If you are planning to buy a car insurance policy for your vehicle, here’s a comprehensive guide to car insurance coverage to help you make the right decision.
Table of Contents
What are the types of Car Insurance?
There are two types of car insurance policies:
- Third-Party Liability Insurance
- Comprehensive Policy
Third-Party Liability Insurance:
This is the basic and primary insurance policy which has been mandated by the Government of India, as per the Motor Vehicles Act of 1988. Lack of a third-party insurance policy as a car owner will result in fines and penalties. It’s also known as liability-only insurance or act-only plan. As the name suggests, the policy protects the policyholder in case of third-party liability. In simpler terms, the policy offers financial and legal aid in case of any damages or losses caused to the third-party, person or property, involved in the accident.
Comprehensive Policy
A comprehensive policy has exhaustive car insurance coverage where it protects the policyholder from both third-party liabilities and own damage. Here, own damage refers to the losses incurred by the policyholder, due to damages to the vehicle. The policy also protects the policyholder from losses or damages that occurred due to natural disasters like earthquakes, tsunamis, etc., or man-made calamities like theft, fire, vandalism, etc.
What are the Types of Vehicles that can Benefit from a Comprehensive Policy?
The Comprehensive policy benefits both personal and commercial vehicle owners. Let us take a look at the coverage available for both vehicles.
Personal or Private Car
The policy protects the insured vehicle and the insured from loss/damage caused and incurred by the policyholder. Further, the policy provides coverage for damage/loss incurred by the policyholder, in case of a natural and man-made disaster. The policy also provides coverage under third-party liability insurance.
Commercial Car
A commercial vehicle has all the benefits that a personal or private vehicle enjoys. However, the specifics and premium of the policy might change depending on the purpose of vehicle usage.
What are the Different Types of Add-Ons Available?
A comprehensive policy, as the name suggests, is very exhaustive in terms of its coverage. However, it might not meet the varied and specific requirements of all vehicle owners. This is where the add-ons come into the picture. Add-ons are additional coverage benefits that can be included in the policy for extra protection. It can be purchased for a nominal premium. Listed below are some of the different types of add-ons available:
Roadside Assistance Cover
A good trip can be ruined in the blink of an eye if you get stranded or stuck in the middle of nowhere at odd hours of the day when you cannot holler for help. To protect vehicle owners under such circumstances, insurance providers offer roadside assistance cover which helps the insured with any issue like a flat tyre, a locked out car, or to tow the vehicle, in case of serious damage, etc.
Passenger Assistance Cover
Generally, in case of an unfortunate event with a car, the policy only protects the owner or policyholder. But, with a passenger assistance cover, the vehicle owner can keep all the passengers in the car protected. The policyholder can avail compensation for all medical expenses of the passengers, incurred due to the accident. If you are constantly travelling with your family, then this add-on is highly recommended for you.
Zero Depreciation Cover
It is a well-known fact that the value of a car depreciates the moment it leaves the showroom. So, it’s only natural that when a vehicle is damaged, the claim amount is disbursed to the insurer only after considering the depreciation costs. To avoid this loss, insurance providers have come up with the zero-depreciation cover which can help car owners avail a higher claim amount.
Return to Invoice Cover
Sometimes, in case of an accident or any natural or man-made disaster, you can suffer a total loss to an extent where the car cannot be revived or the costs for repair exceed your Insured Declared Value (IDV). In those cases, the policyholder only receives the current IDV of the vehicle, minus the deductions. But, with a return to invoice cover in place, you can get the full buying price of your vehicle for compensation.
NCB Protection Cover
The NCB or the no-claim bonus is issued to policyholders who do not raise a claim during the policy period. This bonus is given as a reward for the same, in the form of a discount on the premium on renewal. The best part is the reward can be carried forward for up to 5 years. It can also be transferred, in case you decide to change your vehicle or opt for a different insurer. However, you can lose out on the benefits if you make a claim or renew past the due date. An NCB cover allows you to protect these rewards.
Tyre Damage Cover
Generally, car insurance policies do not provide coverage for some of the components of a vehicle like a tyre. However, if the damage occurred as a result of an accident, it is taken into consideration. If you wish to avail yourself of compensation for other losses and damages incurred due to in-tyre bulges, punctures, etc., you can buy the tyre damage as an add-on.
Consumables Cover
A car insurance policy is extensive in terms of coverage, but it also comes with certain limitations. Like, a car insurance provider does not provide coverage for consumables like oils, lubricants, fluids, coolants, nuts and bolts, etc. This is why insurers provide the consumables cover which helps you receive compensation for all your consumables.
Personal Belongings Cover
Some of us travel daily and choose to store a spare of our essential belongings in the car. Even without us travelling, we choose to leave some of our personal belongings in the car like laptops, bags, etc. If you lose these personal belongings due to theft, the loss will not be compensated under the insurance policy. However, with a personal belongings cover, you can receive compensation for both your vehicle and your possessions.
Key Loss Cover
We, humans, spend a lot of time looking for our misplaced belongings, including our specs and keys. While we do have the option of a spare in case of a misplaced key, it can be difficult to get your car open, if you manage to lose both your keys. You need to approach your car manufacturer for a spare or change the locks on your car. With a key loss cover, you can get your insurer to pay for the expenses incurred for the same.
Engine Protection Cover
It’s common knowledge that a car insurance provider does not provide coverage for damages or losses incurred due to the mechanical or electrical breakdowns of a vehicle. This is why insurers have the engine protection cover which can help policyholders avail compensation, in case of engine damage.
Apart from the above-mentioned add-ons, you can also avail of covers like daily allowance cover to receive compensation for the expenses incurred due to travelling, etc.
But even with invariable amounts of add-ons, the comprehensive policy does not provide compensation under any circumstance in which a law is broken. For example, in situations where a claim was raised when –
- The vehicle owner was driving under the influence of alcohol or other intoxicating substances.
- The vehicle owner was participating in an illegal race or any other illegal activity.
- The vehicle was driven without a valid driving licence and other related documents.
- The vehicle was driven without a valid insurance policy.
- The vehicle was modified or repaired without the knowledge of the insurance provider.
We hope this article can help you make better and informed decisions for car insurance coverage. Purchase a suitable insurance policy and manage the expenses of your car wisely. In a bid to provide complete protection for yourself, make sure you don’t over-insure or under-insure your vehicle under any circumstances.
Chola MS offers a comprehensive car insurance policy with competitive premiums and hassle-free claims. To know more, click here.