Types of Car Insurance Policies in India – Explained
Car insurance is the most sought after insurance product in the Indian market due to the Motor insurance act which makes at least third party car insurance compulsory to ply in the public places. Most of the people have good knowledge of car insurance in India and are able to compare and decide the premiums before taking a car insurance policy.
A car insurance policy has two main types, namely: - Third party car insurance and Comprehensive Car insurance. Let us understand each of them to enable us to select the best type of car insurance. These types of car insurance can be opted both for the new car as well as the old car.
- Third Party Car Insurance
- Comprehensive Car Insurance
- Comprehensive Car Insurance with Add-ons
- Own Damage Car Insurance
- Personal Accident Cover
Insurance coverage refers to the kinds of protection available. Along with basic coverage under the policy, you can choose a number of add-ons to enhance the protection under the policies. Let us first show you the five types of car insurance coverage available in India:
1. Third Party Car insurance:
Third party car insurance or “Liability only” car insurance or “Act only” car insurance is the compulsory car insurance in India as per the Motor Vehicles Act. Any party other than the insurance company and the customer of the car is referred to as third party, hence the name third party car insurance.
The death, disability and the damage to goods or property of the third party is covered under the TP policy of the car insurance. The claim amount in case of Third party claims would be decided by the honorable courts and direct the insurance companies to settle the claim amount to the third parties on behalf of the car owner. This is the basic type of car insurance policy available in India and is compulsorily to be taken for any car to ply in public places.
The premium to be paid under the Third party type of insurance policy is decided by the Governing body for insurance, IRDA known as Insurance Regulatory and Development Authority of India. The car insurance rates in the Third party premium type of car insurance are subject to be revised each year depending on the loss ratio and other factors which are decided by the IRDA.
Under this type of car insurance coverage, you will get the following benefits:
- Cost of repairs/replacement of the damaged vehicle of third parties
- Cost of hospitalization and treatment of third parties
- Liabilities arising out of death of third parties.
2. Comprehensive Insurance:
The other type of car insurance policy in India is the “Comprehensive Car Insurance” which includes the Own damage section as well as the Third party section. The Own damage section covers any loss or repairs to the car owned by the insured due to an insured peril.
The premium to be paid by the customer under the own damage section is decided by the insurance company unlike the third party insurance premium which is decided by the IRDA. The own damage premium rates are given by the IRDA and the insurance companies can decide the premium within those rates.
Insurance companies take utmost care while deciding the premium rates for own damage type of car insurance such that too high price may result in failure of the product and too less price might impact the profits of the insurance company.
The insurance policy will also cover the following risk factors:
- Weather damage
Some of the different aspects that are covered by comprehensive insurance include:
- Damage caused by fire, severe weather, and natural disasters.
- Damage caused by a third party or animal.
- Damage caused to the vehicle due to civil disturbances like riots.
- Theft and vandalism.
||Third Party Liability
|Damage/Losses to own car due to an accident
|Damage/Losses to own car in case of fire
|Damage/losses to own car in case of a natural calamity
|Damage to Third Party Vehicle
|Damage to Third Party Property
|Personal Accident Cover
|Injuries/Death of a Third party Person
|Theft of your car
|Doorstep pick-up & drop
|Theft of your car
|Customize your IDV
|Extra protection with customized add-ons
3. Comprehensive with Add-ons:
The other type of car insurance in India is the comprehensive car insurance with add-ons such as Zero depreciation, Consumables, Engine protection etc. The most common type of add-on opted by the car insurance customer is the Zero Depreciation cover along with the comprehensive car insurance policy.
The “Zero depreciation” car insurance policy is also known as “Nil Depreciation” or “Bumper to Bumper” car insurance in India. This type of car insurance in India can be termed as the total coverage for car as the zero depreciation add-on enables the insurance companies to pay the complete claim amount without factoring depreciation. Bumper to bumper car insurance is an add-on or rider available under the own damage section of the car insurance policy.
Additionally, with a comprehensive insurance policy, you can widen the scope of your policy coverage by purchasing add-ons. Add-ons or Riders are additional coverage that you can buy at an additional premium to get protection against risks that are not covered under your basic policy. The insurance companies offer a variety of add-ons to suit the varying needs of the policyholders. Some of the most common add-ons that most people buy include:
- Zero-Depreciation Cover
In the event of an accident, if any of your car parts get damaged and you need to replace the same, insurance companies do not pay for the entire replacement cost, they deduct the depreciation. But, with a zero-depreciation add-on cover, you can get full compensation for the replacement of parts. However, you must know that you can buy this cover only if your car is less than three years old.
- Roadside Assistance Cover
Breakdown of a vehicle is a common problem, and it sometimes can put you in a difficult situation. In the event of any emergency like a flat tyre, battery issues or mechanical failure, the roadside assistance cover can help you get immediate help even if you are stranded in a remote area.
- NCB Protection Cover
The NCB or No Claim Bonus is a reward to all policyholders who do not file for a claim in a policy year. The NCB can help you get a significant discount on the premium upon renewal of the policy. Some insurers offer NCB by increasing the sum insured upon renewal. However, if you claim a couple of years, you may lose the accrued NCB benefits. This is where buying an NCB protection cover can be useful. As the name suggests, this type of add-on cover does not nullify the NCB benefits in the event of a claim.
- Key Replacement Cover
Often people tend to lose their car keys or misplace it. In such a situation, you may not be able to use your vehicle, and getting an original replacement key from the car manufacturer can be highly expensive. If you have a key replacement cover, the insurer will offer reimbursement for getting a substitute key.
4. Collision Damage or Own Damage Cover:
When you opt for collision damage car insurance coverage, the cost of repairs to your vehicle that has been damaged is reimbursed. To determine the cost of collision coverage, its age and insured declared value are taken into account to arrive at the premium. The IDV is based on the market value of the vehicle.
