If you are a car owner in India, you are obliged to have insurance protection for your car. Apart from being a legal requirement, having car insurance is a critical protection tool that helps you avoid financial losses in the event of an accident. In the purview of the rising number of accidents and the strict rules laid out by the government, it is paramount that you have sufficient car insurance coverage for your vehicle.
Today, in India, many insurance companies offer a variety of insurance plans and choosing the best plan can be sometimes tricky. It is advisable that you assess your protection needs, and choose the right policy that provides you with sufficient protection. In India, car insurance can be broadly classified into two types – Third-party liability insurance and Comprehensive insurance.
Third-Party Liability Insurance
It is the most basic form of car insurance, and the premium for a third-party liability car insurance is quite affordable. This type of car insurance, which is also commonly referred to as liability-only insurance for act-only insurance provides protection only against damages to the third-party. Under this insurance plan, the insurance company compensates only for the damages to the car, property or physical injuries that you may cause to the third-person during an accident.
It is paramount to know that under the third-party liability plan, you do not get any compensation for the personal damages to your car and physical injuries. Also, as per the Indian Motor Vehicles Act, 1988, all car drivers must have a third-party liability car insurance. Driving without a valid insurance cover can attract a hefty fine.
Comprehensive Car Insurance
The comprehensive car insurance, as the name suggests, provides full protection to your car. It covers both third-party liabilities as well as damages to your vehicle. It is advisable to buy comprehensive insurance as it allows for better financial protection in the event of an accident. Typically, a comprehensive car insurance policy provides coverage against the following circumstances:
- Damage to your car caused due to accident
- Damage to your vehicle caused by natural calamities like earthquake, flood, snow, etc
- Damages to the car due to human-made disasters like vandalism, riot, and strikes
- Loss or theft of the car
- Damages to the vehicle during transit
The premium for the comprehensive car insurance is much higher than the third-party liability car insurance as you get better coverage.
Apart from the above car insurance cover, you can also purchase an add-on cover or a rider and widen the scope of your regular insurance policy. Add-ons are the additional protection cover that you can buy by paying an additional premium.
Different insurance companies offer different riders to suit the varying needs of policy buyers. You can choose from a variety of options, and the more number of riders you buy higher will be your premium. Also, you must know that you can buy a rider only if you have a comprehensive insurance plan.
Some of the most popular types of add-on covers that you can consider buying are:
Roadside assistance – If your car breaks down in the middle of the road, this cover can help you get immediate assistance from your insurer. Few Insurance companies like IFFCO Tokio offers this cover as add on benefits without any extra charges with your car insurance policy.
Zero depreciation cover – If you need to replace a particular spare part in your car, generally the insurance companies pay only a part of the actual cost of the party. This is because the insurers deduct the depreciation value. But, with zero depreciation rider, you can get full compensation for the replacement of the parts.
Key replacement cover – If you have this rider, you can claim compensation from the insurer for the cost of replacement of the car keys if you misplace or lose them.
Daily allowance cover – Under this add-on cover, the insurance company would offer compensation for hiring an alternative vehicle if your insured car is at the network garage for repairs.
Apart from the above riders, there are other options that you can buy based on your personal needs. Irrespective of the type of car insurance you purchase, make sure that you read the insurance documents carefully before you sign it.