Car insurance – Imagine you met with a car accident, wherein your whole car got wrecked maybe just got scratches. Getting your car repaired digs a big hole in your pocket and affects your financial condition. Now, if you have car insurance and you meet with a car accident, the insurance company covers all the repair costs. At this point of time, you don’t need to be worried about money for the car repairs. You may also have injuries and car insurance does not cover that. For that, you need health insurance. Read here to know more about health insurance.
Coming back to the topic, car insurance not only covers accidental claim but also covers the damage by theft.
Let’s discuss more about Car Insurance
TYPES OF CAR INSURANCE
Car Insurance in India comes in three major forms. Here is a quick list of all the types of car insurance available:
1. Third Party or Liability Cover
In case you are liable for an accident and damages to someone else’s vehicle, this type of insurance comes in force. It is mandatory by law to have a third party insurance cover before you start driving on roads. Liability insurance will cover the cost of repairs for any third party for e.g. property damaged by an accident or the medical bills for the other person from resulting injuries. This cover is mandatory for all cars.
2. Collision Cover
In case you meet with an accident and your car is damaged severely, this cover helps to bear the repair expenses. Also, if the damages are such that the repair expenses are exceeding the total value of the car, the collision cover pays the value of the car. This cover is important for expensive high-end cars.
3. Comprehensive Cover
This type of car insurance covers all types of damages under all unfortunate situations you may face with your car. Car Insurance covers accidental damages, medical expenses to self and others. Comprehensive cover also covers damages due to weather, natural calamities, car theft, and vandalism, which the other two insurances do not cover. It is not compulsory to have comprehensive coverage, but if it suits your budget, it is one of the most important insurance policies to have in your kitty if you are a regular driver. It can further be enhanced by adding on the riders like NCB (No Claim Bonus), accessories cover, invoice cover, etc. With the all-inclusive features that this cover comes with, it is expensive than the other two.
Add-on Covers With Your Car Insurance
Add-on is an additional benefit added to your car policy which covers your car against unforeseen expenses. You can buy add-ons, also known as riders, by paying extra premium.
Insuranc companies offer various types of add ons but you should select the one according to your specific requirements.
1. Accidental Cover
This add-on is applicable on the owner(if he/she is driving the car) as well as the paid driver. With this add-on in place, the insurance company will pay a lump sum amount as a compensation to the driver, if they die or suffer a serious injury in a car accident. This is one of the most important add-ons to have in your car policy.
2. Zero Depreciation
After an accident, many car parts need to be changed. Depending on how old the car is, the insurer will pay as per the depreciated value of those spare parts. If you have zero depreciation cover attached to your policy, you get the insurance claim as per the actual value of spare parts, which helps you save a lot of money on car repair.
3. Assistance on Road
This add-on cover ensures that the insurance company arranges for your car to be towed away to a garage and get you help to reach your destination, in case your car gets broken in a secluded place.
4. Engine Cover
Engine is the most important part of your car and incidents like flooding are likely to damage it. If your policy does not cover damage caused due to flooding, engine cover add-on helps you to bear the engine repair or replacement expenses through your car insurance policy.
5. Daily Allowance
If your car is at a garage for repairs, this cover helps you with cash to arrange for an alternative mode of transport till you get your car back. It is normally given for a period of 10-15 days and ranges from INR 500-1000 depending on the model of the car.
6. Lock And Key Replacement Benefit
If you lose your key and require getting a new key and lock, this add-on helps you to get the actual cost, rather than just a limited amount that insurance companies normally offer.
7. Consumables Cover
If your car is not older than three years, you can buy this add-on to claim for any money spent on nuts & bolts, screen washers, engine oil, bearings and other consumable parts, when your car meets with an accident. Car policy does not usually cover this. All of the above add-ons are optional but they are very useful in certain situations. Keeping in view your actual requirements, you may opt for some or all of them.
8. Return to Invoice Cover
Usually your car is valued as per the Insured Declared Value (IDV) or current market value, which is lower than the actual value of the car. If your car gets totally damaged in an accident or gets stolen, the insurance company will pay you the claim as per IDV. But with this add-on in your policy, you can get the actual value of your car without deducting the registration charges, road tax and any depreciation calculated on it.
9. No Claim Bonus (NCB) Cover
If you do not file for any insurance claim throughout the year of your car insurance policy, you get to enjoy no claim bonus. This comes in form of discounts on premiums for your next policies. For example, you get 20% discount on the premium you pay for your next policy after a claim free year. This can go up to 50% if you do not claim an insurance for 5 continuous years. Your NCB becomes zero in case you file even a single claim in an unforeseen events. But, with NCB cover in your policy, you can keep your bonus intact and still claim insurance.
Different people need different types of car insurance according to their needs or car requirements. What is suitable for you might not be suitable for you friend. You should carefully read all terms and conditions of a car insurance policy before you opt for one.
We hope you understand how important it is to have car insurance. If you have anything to add or comment on, let us know in the comments below. We appreciate all feedback.