Car Insurance Basics: Understanding Ideal Coverage
Updated On Oct 15, 2023
The basic goal of car insurance is to cover financial damages incurred by unexpected conditions and tragic incidents. All insurance policies are structured to satisfy the needs of the user and allow them to be financially secure even at the time of emergency. Policyholders may also tailor their policy to achieve optimal satisfaction, with the option of adding multiple add-ons.
It's as necessary to have a car insurance policy as to own a vehicle. It is a legal requirement that includes financial compensation from damage because of an adverse accident affecting the vehicle. All car owners need to be covered according to the Indian Motor Tariff, 2002. Not only does the car get damaged when it meets with an accident, but the driver and passengers are still vulnerable to the chances of injury, disability, or even death.
Understanding Ideal Coverage
In the case of burglary, fire, or wreckage, a car insurance policy also guarantees financial stability. Thus, as per your wishes and preferences, you must opt for an appropriate car insurance policy.
- Third-Party Liability: Careful car drivers can at times end up causing harm to individuals on the road or their belongings. In these situations, third-party Insurance works. The Motor Vehicles Act, 1988, established a third-party liability policy for all car owners as compulsory insurance in India. Driving an automobile without a proper insurance policy is illegal. This makes it mandatory to obtain at least a third-party liability insurance plan to be on the right side of the law.
- Comprehensive Car Insurance: A comprehensive car insurance offers the purchaser of the car protection from damage caused to the vehicle after an accident, burglary, natural disasters, protests, etc. For any third-party liabilities, it also offers compensation. When compared to the other types of insurance plans, it offers the highest amount of coverage.
- Standalone Own Damage Car Insurance Policy: On September 1, 2019, the Insurance Regulatory and Development Authority of India (IRDAI) introduced this policy. A standalone own damage insurance scheme provides coverage for any accidents and injuries incurred to the car of the insured. This protects the policyholder from undertaking the financial obligations of fixing the car. This helps car owners to gain flexibility in two ways by buying or renewing a car insurance policy. Firstly, by allowing the policyholder to purchase OD cover from one insurer, and secondly, they can buy third-party car insurance from any other car insurance provider of their preference.
- Add-Ons: To enhance the coverage offered by a car insurance plan, a car insurance add-on cover is an extra cover that can be opted for with a standard car insurance policy. A basic car insurance plan, that is, third-party liability insurance, does not have adequate coverage. Even a comprehensive car insurance plan can still skip a few main liabilities. When you require extended coverage, add-on covers give the insured car extra protection, which will help enhance the basic car insurance policy. For a comprehensive car insurance plan, numerous add-ons can be selected. You must understand certain key add-on covers that must be selected for the full safety of your car to select the best add-on cover for your car.
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 protects 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.
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.