Car insurance, also called motor insurance or vehicle insurance, is a type of insurance that provides financial protection to individuals and their four-wheelers against loss or damages due to various events such as accidents, theft, fire, natural disasters, and third-party liability. In India, as per the Motor Vehicles Act of 1988, having car insurance is mandatory for all four-wheelers. There are different types of car insurance available, including Third-Party car insurance, Standalone Own-Damage (OD) car insurance, and Comprehensive car insurance.
It is possible to purchase additional coverage such as Personal Accident Cover that covers both third-party liabilities and own-damage. To avail the coverage of up to Rs. 15 lakh, the insured must be the registered owner of the car and hold a valid driving license. Apart from providing financial protection, car insurance also helps individuals comply with legal requirements and gives them a sense of security while driving. It is important to review the policy’s terms and conditions before purchasing and to pay the premium on time to avoid a lapse in coverage.
Key Features of Car Insurance Policy
|Third-party damages||Death, injuries & property damages|
|Own damage cover||Available under standalone and comprehensive|
|No Claim Bonus||Up to 50%|
|Car insurance premium||Starting at ₹2094*|
|Add-on covers||More than 10 add-ons such as Zero dep, NCB protect, Roadside assistance, etc.|
|Personal accident cover||Up to ₹15 lakh|
Types of Car Insurance Policies
General insurance companies offer three types of car insurance policies that can be chosen based on budget and individual needs. These include third-party car insurance, comprehensive insurance, and stand-alone insurance.
Third-Party Car Insurance is mandatory for all car owners driving on Indian roads. It provides compensation for damages/injuries caused to a third-party and their property (up to Rs. 7.5 lakh). However, it does not cover damages caused to the insured car. Hence, it is recommended to opt for a comprehensive or standalone car policy.
Comprehensive Car Insurance covers both third-party liabilities and own damages. It allows policyholders to avail cashless repair services at network garages. Additionally, the coverage can be enhanced with add-on benefits such as roadside assistance cover, zero depreciation cover, etc. by paying a nominal extra premium.
Standalone Own Damage car policy provides financial coverage for accidental damages caused to the insured car. It can be purchased along with an active third-party insurance policy, as per the mandatory requirement under the Motor Vehicles Act in India. However, having standalone insurance offers financial help in case of own-damages to the insured car and third-party liabilities as well.
Coverage Under Car Insurance Policy
These are some of the events that are typically covered under car insurance policies:
- Damages caused to the insured vehicle due to man-made acts like riots, strikes, terrorist acts, vandalism, etc.
- Third-party damages like death, disability, and property damage caused by the insured vehicle.
- Losses arising from theft, housebreaking, or burglary of the insured car.
- Damages sustained by the insured car due to natural disasters like earthquakes, hurricanes, cyclones, floods, etc.
- Damages caused to the insured car while it was being transported via railways, roads, waterways, or airways.
However, it is important to note that the specific events covered and the extent of coverage may vary depending on the type of policy and the terms and conditions of the insurance provider. It is advisable to carefully review the policy document before purchasing to understand what is covered and what is not covered.
How to Calculate Car Insurance Premium?
The cost of car insurance is determined based on various factors. One can easily calculate the premium using an online car insurance calculator. However, the insurance provider considers the following factors while deciding the car insurance price:
Type of Cover – The premium of the car policy is based on the type of coverage chosen by the policyholder. Third-party insurance has the lowest premium as it only covers third-party damages. The premium increases if the policyholder adds own-damage cover or buys comprehensive car insurance.
Personal Accident Cover – Personal accident cover is available in both third-party and comprehensive car insurance policies. The policy covers accidents up to a maximum of Rs. 15 lakhs, and the policyholder can purchase it by paying a nominal extra premium.
Insured Declared Value – The Insured Declared Value (IDV) is the current market value of the car. It is the maximum amount for which the policyholder can raise a claim during the policy term. The higher the car’s value, the higher the IDV, and vice versa.
Make & Model – The make and model of the car play a significant role in deciding the premium. Insuring a higher-end car model would be more expensive than insuring a base model of the same car due to higher costs of repair or replacement.
Fuel Type – Repairing a diesel or CNG car is more expensive than repairing petrol cars. Therefore, insuring a petrol car is cheaper than other fuel types like CNG, LPG, and EV.
Location – The geographical location of the insured car affects the final cost of the policy premium. The premium is generally higher in metropolitan cities due to denser traffic and higher probability of accidents.
