1. Third Party Car Insurance
Third party car insurance or Liability 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 a third party, hence the name third party car insurance.
The death, disability, and damage to goods or property of the third party are covered under the TP policy of the car insurance. The claim amount in case of Third party claims would be decided by the honourable 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 compulsory to be taken for any car to drive in public places.
2. First Party Car Insurance
While buying insurance for your car, it is not only enough to look at some important aspects of the policy, such as the cost and the coverage but also understand what terms like first-party car insurance, second party, and third-party car insurance stand for. This knowledge, in turn, can help you understand the policy document so that you can make a good decision.
The own damage section of the car insurance is known as the first party car insurance. In the insurance agreement, the person who purchases the insurance is known as the first party, and the company who sells the insurance is known as the second party. The customer who pays for his car insurance is known as the first party and any claims made under the first party section are settled by the insurance company under the own damage section of the car insurance policy.
3. Comprehensive Car Insurance
Comprehensive Car Insurance 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.
The other type of car insurance in India is 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.
4. Pay as you Drive Insurance
Pay as you drive insurance allows a policyholder pays an insurance premium based on the distance (kilometers) driven by the vehicle. This will be useful for those who have multiple cars.
Currently, there are only a few insurance companies only who are offering this policy. It provides comprehensive coverage for own damage and third-party liability coverage is provided on a basis for a term of a year.