Here are the 5 Various Forms of Automobile Insurance in India
1. Third-Party Liability Only Cover
The Motor Vehicle Act 1988 of India requires all motorized vehicles on its roads to carry third-party only liability insurance. In this context, “third-party” refers to any individual, property or vehicle that suffers damage because of the insured person’s actions while driving. This type of car insurance, with its somewhat narrow coverage scope, is one of the more cost-effective options available in the country.
The following are scenarios that will be encompassed under the coverage of third-party liability only:
Damages to the third-party vehicle
Damages to the third-party property
The expenses related to hospital stay and medical care for third parties.
Obligations resulting from the fatalities of individuals not directly involved.
Third-party car insurance will not provide coverage for any damage or loss to the policy holder’s vehicle due to an accident, any damage or loss to the policy holder’s vehicle in the event of a natural disaster, or in case the policy holder’s car is stolen.
2. Own Damage (OD) Cover
The insurance policy covering collision damage ensures that the policyholder is compensated for any repair costs associated with their damaged vehicle. The premium rate for this kind of car insurance in India is determined by the age of the vehicle as well as its insured declared value (IDV), which is essentially the car’s market value.
If the repair expenses for your car surpass its present market value, your insurance firm will cover the existing market value of the car in question. In the case of older cars, the collision coverage can be minimum. Collision coverage is necessary if your automobile has a lien on it.
When considering these types of car insurance coverage, it’s essential to remember that the insurance company would only reimburse the holder in the event of an accident. Thus, collision damage coverage is highly beneficial for those residing in areas with high accident rates or cities with heavy traffic conditions.
3. Personal Accident Cover
A personal accident insurance provides coverage for the car owner’s medical costs in the event of a mishap. This kind of auto insurance also safeguards passengers and drivers from medical expenses resulting from an accident. The insurer will handle all medical bills, irrespective of whether the accident was the fault of the insured vehicle’s driver or a third party. If a fatality occurs as a result of the accident, the insurance provider will give a one-time payment to the bereaved family.
4. Uninsured Motorist Protection
If an accident transpires, the individual responsible for the accident should have their insurance cover your vehicle’s repair costs. However, what happens if the other individual lacks insurance? It would seem you’re left having to take care of the damage expenses, right? This is the circumstance in which uninsured motorist coverage becomes significant. This is a form of car insurance.
The insured can be safeguarded if the party responsible for the accident lacks insurance. This coverage is also useful when third-party insurance falls short in covering the damages inflicted on your vehicle. The uninsured motorist protection will be responsible for handling both the repair costs for your vehicle and any medical expenses resulting from the accident.
5. Comprehensive Car Insurance
Comprehensive car insurance, as the name implies, provides the most extensive coverage for your car. It covers damages caused by third parties as well as damages to your own vehicle, ensuring full protection. Despite the cost being higher than third-party liability-only covers, the extent of safeguard it provides against all potential risks on the road is unparalleled in the Indian car insurance market.
A unique feature provided by the comprehensive insurance plan is its coverage against theft— a component that other insurance types lack. This policy can also safeguard your vehicle against:
Here are a few situations that will not be included under a comprehensive car insurance policy:
Harm inflicted on the vehicle owing to driving while intoxicated or being under the influence of substances.
The car can sustain damages if driven without a proper driving license.
Electrical and mechanical breakdown
Usage-related wear and tear
Damages incurred when on foreign soil
Add-on Coverages
A standard comprehensive car insurance plan typically provides more coverage than third-party auto insurance. But here’s another significant benefit of selecting a comprehensive car insurance plan – the ability to add extra options. These add-ons allow you to tailor your insurance in India to fit your particular requirements, which the basic comprehensive car insurance plan may not cater to.
