Let’s face it, Indian roads are not best known for safety. India tops the world in road crash deaths and injuries, according to a World Bank report. In such a scenario, it is in your own interest to be proactive and take control of your own safety and that of your vehicle.
Therefore, besides safe driving practices, a good car insurance policy. is strongly recommended. If you are planning to buy a new car and want to know more about car insurance details, here’s a small guide to help you understand the product.
What is car insurance?
Car insurance is essentially a contract between you and the insurance company that protects you against any financial loss in case of an accident or theft.
Most importantly, car insurance also covers any legal liability towards a third party in the event of a road accident.
All you need to do is pay a small premium at regular intervals of time. In return, the insurance company agrees to pay your losses as outlined in your car insurance policy.
Also, if you are wondering what is vehicle insurance and is it the same as car insurance, then the answer is yes. Car insurance is also known as vehicle insurance or motor insurance. Just that the term vehicle or motor insurance can also be used for insurance policies for two-wheelers and commercial vehicles. Whereas, the term car insurance is used exclusively for insurance for all kind of cars.
Types of car insurance
Broadly speaking, two types of car insurance policies are sold in India. They are as follows:
1) Third-Party Liability-Only Insurance: Third-Party car insurance covers just the financial liabilities towards a third party in the event of an accident. It would not pay for any loss or damage to your own vehicle. This is the cheapest form of car insurance in terms of premium.
2) Comprehensive insurance: Comprehensive car insurance policy includes both the third-party liability as well as damage (OD) component. It would also pay for any kind of damage or loss to your own vehicle in case of an accident or theft. Remember that you will have to shell out higher premiums for these policies as the coverage is wider. The premium amount will depend on the make and value of the car, the state of registration, and the manufacturing year.
Is car insurance compulsory in India?
As per the provisions of the Motor Vehicles Act, 1988, a third-party liability-only car insurance policy is mandatory for every car plying on Indian roads. This has been done to ensure that a person is duly and fairly compensated in case he/she suffers any loss due to your vehicle in the unfortunate event of an accident.
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.
Car insurance tips and tricks
Before buying a car insurance policy, here are some tips and tricks that you can follow to get the best insurance product for your price:
- Compare car insurance policies online to understand all the benefits that you can get for the maximum premium you can afford.
- Get the right add-on covers to widen your coverage. By just paying a little extra premium, you can get significant benefits.
- Besides car insurance information, also check the claim settlement ratio of the insurer. Claim settlement ratio is the percentage of claims that an insurance provider settles in a year out of the total claims filed. Higher the number, better the chances of your claim getting accepted.
- Also check the number of network garages of the insurer. At network garages, you get the cashless facility. This means that, in case of repairs, the insurer pays directly to the garage, saving you a lot of hassles.
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.