Why do we buy car insurance? To protect ourselves from sudden financial shocks in case our vehicle needs repair or replacement due to an accident, or financial loss due to theft. But that’s only a broad scenario. Insurers usually spell out the damages that are covered under the motor insurance policy in detail in order to avoid confusion later.
Risks or damages that are covered under an insurance policy are called inclusions and those that are not covered are called exclusions. It is important to note that inclusions and exclusions may vary from one insurer to another and from plan to plan. But there are some general inclusions/exclusions that usually find their place in every car insurance policy. In this article, let’s take a detailed look at the inclusions to find out what all a car insurance plan covers.
Before we discuss what auto insurance policy covers, it is important to understand that there are broadly two types of car insurance policies sold in India -- Third-party Liability-Only Insurance and Comprehensive Insurance.
What is Third-Party Liability-Only Insurance?
Third-Party Liability-Only Insurance covers just the financial liabilities towards a third party in case your car is involved in an accident and harms another person and damages his/her property. It does not pay for any damages or loss to your own vehicle.
Under the third-party car insurance, any damage to property (i.e., the vehicle of the third-party) is covered up to Rs 7.5 lakh, while liability is covered for an unlimited amount in respect to injury or death.
What does Comprehensive Car Insurance mean?
A Comprehensive Car Insurance includes both the third-party liability as well as the own damage (OD) components. Apart from third-party liabilities, this type of policy pays for damages or loss to your own vehicle as well in case of an accident or theft.
Listed below are some of the major risks that are covered under the own damage component in a comprehensive car insurance policy:
- Damage to your vehicle due to man-made disasters like fire, self-ignition, explosion, or riots.
- Damage to your vehicle arising out of an accident due to an external impact.
- Damage to your vehicle or complete loss of your vehicle after natural disasters like lightning, earthquake, hurricanes, cyclones, landslides, etc.
- Loss of your car after housebreaking or theft.
- A personal accident cover is also included in this policy that provides coverage to the vehicle driver for any bodily injury, partial or total disability or death in case of a road accident.
- Some insurance companies may also offer optional accidental cover for co-passengers of the vehicle involved in the accident.
Going by the list of inclusions, it can be safely concluded that a well-defined comprehensive car insurance policy can prove to be extremely helpful as it can offer you financial assistance in dealing with various kinds of expenses. However, before buying any policy, read the policy document carefully to get an understanding of the specific inclusions offered by your plan.
Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.