Car owners have their cars insured. However, are they fully aware of the insurance policy? Although you might have intended to take out the policy with certain goals in mind, do you know if your car will be adequately protected? Here are some basics about car insurance that can help you make a wise decision.
Car insurance is a must.
Indian law requires that all vehicles on the Indian roads must have valid insurance policies that cover at least the cost of any damage they may cause to others.
The insurance company will pay for the damage if it is covered under the contract. An insurance policy will cover costs resulting from fire, accident damage, theft, and natural calamities such as floods, earthquakes, or cyclones.
Don’t forget the compulsion. Even if you don’t have to, it is still a good idea to insure your car. Your car could also be in an accident. It is worth paying a small amount for car insurance. It is important to renew your auto insurance policy on an annual basis.
Types of Car Insurance
There are two main types of auto insurance policies: comprehensive and third-party. Let’s examine them in more detail.
Third Party Insurance
This insurance covers third-party damage that your car causes. It is the minimum requirement under Indian law. This insurance covers the damage caused by your car to another person or vehicle. If you cause an accident while driving, your insurer will cover the damages to the vehicle and the people in it. This policy does not cover you or your vehicle.
This premium is based on the engine capacity of your car. This policy only covers third party damage and the premium is much lower than a full coverage policy.
Comprehensive Insurance
It is comprehensive, as the name suggests. This policy covers you and the third party for any damage. Accidents can result in medical costs for you and your passengers, as well the medical costs of any other person. In addition to covering your car and other vehicles, the insurer will also cover you for any expenses.
The policy also covers any damage to your vehicle caused by theft, burglary or terrorist activity. Insurance companies will cover your car’s accessories, such as the music system or air conditioner.
The insurable vehicle value is used to calculate the premium. Because comprehensive insurance covers a wider range of vehicles, the premium is typically higher than a third-party policy.
What coverage do I need?
Two things to remember when shopping for car insurance
1) What is my capacity to pay the premium?
The minimum legal requirement in India is third party insurance. If you decide to go for something more, consider the risk you are willing to take on. You might already have a loan for your car, another loan that you need to repay, or financial obligations. Calculate your monthly car insurance premium to find out if it is possible to pay it off.
2) Additional coverage options
Additional coverage is available if you are prepared to pay more for what you need. You may need all-inclusive coverage for your car to ensure complete protection. The coverage you select will determine the premium. These are the most common types of coverage:
- Personal injury coverage In case of an accident, you and your passengers are covered.
- Uninsured/Underinsured coverage:Insured pays for damages to your vehicle and you if another vehicle hits you that isn’t insured.
- Collision:Your car will be repaired if it is involved in a collision with another vehicle or object. Your vehicle’s repair costs, minus any voluntary amounts you may wish to pay, are covered.
- Accessories for cars:Additional coverage covers damage to car accessories such as the A/C and music system.
If you choose a comprehensive policy, the premium for your car insurance will decrease as your vehicle gets older. In the case of third party auto insurance, however, the premium amount is constant because the amount is determined based on engine size.