Here are some of the most sought-after additional features when it comes to a comprehensive car insurance policy:
a. Roadside assistance cover
An exciting road journey can abruptly end due to unexpected problems like flat tires, dead batteries or even a mechanical breakdown. This is the time when an additional feature like roadside assistance cover proves to be beneficial. With this provision, you’ll have access to aid around the clock, even if your vehicle malfunctions in a secluded place.
b. Zero depreciation cover
Alternatively referred to as “nil depreciation cover”, this type of supplemental insurance can be utilized when your vehicle sustains damage. Insurance providers typically do not cover the full cost of repairs if specific components of your car need replacement, considering the depreciation of these parts. However, by opting for the zero depreciation cover, total repair costs will be covered by your insurance company. Please note that this coverage is only available if your vehicle is less than three years old.
c. Key replacement cover
This is a handy accessory for individuals who are prone to misplacing things. The cost of replacing a lost, stolen, or damaged car key can be quite substantial. However, with the key replacement cover, the insurance company completely takes care of the expenses involved in fixing the key and lock set or even substituting the key.
d. No claim bonus protection
Most insurance firms generally offer a no-claim bonus discount on the insurance premium at policy renewal time, given no claim was made against it that year. However, given the uncertainty of road accidents, it’s possible that you may not receive a no-claim bonus. With no-claim bonus protection, you can still avail the no-claim bonus discount, even if a claim has been made.
e. Return to invoice cover
This kind of supplement can assist you in reclaiming the full amount of your vehicle based on the invoice value if it is stolen or irreparably damaged.
f. Engine protection cover
The engine serves as the lifeblood of your vehicle, and fixing it can be quite costly. The engine protection cover provides a safeguard for costs associated with repairing or replacing the engine, gearbox, and differential, which may become necessary due to specific circumstances such as water saturation or leakage of lubrication oil, among others.
g. Consumables cover
For the majority of repair work, items like lubricants, screws, washers, air conditioning gas, and engine oil, also known as consumables, are needed. However, under a standard comprehensive car insurance policy, these items are not covered for reimbursement by insurance companies. With a consumables cover add-on, you can rest assured that you won’t have to pay for these items yourself.
Car Insurance Premium
The cost of your auto insurance premium could either be high or low, influenced by specific factors:
You may be obliged to pay a higher premium if you:
Choose comprehensive insurance instead of third-party insurance.
Don’t renew your premium on time
In these instances, a smaller premium might be applicable. :
Your car’s cubic capacity is less
Opt for higher deductibles
There are several kinds of vehicle insurance to choose from, but opting for comprehensive car insurance could be your best bet. Even though it costs more than the legally required third-party car insurance, it offers better value for your money. Given the inherent risks in driving, proper car insurance can provide you the necessary peace of mind while on the road, making sure you’re well-equipped to handle any situation.
Frequently Asked Questions
Here are some commonly asked queries concerning the Top 5 Categories of Car Insurance Coverage [2023 Guide].
How many types of car insurance are there?
Third-Party Liability Only Cover
Personal Accident Cover
Uninsured Motorist Protection
Comprehensive Car Insurance with Add-ons
Which kind of insurance is ideal for a car?
The ideal car insurance is one that meets all your requirements as the policy holder. A thorough car insurance policy provides significantly more coverage than other car insurance varieties. . This type of car insurance is a secure choice for your automobile.
Which type of car insurance is most prevalent?
The most prevalent form of car insurance in the country is third-party car insurance, as it’s a requirement enforced by the Indian government. Every vehicle in India must have it before it can be driven on the road. However, because its coverage is quite narrow, most individuals prefer to go for comprehensive car insurance. This insurance policy not only includes all features of third-party insurance but also covers damage to the policyholder’s vehicle, thereby giving you and your car an extended range of protection.
Does comprehensive car insurance come with a high premium?
Indeed, the cost of all-inclusive auto insurance is relatively higher compared to other car insurance options in India. The reason behind this is that comprehensive car insurance affords your vehicle greater coverage than other types of vehicle insurance do. A reliable method to maintain a manageable premium is ensuring timely renewal of your policy. Additionally, choosing a no claim bonus protection cover can help keep your premium manageable by offering a no claim bonus discount, even if a claim is made.
Is having comprehensive car insurance for my vehicle a requirement?
No, according to the instructions from the Indian government, only third-party car insurance is legally required. But, having comprehensive car insurance could be beneficial as it covers the damages suffered by the car of the insured, which is not covered by third-party insurance. Moreover, comprehensive car insurance can be tailored to meet your specific requirements as a car owner due to the number of add-ons available.
How can I determine the most suitable insurance policy?
The optimal approach to acquiring a policy is by conducting some due diligence and juxtaposing different policies. This allows you to identify and select the one that most accommodates your requirements and financial capability.
Can one change from third-party vehicle insurance to comprehensive vehicle insurance?
Indeed, it is feasible to execute this change during the period of policy renewal.
