Types of Car Insurance Policies in India

Different Types of Car Insurance - Car insurance is a tool meant to protect you against the financial losses which may occur due to an accident or any unfortunate event involving your car. It is crucial to own a basic cover of car insurance as it is regarded as compulsion as per the Indian Motor Tariff.

However, before opting for an insurance cover for your car, you should go through different types of car insurance policies available in the market. After gaining the understanding of various insurance plans, you can easily select a relevant policy based on your budget and requirements.

What Are The Types of Car Insurance?

There are three types of car insurance, which are as follows:

1. Third Party Car Insurance

The Third Party insurance is also known as liability only cover. This is a basic insurance cover that is mandatory to have in India to avoid legal consequences. This policy offers protection against the financial liabilities which you may incur towards a third party due to an accident involving your car. The coverage of this policy includes:

  • Third party property damage - Damages incurred by the property of a third party person. This compensation is limited to Rs. 7.5 lakh.
  • Medical expenses to treat injuries - Cost of the treatment of injuries of the third party person, including bodily injuries and partial and permanent disabilities.
  • Compensation of death - A compensation is given to the third party person’s family, in case of his/her death.

2. Standalone Own-Damage Insurance

The standalone own-damage insurance cover is meant to offer coverage only for the own damage or loss incurred by your car in an accident or any mishap like theft, fire, or a calamity. This cover provides compensation for the own-damages sustained by your car in the following scenarios:

  1. Accidental Damages - Repairing cost of the damages incurred by your car is covered in case of a road accident.
  2. Fire or Explosion - You will be compensated as per the Insured Declared Value (IDV) of your car in case of the total loss due to fire or explosion.
  3. Total Loss Due To Theft - If your car gets stolen, the complete loss will be covered by the insurer by providing you with the IDV.
  4. Natural Calamities - Compensation for the damages sustained by your car due to natural calamities like Floods, Earthquakes, Hurricanes, Typhoons, Hailstorm, Lightning, or Rockslide or Landslide.
  5. Man-Made Calamities - Own-damages incurred due to man-made disasters including Burglary, Air-strikes, Vandalism, Riots, or Terrorist Act.

3. Comprehensive Car Insurance

A Comprehensive Insurance is often called a package plan by many insurance providers. This plan encompasses third party insurance policy and own-damage insurance cover. Following are the inclusions of this coverage:

  • It covers all the scenarios included in the standalone own damage insurance cover.
  • This plan also provides you with a protection cover against the liabilities incurred towards a third party person due to an accident involving your car. It includes coverage for injury or death of a third party person.
  • A compensation amount of up to Rs 7.5 lakh is also provided for third party property damage.

Add-on covers

The purchase of a standalone own damage cover or a comprehensive cover you open the doors for add-on coverage as well. These add-on covers are optional and can be acquired by paying a little extra premium. By adding these covers to your comprehensive plan or standalone own-damage plan, you can extend the scope of your car insurance coverage. You can select the add-ons as per your budget and requirements. Some of these add-ons are Zero Depreciation, NCB Protection, Personal Accident Cover for the Passengers, Roadside Assistance, Return to Invoice, Engine Protection Cover, and many more.

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The car insurance can be of different types, but you need to select the one based on your insurance requirement and financial soundness. Keep the various types of car insurance in mind to make a prudent decision related to a car insurance plan. We hope that the above-mentioned information will help you find a plan that suits your needs.

Disclaimer: This article is issued in 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.

Add-ons For Your Car Insurance Policy

  • Zero Depreciation

    A car's value depreciates constantly with time. Thus, at the time of a claim settlement, the depreciated value of a car is deducted from the claim amount. However, by opting for a zero depreciation add-on you can shift the liability of the depreciation cost to the insurer and get the entire claim amount without any deduction of the depreciation sum. This add-on is generally available till the age of 5 years of car, however, the car age limit varies from insurer to insurer.

  • NCB Cover

    A No Claim Bonus (NCB) is a discount given by the insurer in the premium amount to a car insurance policy holder for not making a claim in the entire tenure of the four wheeler insurance policy. This discount is not available if the policy holder has made even a single claim. However, with the NCB cover, a policyholder will be entitled to receive an NCB discount despite having made a claim subject terms and conditions of insurance company. The NCB discount keeps on increasing with every claim-free year until it reaches 50%.

  • Engine Protection Cover

    A car's engine is by default not covered under either a comprehensive or a standalone own-damage car insurance policy. And therefore, if it gets damaged due water-logging or oil leakage, your insurance company is not liable to pay for its damages. But, if you opt for the add-on known as Engine Cover, you can get your car's engine insured by the insurer for damages incurred due to water ingression as well as leakage of lubricants. Engine Cover is one of the most popular car insurance add-ons and is available against the payment of a nominal premium.

  • Invoice Cover

    If you have a return to invoice cover added on to your comprehensive car insurance policy, you can claim the total ex-showroom price of your four wheeler, taxes and registration charges, in case of total loss. In case of total constructive loss (more than 70% of damage) or theft of your car, an insurance company pays the Insured Declared Value (IDV) of your car as compensation. However, this IDV is lesser than the actual amount paid by you at the time of purchasing your car. When you opt for the add-on called Return To Invoice Cover with your car insurance policy, the insurance company pays the total ex-showroom price of your car plus the taxes and registration charges incurred at the time of purchase, as the claim amount in case of total loss.

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