Car Insurance: Everything you need to know

There’s uncertainty in everything, be it life or your possessions. Just like we take an insurance policy over our life or health, we should insure our vehicles as well. This is because motor accidents are uncertain. It can happen to anyone, no matter how experienced a driver you are. So, if your car is insured the third party insurance company bears the financial burden in case of an accident.

Getting car insurance is an indemnity. When an accident happens the insurer makes sure that damages the car suffers are repaired. And in extreme cases where there is a total loss, the insurance company pays the entire sum.

In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every owner of a vehicle plying on public roads to take an insurance policy. The policy should cover the amount, which the owner has to pay any unfortunate accidents to happen. This is because the owner of the car is legally bound to compensate for accidental death, bodily injury or damage to property. In such a case, the insurer would pay the sum owed by the insuree or the person whose car got into the accident.

Read: Steps On How To Reduce Your Car Insurance Premium

Motor Vehicles Act, 1988:

The Motor Vehicles Act deals with the legal provisions applicable to the following:

• The registration of a vehicle
• The driving license of the vehicle owner
• Mandatory insurance required for a car

The Act only necessitates the third-party liability policy. In case you are caught driving a vehicle without a minimum of third-party liability insurance coverage:

• You will have to pay a fine of Rs.1,000
• In certain circumstances, you may even face a jail term of 3 months
• Your driving license could be suspended
• The registration of your vehicle could also be suspended

So, it is important that you abide by the law and purchase a suitable insurance policy for your car.

Why do you need car insurance?

There are several reasons for doing so, indemnity against uncertain financial loss being one.

1. Minimises your liability: Buying car insurance reduces the financial responsibility on you in case of an accident. The ramification of damages that you or the others suffer to the extent of bodily injury can be mitigated. A Third Party Insurance also covers you against the related legal expenses.
2. Pays for the damages: Indian roads are an unpredictable place, you never know what will hit you (literally). And we are telling you, repairing an accident damaged vehicle can quickly become a pocket burner. So, car insurance protects you from such uncertainties.
3. Pays for medical expenses: In the event of an accident, there are significant chances of injuries that require medical attention. Cuts, bruises and/or fractures are the inevitable aftermath. Thus, car insurance also protects you from expensive hospitalisation bills.
4. It helps you stay stress-free:  If you aren’t a confident driver, you will have peace of mind with insurance. Car insurance reduces the stress on the motorway, even for those of you who are experienced drivers.
   

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What are the various types of car insurance?

There are three types of Car Insurance in India:

• Zero Depreciation Car Insurance

Zero Depreciation Insurance is also known as Bumper to Bumper Insurance. It offers complete cover without considering the depreciating factor of your car. In case of an accident, you will receive full coverage for your vehicle. There will not be any deductions in the coverage amount due to depreciation. Zero Depreciation Insurance demands over 15% to 20%  premium compared to the standard insurance policy. Zero Depreciation Policy is a must-buy for new vehicles.

• Comprehensive Car Insurance

Comprehensive car insurance offers cover against damage to the vehicle as well as the death of the driver or passengers. Besides, the insurer also covers the damage caused by the car to a third party vehicle, property or person.

• Third-Party Car Insurance or Third Party Liability (TPL)

Third-party liability insurance offers limited protection. This type of car insurance shields you only against the costs incurred from the damage done by your vehicle to another vehicle, property or person.

Recently  a proposal was floated. according to this, the insurance coverage of cars could be for five years and more in addition to the existing one-year insurance. They did not finalise the modalities of such a provision yet. but this will undoubtedly benefit those car owners who sometimes forget to get their vehicle insurance renewed in time. this is because, If you don’t renew your policy in time, the company won’t cover the period between the date when the insurance cover ended and the date until it is  renewed. If during this interregnum, the car gets damaged because of an accident, no indemnity will be payable.

How much premium should I pay for my car?

There are various factors that affect the premium for your car.

• Policy Type– First and foremost, the premium depends on the kind of policy you are planning to purchase. The premium for TPI is significantly less compared to Comprehensive or Zero Depreciation Insurance. But, Zero Depreciation will cost you over 15% to 20% greater than the standard.
• The make, model, fuel type– Generally, diesel cars demand more premium compared to petrol cars
• The driver– Yes, the driver, his/her age and profession also plays a role in deciding the premium for a car.
• Geographical location– The location of the car is vital too. Urban cars attract elatively more premium.

What doesn’t cover my car insurance package?

You can check with your insurance provider for a better understanding of the terms and conditions for your insurance package. We encourage you to carefully read the clauses mentioned while purchasing vehicle insurance.

Below are some of the car insurance clauses and exclusions.

• Any issues related to the vehicle due to the general ageing of the car
• Consequential loss
• Mechanical breakdown of the vehicle
• Wear and tear of car parts such as tires
• The policy won’t cover the damages suffered as a result of using the vehicle outside the geographical location of the country
• The insurance won’t give coverage if the person is driving without a license
• No cover will be offered if the driver was under the influence of alcohol or drugs
• Damage incurred to the vehicle during a war or nuclear attack
• The policy won’t cover damages if you use the car for purposes other than what was mentioned in the policy

How to make a car insurance claim?

You should contact your insurer if your car is involved in an incident. Here is the procedure to make the claim.

• In case of an accident, you’ll need to file an FIR at the police station concerned.
• The driver or the passenger should note down the number plate if another car is involved. 
• Contact your insurance company immediately.
• Submit documents like RC, PAN, Aadhaar, a copy of FIR to the insurance company to process the claim.
• File a claim with the insurance company and note down the claim reference number.Whenever you buy a car, the first that you need to do is buy insurance for it. Keep all these factors in mind and choose the insurance cover that best suits you and your car. Stay safe on the roads!Do you need to get your car serviced? No worries! Download the GoMechanic App now.

  Also check out:  Car Insurance: When NOT to file a claim

  

  Read: 10 Reasons To Choose Petrol Over Diesel For Your Next Car