Car Insurance Basics - What is the right car insurance coverage for me? Having a car insurance policy is as important as owning a vehicle. It is a legal requirement that provides financial coverage against damage involving your car due to an unfortunate event. According to the Indian Motor Tariff, 2002, all motor vehicle owners need to be insured. When a car meets an accident, not only does the vehicle get damaged but the driver and the passengers are also exposed to the risks of receiving injuries, damages or even death.

A car insurance policy also ensures financial security in the event of theft, fire or wreckage. Therefore you must opt for a suitable car insurance policy as per your needs and requirements.

Types of Car Insurance Policy

A car insurance policy comes in three different types:

1. Third-Party Policy
2. Comprehensive Own Damage Policy
3. Standalone Own Damage Policy

Third Party Car Insurance Policy

A third party car insurance policy is designed to provide coverage to the third party in the event of an accident caused by the insured's vehicle. The policy aims to cover the third party liability like damage, bodily injury or death of the third party due to mishaps involving the insured’s car.

According to the Indian Motor Tariff, 2002, the sole beneficiary under the coverage is the third party. The amount of compensation to meet the incurred third party liabilities is decided by a court of law in case and paid by the insurance company in accordance with the insurance policy document.

Key Benefits of Third Party Coverage

1. Reduces the financial and legal burden of the policyholder.
2. Comes with an easy, effective and fast acquisition process.
3. Provides damage coverage to third party property damage, bodily injury and death.
4. Offers optional personal accidental cover for the owner-driver of the car.
5. Comes with relatively lower premium rates.

Comprehensive Car Insurance Policy

A comprehensive car insurance policy provides protection to the owner of the car against damage incurred by the vehicle during an accident, theft, natural calamities, riots, etc. It also provides coverage for all third party liabilities. It provides the maximum amount of coverage as compared to the other types of insurance policies.

Key Benefits of Comprehensive Coverage

1. An extensive range of coverage options.
2. Provides damage protection to the insured as well as the third party.
3. Covers own damages incurred in road accidents, natural calamities, fire, riots, strikes, etc.
4. Provides compensation to the third party in case of bodily injuries, permanent disabilities and death.

Standalone Own-Damage Car Insurance Policy

Standalone OD Car Insurance was introduced by the Insurance Regulatory and Development Authority of India (IRDAI) on September 1, 2019. A standalone own damage policy offers compensation against all the damages and losses caused to the insured’s vehicle. It saves the policyholder from meeting the financial liabilities of repairing the vehicle. It allows the vehicle owners to enjoy flexibility in two ways at the time of purchasing or renewing car insurance policy. Firstly, by providing them with the flexibility to get OD cover after getting a third-party policy and secondly, they can purchase it from any car insurance company of their choice.

Key Benefits of Standalone OD Policy

• Compensates for damage incurred by the insured’s vehicle in road accidents, theft, fire, natural calamities, etc.
• Offers flexibility by allowing car owners to purchase OD cover from one insurance company and the compulsory third party cover from another.

What Are Car Insurance Add-ons?

A basic insurance policy is not the solution to all the problems. Therefore, there are several add-ons through which a policyholder can enjoy extra benefits to their existing car insurance policy. There are several add-ons covers provided by car insurance companies in India:

Different Types of Add-ons

• Zero Depreciation Cover - At the time of insurance settlement, the insurance company exempts the cost of depreciation on the vehicle. Zero depreciation cover protects the policyholder from bearing the depreciation cost, thus allowing him to claim a higher coverage against the car insurance policy. This add on covers 100% of the cost of the car with only 50% coverage for tubes, tyres and batteries.

• Roadside Assistance Coverage - There are several situations where the car breaks down suddenly and does not remain in a movable condition. In that case, roadside assistance coverage provides assistance service in case of shortage of fuel, engine breakdown, oil leakage, punctures or any minor repairs.

• Engine Protection - Engine protection cover allows the car owner to claim indemnification for engine and gearbox damage.

• Daily Cash Allowance Benefit - Under this add on, the policyholder gets everyday cash benefits when his registered car is out for repairs for more than a single day.

• Lock and Key Cover - Under this cover, the insurance company will pay for the lost lock or key of the insured’s car if it gets damaged or lost somewhere.

• Policy Extension Cover - It helps to extend the coverage of the policy of the insured’s car over the standard time of expiration.

Read more about car insurance add-ons here.

Which Policy Gives Ideal Coverage?

The ideal insurance coverage should be the one that ensures the highest level of protection to the policyholder. Therefore, all the owners are recommended to have a comprehensive car insurance policy. It takes care of almost all the potential losses. It provides protection against natural calamities, theft, accidental damages, no matter who is responsible for the fault. Many beneficial add-on covers can also be complemented with it.

Also Read

Best Car Insurance Policy for People in Their 30s

Process to Convert Third Party to Comprehensive Car Insurance Policy

Conclusion

All coverages are designed to meet the expectation of the customer and help them to be financially stable even at the time of emergency. With the option to include several add-ons, policyholders can also customise their plan to ensure overall satisfaction.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.