Car Insurance: Having a car is thrilling, but having the proper insurance is equally significant. Car insurance is thought to be mere formalities by many, but it ends up saving you from large financial losses in the event of accidents or damages. If you’re uncertain which insurance policy is best for you, here’s everything you should know about the available types in India.
Types of Car Insurance
In India, four broad categories of car insurance exist. The first and most elementary is third-party insurance. Second is comprehensive insurance. The third is pay-per-use insurance, and fourth one is own damage insurance, where only your car’s damage is covered, but not third-party claims.
Third-Party Insurance
Under the Motor Vehicles Act, third-party insurance is mandatory for all cars on Indian roads. It safeguards against any injury inflicted on another individual, his/her property, or his/her vehicle as a result of your driving. Though this is the most affordable kind of insurance, it does not offer any protection to your own car. This scheme is ideal for those who want to fulfill legal obligations at the least expense.
Own Damage Insurance
Own damage insurance can finance repair costs if your car gets damaged in an accident. The premium for own damage insurance varies based on various factors such as your car’s age, model, engine capacity, location, additional safety features, and declared value (IDV). IDV means Insured Declared Value — essentially the existing market value of your car. This is the sum amount that the insurer will pay if your car is stolen or totally destroyed.
Comprehensive Car Insurance
As the name indicates, comprehensive insurance provides wide coverage. Comprehensive insurance covers the damage to your vehicle as well as third-party liabilities. It also provides a cover for personal accident of up to ₹15 lakh to the car owner or driver. Another advantage of this policy is that the flexibility to include additional cover options such as engine protection, zero depreciation, return to invoice, or no-claim bonus protection. These add-ons provide an extension to your policy’s coverage.
Pay-Per-Use Insurance
Pay-per-use insurance is ideal for car owners who drive on an occasional basis. Under this policy, you pay only for the time when you use the vehicle. This is an excellent choice for individuals who use the vehicle on weekends only, for short distances, or for special events. It helps you save money without compromising on the security of having an insurance cover.
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