What Are the Different Types of Car Insurance Policies Available In India

When you buy a new car, you take utmost care of it by protecting it from the force, obeying the road rules while on the road and practicing good driver etiquette. In fact, you do everything to keep your newly-bought car safe and in prime condition. Despite you taking proper cautions, your vehicle can meet unexpected contingencies on the road. Such as major or minor accidents, tyre bursts, breakdowns, natural or man-made disasters and so on.

To help you in this, your car insurance takes a step forward. It covers your four-wheeler from extreme hassle during adverse conditions and makes sure your vehicle gets the best treatment always. In India, different types of car insurance policies are available in the market. You should ideally access your insurance requirements and decide on a policy that protects you in the most feasible way.

Different Types Of Car Insurance Policies Available In India

1. Third-Party Liability Only Cover

Third-party car insurance is one of the most common types of car insurance policies. It covers only damages and losses caused to a third party person’s property or vehicle. Mandated by law, it compensates for the third party’s physical injuries.

Third-party car insurance provides the following benefits:

  • Coverage for expenses related to replacement or repairs of the damaged vehicle of third parties
  • Coverage for expenses incurred on hospitalization and treatment of third parties
  • Liabilities arising out of the death of third parties

According to the Motor Vehicles Act, third-party car insurance coverage is compulsory. The premium of this policy is decided by the IRDAI. And it is much cheaper than the comprehensive policy. What else? You can neither customize the third-party car insurance nor do buy add-ons with it. Also, the policy does protect you from the theft or damage of your car.

2. Standalone Own-Damage Insurance

The standalone own-damage car insurance policy covers only the own damage or loss incurred by your car in an accident or any mishap like theft, fire, or a calamity. This car insurance product gives compensation for the own damages your car receives in the following circumstances:

  • If the damage is caused by a road accident, the repairing cost of the damages incurred by your car will be covered.
  • The insurance company will compensate you as per the Insured Declared Value (IDV) of your car in case of total loss caused due to an explosion or fire.
  • The insurer will cover the complete loss of the case based on its IDV if the car gets stolen.
  • Damage to the car by the natural calamities such as Floods, Hurricanes, Earthquakes, Typhoons, Hailstorm, Rockslide, Lightning or Landslide is covered and the insurer pays compensation.
  • Own damage caused by man-made disasters, such as airstrikes, burglary, vandalism, terrorist acts, and riots is covered under the standalone own-damage car insurance policy.

3. Comprehensive Car Insurance:

Often referred to as a package policy by some insurance companies, comprehensive car insurance provides wider insurance protection because it gives the highest level of protection by providing coverage for third-party liability, own-damage cover, personal accident cover, and all non-collision damage such as storms, floods, fire and theft. Find the details below:

Own-damage cover:

This provides coverage for the insured vehicle in the following situations:

  • Theft of the insured vehicle
  • Accidental damages
  • Damages are caused by natural calamities, such as earthquakes, floods, hurricanes, etc.
  • Damages while in transit via road, rail, waterways, lift, etc.
  • Damages from man-made disasters, including riots, airstrikes, terrorist attacks, riots, vandalism, etc.

Further, the comprehensive car insurance policy provides personal accident cover to the owner-driver.

Third-party liability cover

Third-party liability cover is another part of comprehensive car insurance. It provides protection to the policyholder from legal liabilities to a third party from accidental injuries/death or property damage. There is no limit on coverage amount under this insurance for injuries/death. But, there is a cap of Rs.7.5 lakh on coverage for third-party property damage. It is the course that decides the final claim payout for property damage.

4. Car Insurance Add-on Plans

Besides third-party liability insurance plans and comprehensive insurance, every motor insurance company offers add-on covers to extend the coverage of the base policy. Also called riders, these add-on covers should be bought from the same insurance company by paying an additional amount. Some of the most common covers are:

  • Personal Accident Cover: If you are covered i.e. as the owner-drive of the car by opting for reimbursement of medical expenses after an accident, you are using personal accident car insurance coverage.
  • Zero Depreciation Insurance: This is an add-on cover. It is usually offered by the insurance company to enhance the coverage of your existing car insurance plan. To be precise, if any parts of your car get damaged and you need to replace the same, your insurance provider will not pay the entire replacement cost of the parts. They will deduct the depreciation value.

However, if you have bought a zero-depreciation add-on cover, the insurer will provide full compensation for the replacement of parts. Here, it is important to note that you can buy a zero-depreciation add-on cover only if your car is less than three years old.

  • Return to Invoice (RTI) cover – This is another add-on product that safeguards your car from total loss expenses. This scenario includes car theft. In such a case, the insurer offers you the actual invoice value of the vehicle, with no accounting for its depreciation with age.
  • Engine protect cover – A comprehensive car insurance policy does not cover your car from electrical or mechanical damages to the engine. But if you buy an ‘engine protect cover,’ it will provide your engine with the much-needed protection, particularly if you live in an area prone to waterlogging.
  • Loss of personal belongings cover – This product covers the loss of expensive electronic equipment, laptops, etc. that were kept in the insured vehicle.
  • No Claim Bonus (NCB) protect cover – No Claim Bonus is a bonus that every insurance company provides drivers who abstain from raising insurance claims in a policy year. The NCB protect cover allows you to maintain this bonus even after raising a claim.
  • Key replacement cover – This is another add-on cover that provides coverage for the cost of the insured vehicle’s key if it gets lost or misplaced.
  • Roadside assistance cover – Roadside assistance cover is one of the popular products, that gives 24/7 protection to the policyholder from incidents such as fuel depletion, flat tyres, the requirement for expert scrutiny, etc.
  • Daily allowance cover – It offers reimbursement for the costs involved in hiring an alternate vehicle when your insured car is undergoing repairs at a workshop.
  • Consumables cover – Components are used in a vehicle. They are nuts and bolts, engine oil, screen washers, and so on.  The insurance provider does not bear the cost of these components at the time of a claim. But, if your car insurance was equipped with this rider, the coverage for consumables will be available.

Conclusion

Car insurance in India is of several types. You need to select your policy based on your requirements and budget. When purchasing a car insurance policy, remember to assess different types of insurance plans and add-on covers and select one that meets your needs.

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