Car insurance is an agreement between the owner of the car and the insurance company; where the car owner agrees to pay certain premium amount with a promise by the insurance company to cover for the loss, repair or damage caused to the insured vehicle in case of accident or mishap. It is mandatory under the law of Motor Vehicle Act of 1988, to own a vehicle insurance. Car insurance covers various damages that may occur to you or the owner or third-party. It also comes with add-on covers that enhance the basic policy by giving an extensive cover. If you are buying a new car, the car dealers will have tie-ups with various insurance providers. So it is easy for you to buy an insurance along with the purchase of the car.
Types of car insurances:
Third-party Liability cover: Also known as liability only cover, this plan provides cover against all the legal liabilities that arises due to damages or injuries caused to a third-party person or property by the insured vehicle. Personal losses covered under this plan include accidental death, body injuries, permanent disability, etc. This insurance cover can be availed at a low premium as it covers only third-party liabilities. This cover allows you to raise a claim under the ‘no-fault liability claims’ category. Here, you are allowed to raise the claim without having to provide proof that suggests your negligence caused the accident.
Comprehensive policy: This is a standard policy that provides an extensive coverage under various situations for the policyholder. Also known as ‘other than collision’ cover, this plan covers third-party liabilities due to body injuries, accidental death/property damage, own liabilities arising out of personal losses, property damage from natural calamities, man-made calamities, etc. The premium for this plan is high due to the capacity of the coverage that the plan provides. Insurers usually provide a number of add-ons that you can opt for under the comprehensive plan. Few add-ons are zero-depreciation, engine cover, Key replacement, roadside assistance, anti-theft device, etc.
Add-ons for car insurances:
There are many add-ons as per the requirement of the policyholder. You can avail these benefits for extra premium amount on your standard policy. These will enhance the cover making it more secure for the vehicle. Here are the add-on covers that are available for car insurance:
What does it cover?
The coverage for comprehensive policy is extensive, it covers the following:
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Loss or damage caused to the vehicle due to an accident, natural calamities, civil protests, riots, earthquake, flood, etc.
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It covers bodily injuries occurred to the driver or owner of the insured vehicle if the vehicle was in a mishap or accident.
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Legal liabilities arising out of third-party person or property damage by the insured vehicle.
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If the owner of the insured vehicle has passed away in an accident, then the nominee will be liable to receive the death benefit as mentioned in the policy.
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Personal accident cover for up to Rs.2 lakh can be availed or claimed if the owner of the insured vehicle has suffered a permanent disability or death.
What is not covered?
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Usual ageing with wear and tear.
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Loss or damage abroad
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Driving while intoxicated by alcohol, drugs or any other intoxicating substance
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Electrical or mechanical breakdown.
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If the owner do not have a driving license, he/she will not be eligible for insurance.
Factors affecting Car Insurance Premium;
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Geographical location: The location of your residence directly impacts your premium. Insurers have classified the premium amount based on different locations and the risk involved in driving in those cities. Metro cities have higher insurance premium due to the number of population, traffic on the road and the probability of accidents. Whereas driving in a regular city with less population and where the risk is lower for driving, accidents and vandalism, will pay 3 to 5% lower premium.
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Age of the car: In case of renewal of your policy, age of the car or year of manufacturing is highly vital. The insurance company will inspect your car at the time of renewal and decide the premium based on its use, wear and tear, performance, etc. The depreciation value will also be considered by the insurer if you do not you have zero-depreciation cover.
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Driving record: Your driving record is a mirror of your experience with driving a car. And if the insured vehicle has been claimed more than once in a policy year, the premium amount will be that much higher. The safer you drive, without violating traffic rules you will be eligible for better rates and driver discount.
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Brand and Engine: There is no doubt that if you have bought a luxury car like Audi, Benz or Jaguar, you will pay the same amount of insurance that a non-luxury car owners would pay. The manufacturer of your car and brand is one of the most vital part of insurance premium calculation. The value of your car will also determine the length of coverage and the insurance type that you require.
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Car accessories and customization: Customisation and extra accessories are not covered under motor insurance. Roof railings, stickers, extra bumper fittings, etc. are not covered under the policy. But if you wish to insure these items as well then get them fixed by the dealer at the time of purchase, they will add the cost of these items along with the price of the car. You will get a higher Insured Declared Value by the insurer by doing so, but please note that your insurance premium will also increase.
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