When a claim is lodged under collision coverage policy, the maximum amount payable under the policy is given by the IDV less accumulated depreciation. If you have purchased your vehicle on a loan, you should hold collision cover.
- In some cases, the cost of repairs will exceed the current market value of the vehicle. In such circumstances, the insurance company will pay the current market value of the car.
- The collision cover should be subscribed as per the age of your vehicle. If you are buying an insurance company for a brand new vehicle, you should ensure that the collision coverage is included.
- If there is a lien on your vehicle, you should buy collision cover.
- The collision cover can be as low as possible for old vehicles.
5. Personal Accident Cover:
- Personal injury protection will cover all the costs associated with the accident.
- In addition to the mandatory liability insurance, you can include certain coverage to overcome various risk factors.
- The medical bills of the driver and other passengers will be covered by the personal injury protection.
- Regardless of whose fault, the insurance company will pay the medical bills.
- Hence, you can buy personal injury coverage for the vehicle owner, driver and passengers so that you can make the most of your investment.
How to Choose the Best Car Insurance Plan in India?
Know your needs Before you start looking for the best car insurance and the best insurance company, assess your needs and know the type of policy you want. In India, there are two types of car insurance policies – Third-party Insurance and Comprehensive Insurance.
So, if you are looking for a basic plan with an affordable premium, a third-party liability plan would be an ideal choice. But, if you drive a luxury car, it is better to purchase a comprehensive cover, as it will help reduce financial liabilities in the event of an accident.
Compare the plans Once you are sure about the type of car insurance policy you need, it is a good practice to compare the plans from different insurance companies before making the purchase decision. You must compare the plans in terms of the sum insured, inclusions and exclusion of the policy, type of add-ons offered, claim process, deductibles, etc. Choose a plan that is cost-effective for the premium you pay.
Ask about the add-ons Add-ons or Riders are additional coverage options that you can purchase by paying an additional premium. The riders widen the scope of the policy and provide coverage against specific damages that are not included in your usual plan. You must ask the insurer about the add-ons offered and choose the one that best suits your needs. However, you must know that add-ons are available only to comprehensive insurance policyholders.
Check the claim process one of the primary objectives of purchasing a car insurance policy is to get immediate financial assistance in the event of an accident. So, it is paramount that you choose an insurance that has an easy and quick claim process. The last thing you would want during an emergency is going through a complicated procedure to get compensation for the losses.
Know about the claim settlement ratio of the insurer Not many car insurance buyers understand the importance of claim settlement ratio (CSR). You must check the claim settlement ratio before finalising the insurer. The CSR indicates the number of claims the insurer has successfully settled against the number of claim applications they received in one year. It is better to purchase a policy from a company that has high CSR, as it would mean that you have better chances of getting your claim approved.
Never provide any wrong information A lot of first-time car insurance buyers tend to provide incorrect information about their age and driving history to reduce the premium amount. But such practices can prove to be a costly mistake at the time of filing a claim. If the insurer finds the information is misleading, your insurance will be cancelled. So, it advisable to be honest and provide accurate details in the application form.
Be aware of the policy terms and conditions Last but not the least, before you sign the policy documents, you must take your time to read the terms and conditions carefully and check if the terms are favorable and meet your needs. This is a critical step to avoid any legal hassles at the time filing a claim.
How to File a Car Insurance Claim?
Here’s a step-by-step guide on how to file a motor insurance claim –
- The first and foremost thing is to inform the insurance company and get few important details in hand like policy details, loss details, and contact details.
- A survey will then be arranged on submitting the detailed estimate of repairs from the repairer.
- Submit duly filled and signed claim form along with documents such as registration certificate of vehicle, driving license, etc. Also, it is mandatory to update PAN and Aadhaar card details.
- In case of third party death/injury or any damage to property, you need FIR from police station.
- If all documents are found to be correct and in order, then a cashless facility will be arranged by the insurance company.
- You need to produce your vehicle for re-inspection, if requested by the surveyor
How to Buy Best Car Insurance Policy in Car Insurance?
Car insurance can be purchased online from the PolicyBachat portal in two easy steps. At PolicyBachat we cater unbiased comparison of quotes, a 24*7 customer assistance team your motive is to give our customers the right quotes with compare car insurance rates online.
You have the option to purchase this cover via the online mode or the offline mode while buying or renewing your car insurance policy. You can buy a Cover by following the below mentioned steps.
- Go to compare car insurance quotes online at PolicyBachat.com
- Fill in the required details and select your Car Model & Variant, RTO Location, Registration date, and Email address.
- Click on the “START SAVING MONEY”.
- Choose a Comprehensive Insurance plan.
- Premiums with different insurance companies are displayed with low premiums.
- Select the Add-on Cover from the available Add-ons
- After that fill in the ‘vehicle owner details and personal details.
- Purchase the best Car Insurance Policy using online payment
- If any queries are raised call: 1800–123–4003.
Car owners should be wise enough to choose the best car insurance coverage options to minimize the risk and to maximize the benefits. While the mandatory liability insurance is the cheapest option, it will not cover the policyholder’s interests.
Hence, the selection of insurance policy should be done as per the make and model of the car, frequency of usage, location and other factors. By comparing and analyzing various kinds of coverage, you can settle for the best car insurance policy.
These are all the types of car insurance in India and the customer can choose any type of car insurance depending upon his/her premium paying capacity, requirement, coverage etc. Car insurance renewal tips: The car insurance renewal quote should contain the extra coverage in the form of add-ons such as Bumper to bumper, Consumables etc., at a reasonable premium.
For best types of car insurance in India please visit www.policybachat.com and select the best car insurance type from the top general insurance companies.