Everything You Need to Know About Car Insurance in India

Car insurance is the first thing you need to buy after you purchase a car. As per government rules, it is mandatory for every vehicle owner to buy car insurance. Failure to do so can result in you incurring several fines, not to mention financial losses arising from vehicular damage and theft. Your car insurance protects you from a host of unfortunate circumstances. Here is a list of all the crucial things you need to know about car insurance.

Types of insurance polices

There are 3 types of Car insurance policies

Liability only insurance policy: This policy covers the policy-holder against vehicle theft, damage, and bodily injuries caused to self and third-party in accidents.

Own damage policy: This policy protects the policy holder from vehicle damage or loss caused due to natural calamities as well as man-made disasters.

Comprehensive Insurance Policy: This is a package policy which covers all aspects of the above mentioned policies. It offers complete coverage to the policy holder.

What is covered?

- Your car insurance cover includes the following things:

- Vehicle damage caused due to man-made situations like accidents, riots, strikes, terrorist activities etc.

- Vehicle damage caused due to “acts of God” such as earthquakes, storms, floods etc.

- Personal accident-cover for owner driver

- Liability to third party

- Loss/theft of vehicle

What is not covered?

- Wear and tear on the car

- Aging of the car

- Electrical/mechanical break-down of the car

- Damage caused by policy holder under the influence of alcohol, drugs and similar intoxicating substances.

- Damage caused while driving the car without a valid driving license.

- Loss/damage outside the country

- Consequential loss

Factors affecting insurance premium

The following factors can affect your car insurance premium

Insured declared value: This refers to the vehicle’s cover amount or the sum insured. The cover is decided on the basis of the vehicle’s value as per the ex-showroom price and with depreciation adjusted during policy renewal.

Vehicle Age: As the vehicle gets older, it gets more prone to wear and tear and mechanical failures. This phenomenon causes a hike in insurance premiums.

Claim history: For every successful year in which the policy holder does not make a claim, he is entitled to a no-claims bonus. The policy holder is rewarded with a reduced premium for not making claims. On the other hand individuals filing for too many claims may find their premium amount increasing.

Purchasing Car Insurance

There are three ways in which one can purchase car insurance

Option 1: Reaching out to the insurance company by visiting their office/branch directly and selecting a policy that suits you. You can pay in cash/cheque.

Option 2: You can purchase insurance from your broker or agent and ask him to suggest an insurance policy that suits you. You can pay in cash/cheque.

Option 3: You can also purchase your car insurance online by submitting soft copies of the mentioned documents and making an online payment. Remember to compare different policies before finalizing one.