yes, various premium discounts are permitted under car insurance plans. You can claim a discount for an additional –
-
- Long term coverage
- Installing safety devices
- Becoming a member of automobiles associations
- Modifying the car for disabled users
- Choosing voluntary deductible
- Existing no claim bonus
- What is the premium for personal accident cover?
A personal accident cover INR 15 lakhs costs INR 750
- If I don't buy comprehensive plan would I face a problem?
No, for those who have bought only a third party liability policy, you wouldn't suffer any penalty because of not purchasing a comprehensive plan. However, if your car faces any damage, you would incur huge repairs even without the a comprehensive car insurance policy.