Year of Manufacture – The manufacturing year of the insured vehicle is also taken into account when deciding the car insurance premiums. Insuring newly launched vehicles can be expensive since their spare parts may not be readily available in the market.
Add-on Covers – Additional coverage options like roadside assistance or zero depreciation increase the premium. These options can be purchased only with a comprehensive car insurance plan.
Claim History – The insurer provides a No Claim Bonus to policyholders who have not filed any claims during the policy term. This bonus results in a reduced premium for own-damage coverage.
Benefits of Buying Car Insurance Online
|Categories||Buying Car Insurance Online||Buying Car Insurance Offline|
|Buying Process||Can be purchased online from the insurer’s official website or Policybazaar.com using a smartphone or laptop.||Requires physical visit to the insurer’s office or by connecting with the agent|
|Insurance Premium||Lower premiums due to the absence of intermediaries.||Higher premiums due to higher operational costs and involvement of agents.|
|Convenience||More convenient as it only requires a smartphone and a good internet connection.||Less convenient as customers need to meet with the insurance agent.|
|Transparency||More transparent as there is no role of an agent or intermediary.||There is less transparency as agents play a big role.|
|Customer Support||Easy to connect with the customer support team 24×7 via emails and calls.||Policyholders can connect with the customer support team or the agent during office hours.|
|Paperwork||Minimum to zero paperwork.||May require a lot of paperwork.|
|Renewal Process||Easy to renew as the policyholder’s details are auto-saved with the insurer||The renewal process is cumbersome and takes time.|
Factors to Consider While Selecting Car Insurance Policy
When selecting a car insurance policy, there are several factors to consider that can help you make an informed decision. Here are some key factors to keep in mind:
While third-party insurance is mandatory for every car owner, a comprehensive policy offers more extensive coverage. It’s important to check the policy’s inclusions and exclusions before purchasing it.
Comparing car insurance policies online is a convenient way to find the right one that suits your needs. Consider factors such as policy premium, IDV, network garages, claim settlement ratio, and customer support services.
Claim Settlement Ratio & Process
Check the insurer’s claim settlement ratio, which shows the number of claims settled by the insurer compared to the total number of claims raised by the customer. This will help you understand the insurer’s ability to settle claims.
Check the number of cashless network garages in your area before availing services from an insurer. This will increase your chances of availing cashless facilities without paying out of your own pocket.
Insurance companies offer add-on covers with comprehensive insurance policies to enhance coverage and maximize policy benefits. Depending on your requirements and budget, choose the add-ons that best suit your plan.
Choose an insurance company that offers 24×7 customer assistance to help you settle your queries and claims at your convenience.
Insured Declared Value (IDV)
IDV is calculated based on the market value of the insured car. The newer the car, the higher its market value, sum insured, and premium. However, an older car is more susceptible to risks, and the insurer may conduct an inspection before insuring it.
The car policy premium is based on factors such as the car’s IDV, make, model, fuel type, and policy tenure. Even for the same coverage benefits, the premium can vary between two insurers. Therefore, it’s important to compare and choose the best one for your needs.
Difference Between Third Party, Own Damages and Comprehensive Car Insurance
o help you choose the right four-wheeler policy, here is a table to help you compare features offered under different types of car insurance policies in India:
|Coverage Offered||Third-party Car Insurance Cover||Standalone OD Cover||Comprehensive Car Insurance Cover|
|Third-party property damage||Yes||No||Yes|
|Third-party bodily injury||Yes||No||Yes|
|Own damages of car||No||Yes||Yes|
|Personal accident coverage||Yes||Yes||Yes|
|Availability of add-ons||No||Yes||Yes|
Benefits of Car Insurance Renewal Online
Renewing your car insurance policy online is essential to continue receiving coverage from your existing policy. There are several benefits associated with online car insurance renewal, some of which are:
- Easy Comparison: Renewing your car insurance online allows you to easily compare the plans offered by multiple insurers. This helps you understand the additional services offered by the plan, such as free pick-up and drop facility, 3-day repair assistance, cashless assurance, and self-video claims.
- Easy Customization: During renewal, you can easily modify the coverage of your car insurance policy by adding or removing the add-on covers. However, remember that your car’s premium depends on the add-ons you choose.
- Easy to Switch Insurers: If you are not satisfied with your current insurer or want to enhance your coverage benefits, you can switch to another insurer at the time of renewal. You can easily do this from the comfort of your home if you find another insurer offering better features and services at a premium that suits your budget.
- Secured and Transparent: Online payment gateways make renewing a car insurance policy a secure and transparent process. You can easily pay the premium using credit cards, debit cards, and UPI.
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