A car purchase is an investment that is second to none. And one thing that we never forget bringing along with it is -an car insurance cover. But if you didn’t opt for the right type of car insurance, then you might end up in deep waters. This is so because the policy that you’re opting for will determine what you’ll get in the cover in case of a contingency.
Car insurance policies are among motor insurance policies that safeguard the insurer against risks such as accidents, theft, or other run-downs.
Nowadays, a plethora of companies deal in car insurance and even provide additional services as per the customer’s need. So it’s advisable to compare different quotes from different car insurance dealers and pick out the best plan for yourself.
TYPES OF CAR INSURANCE POLICY COVERS
1. Third-Party Car Insurance Policy Cover
This is the most significant type of car insurance policy which can’t be left out while discussing types of car insurance policy covers. It is mandatory for everyone who owns a car in India to have a third-party liability cover under the Motor Vehicles Act, 1988. It won’t be wrong to say that it’s an obligatory minimum requirement that must be met before one sets their hands on the steering wheel.
In the event of an accident where you’re at fault, you’ve to bear the expenses for the loss suffered by the third party. In such a scenario, a third-party liability insurance coverage caters to the damages for both bodily injuries (BI) and property damages (PD). Apart from that, it also covers the legal costs borne by the insured.
In India, the maximum recoverable amount under the third-party liability car insurance is as follows:
- Third-Party Property Damage: 7,50,000 INR (Nevertheless, the owner can restrict the amount of property damage to upto 6,000 INR.)
- Third-Party Injury/Death Damage: As decided by the court of law
NOTE: Damage to the insured (or first-party) isn’t covered under this insurance policy.
One noteworthy thing about third-party liability insurance cover is that, unlike the comprehensive car insurance policy (that we’ll discuss shortly), it can’t be equipped with add-ons. Wondering what “add-ons” mean here? Scroll down a little to learn about that…..
2. Own Damage (OD) or Collision Car Insurance Policy Cover
The damage or repairs arising from a collision from bumping into another vehicle or in a stationary or motionless object such as a tree, traffic signal, fences or statue, etc., are covered in the collision car insurance policy. The alluring thing about this type of car insurance policy lies in the fact that the insured can recover the cost of damages irrespective of the fact who’s irresponsibility led to the accident.
The amount of premium and the claim are ascertained after taking the Insured Declared Value (IDV) and age of the car into consideration. IDV plays a major role in determining the insurance claim after writing-off the depreciation charges. The collision insurance cover would be a must-have, especially if you acquired a car on a mortgage or loan.
3. Comprehensive Car Insurance Policy Cover
A comprehensive car insurance policy backs one up against damages that are outside the scope of a collision car insurance cover. Plus, it also offsets any harm resulting from natural calamities like floods, landslides, civil disturbances, strikes, theft, or any harm caused due to animal attacks or terrorist attacks.
It proffers total end-to-end coverage for the first party, co-passengers as well as third party legalities. Also, it covers personal accidents cover for oneself. This makes it the most sought all-embracing cover option. Quite obviously, the premium amount for a comprehensive car insurance policy cover is typically sky-scraping.
In order to have a 360-degree protection cover for your adored car, you can opt for add-ons alongside the comprehensive car insurance plan. A few add-ons that an insured usually opt for are:
Zero-Depreciation Cover: It’s a well-known fact that the insurance providers generally write off the depreciation amount for those parts of the cars that demand replacement due to the damage, but thanks to the zero-dep policy, which makes the insured is able to recover the compensation without bearing for the depreciation charges. It must be kept in mind that the zero-dep policy can only be opted for if your car is less than 3 years old.
Roadside Assistance Cover: No wonder there might be times when your car might face a breakdown scenario (battery breakdown, flat tyre, or engine failure), and you get stuck just when you were least prepared for it. If you have a roadside assistance cover for your car in place, you’ll be able to get past such circumstances then and there.
No Claim Bonus Protection (NCB) Cover: If an insured doesn’t file any claim within a year of the purchase of a policy, the insurance company provides that customer with additional discounts. These rewards are generally regarded as NCB.
Now when the insured often demands claims for consecutive years, they might lose the accumulated NCB. That’s where NCB Protection cover has a role to play. Purchasing this add-on assists the insured in retaining NCB benefits at the point of making a claim.
Key Replacement Cover: Anyone can end up losing their car keys at any point in time. While getting another replacement key from the car manufacturer is a big-budget alternative, having a key replacement policy cover can save both your time and hard-earned cash. This cover enlightens the burden by assuring that you get compensated for the same.
4. Personal Accident Insurance Policy Cover
Other types of car insurance policies basically cover the insured or the owner (or the first party) apart from the vehicle, i.e., the car, but a personal accident car insurance policy covers (also referred to as Personal Injury Protection or PIP car insurance policy) looks after the driver and the passengers as well. This type of car insurance policy makes up for lost wages for the days you weren’t able to work, along with medical treatment expenses.
Since the fact that who was at fault is not taken into account, this car insurance policy is also known as a “no-fault” policy in some states.
5. Uninsured & Underinsured Motorist Insurance Policy Cover
To safeguard yourself against the damages caused in case of an accident from those who drive around without insurance or minimum liability coverage to comply with the formalities, one needs to have uninsured and underinsured motorist insurance policies covered, respectively. These are often paired together. The most common accident covered under these two types of car insurance policies is hit-and-run cases.
6. Gap Car Insurance Policy Cover
Suppose your car gets totaled (total loss) due to an uncertainty covered in your car insurance policy. In that case, the gap insurance coverage will reimburse the difference or the gap between your car’s worth and the outstanding loan amount. For instance, if your outstanding loan amount on the car is 65,000 INR, and the worth of your totaled car was 55,000 INR, the insurance company is liable to reimburse the “gap,” i.e., the remaining 10,000 INR.
THINGS TO CONSIDER
It must be noted that an insurance company isn’t liable to pay the claim (no matter the type of car insurance policy covered) in the below-mentioned circumstances:
- If the driver doesn’t have a valid driving license.
- If the driver is driving under the influence of any kind of substance.
- If the car was put to use for an unauthorized motive or purpose.