All you compulsion to know about Car Insurance

All you compulsion to know about Car Insurance

A car insurance policy is a mandatory requirement as per law. If you have a car and want to drive it on Indian roads, you should have a valid car insurance cover on your car. This mandate is prescribed by the Motor Vehicles Act, 1988. Since a car insurance policy is compulsory, you should have a complete understanding of the plan, its benefits, and other features. So, here is a detailed guideline by Acme Insurance on car insurance for your understanding –
Types of car insurance policies
In India, there are two types of car insurance plans which are described below –
Third party liability cover
It is also called ‘liability only policy’ or ‘third party policy’. This is the bare minimum coverage which is mandated by the Motor Vehicles Act, 1988. The policy covers any financial liability you face in the following circumstances –
When a third party (any individual other than you and your car) dies due to an accident involving your car.
When a third party suffers physical bodily injuries due to your car.
When your car damages third party property.
Benefits of a third party cover
Here are some benefits which you can get from a third party policy –
The premium is very low and it depends on the engine capacity of your car. It does not depend on the car’s age and remains fixed.
For any third party injury or property damage, you get coverage for up to Rs.7.5 lakh. In case of death, however, there is no limit to the coverage.
The third party can claim a compensation from your policy under ‘no fault liability’
Limitations of a third party cover
Though a third party policy has benefits, it has limitations too. These limitations are as follows –
The policy does not cover damages suffered by your car
If you suffer an accidental death or disablement you, usually, do not get any coverage. However, in some plans, there might be a personal accident cover of Rs.2 lakhs for the owner/driver of the car.
You don’t get a discount if you don’t make any claim in a policy year.
Add-on coverage features are not available in a third party policy.
Comprehensive package policy
The other type of car insurance policy is the comprehensive package policy also called package policy. The policy covers the mandatory third party liability and also damages suffered by you and your car. Coverage is provided for the following contingencies –
Death of a third party or bodily injury caused to a third party
Third party property damage due to your car
Damages caused due to man-made calamities like fire, theft, collisions, etc.
Damages faced by the car due to natural calamities like earthquakes, lightning, flood, hurricane, etc.
Damages faced when your car is in transit by air, water or road, etc.
Benefits of a comprehensive policy
A comprehensive car insurance policy has many benefits which include the following –
Coverage is given for both third party liability and damages faced you
Compensation is also paid when your car collides with a car or something other than another car
You can opt for various add-on coverage features
There is a no-claim discount in the premium if you don’t make a claim in any year
 
Limitations of a comprehensive policy
There are certain limitations under the plan which include the following –
Premiums are higher because of the comprehensive scope of coverage
Premiums increase further when add-ons are selected
Add-ons in a car insurance plan
Add-ons are additional coverage features which are available in comprehensive car insurance policies at an additional premium. The most common and popular add-ons include the following –
Personal Accident/Personal Injury Protection (PIP)-This add-on covers death and disablements which you might suffer when involved in an accident.
Medical expenses –Under this add-on, the medical expenses incurred on an ambulance and treatments are covered if you are involved in an accident.
Vehicle replacement –Through this add-on, the insurance company promises to replace your car with a new one of an equivalent value if your car is stolen or if it suffers a complete loss.
Rental reimbursement –When your car is at the workshop for repairs you might hire a rental car for your conveyance needs. This add-on covers the cost of such rental cars that you incur.
Zero depreciation –In case of damage, the claim is paid after deducting depreciation from the cost of the parts repaired or replaced. With this add-on, the complete cost of replacement is paid by the insurance company irrespective of the applicable depreciation.
NCB protect –When you don’t make a claim you earn any claim discount. However, this discount is lost whenever a claim is made. This add-on ensures that even after you make a claim you don’t lose your accumulated discount.
Read more about No claim bonus in car insurance
Engine protect-This add-on covers the cost incurred in replacing or repairing the engine of your car.
Roadside assistance –This add-on ensures round-the-clock assistance by the insurer if your car breaks down. The company provides you with on-site repair and rescue services with this add-on.

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