Motor cars have really changed the way we travel. Cars are much faster, comfortable, and efficient as a means of transport than the horse or bullock-carts our predecessors used as the only modes of transportation till the nineteenth century. Cars have not only added thrill to our journeys but have paced up all other economic activities as well.
People associate their cars with their pride and symbol of status. Any scratch on cars hurts us more than an injury on self. For many people, their cars are their second most expensive assets after their homes. Thus, any theft or damage to your car can be a huge financial setback. That is why you need to get your car insured, and not to forget, as per the Motor Vehicles Act, 1988, the third-party liability component of car insurance is mandatory for the car owners to have. Yes, car insurance has two components i.e., third-party liability insurance and own-damage insurance.
Third-party liability insurance, which is mandatory to have, can be purchased as a standalone insurance product. Thus, people who are purchasing car insurance for the sole purpose of avoiding the fines imposed by the traffic police can buy standalone third-party liability insurance. Whereas a comprehensive car insurance policy has both the components i.e., apart from covering third party liability, this policy covers damages to own vehicle as well. The smart ones go for a well-equipped comprehensive car insurance policy.
While the third-party liability component of your comprehensive car insurance plan is fixed, the premium calculation for the own-damage component of the plan depends on factors like capacity/model/fuel type of the vehicle, claim history, place of residence, and modifications done to the vehicle. To avoid false claims or to make the car owner more careful, the insurance companies make the vehicle owners pay a certain amount of the claim called the deductible. As of present, the deductible is fixed as Rs 500 for cars.
- The driver not holding a valid license at the time of the mishap
- The driver was under the influence of the drugs or alcohol at the time of accident.
- Normal wear and tear of the car.
- Using the vehicle beyond recommended purpose.
- Mechanical breakdown.
- Any issues with the insured vehicle due to its general aging.
- Consequential losses.
- Damages incurred from using the car outside the geographical dimensions of the country.
- Damage incurred due to the car during war or nuclear attack.
- Vehicle related factors: TThe model, make, type of fuel etc, all count when it comes to evaluating the insurance premium for the car. Usually, petrol cars attract a lesser premium when compared to diesel cars.
- Location: The premium of the car tends to be higher for people living in urban areas and near highways.
- Driver: The age and profession of the owner/driver also plays a role in determining the cost of premium. Premium tends to be higher when the owner/driver is very young as people in that age group are tempted to drive recklessly.
Some of the advantages of having a car insurance policy area as follows.
- Death arising out of car accident is covered by your car insurance
- The repair costs of the damaged car due to accidents are covered.
- Covers damages caused by incidents other than accidents such as, theft, fire, etc.
- The liabilities incurred due to damages caused to third party are covered.
- Zero Depreciation Policy: Your car insurance policy pays you the claim amount after adjusting for depreciation. So, if you want that your insurance policy covers the entire amount of loss suffered then you should have this add-on. Having Zero Depreciation Policy is a great advantage as you get the whole amount of claim paid.
- Emergency Assistance: With this feature you get round-the-clock mechanical assistance for any breakdown your car may suffer. Imagine suffering a car breakdown when you are far from home, probably in a different city. The situation can be scary, right? But worry not if you have this add-on. All you need to do is call the car insurer and they will assist you to get your vehicle towed to the nearest garage.
- No Claim Bonus Protector Having this add-on cover is a great advantage. If your parked car suffers any damage due to an external impact such as fire, flood etc, you can file for claim without losing your No Claim Bonus earned so far.
- Return to Invoice Total loss is what every vehicle owner fears. Total loss happens in cases of severe accidents where the whole vehicle gets obliterated or when the vehicle is stolen. In such cases, the insurance company pays the IDV (Insured Declared Value) of your car. The IDV is the current market value of your car, which is quite low than the cost of replacing the car with a new one. Having this add-on gets you the difference between the invoice value and the IDV as well.
- Engine & Gear Box Protector:Your car insurance policy typically provides coverage for damages due to accidents, collision or theft. But sometimes the internal parts of the car such as the gear box or engine get seized due to bad weather conditions. For which you might spend on machine charges, labour costs, cost of compression tests, and engine cylinder re-boring etc. All these costs are covered under this add-on.
The private car sector is rapidly growing in India and so is the requirement for car insurance. India is a highly diverse country, so can there be a dearth of variety in term of choosing the best car insurance plans for you? Private car insurance is steaming sector in India and various general insurance companies are competing against each other to capture a higher market share. This stiff competition has benefited the customers in a big way as companies are regularly adding more features to the comprehensive car insurance plans to make them more attractive for the buyer. Product differentiation is the motto of insurance providers to stay ahead of competition.