Types of car insurance covers and their benefits

If you own a car in India, you would have to get your car covered under a car insurance policy. This rule has been made mandatory as per the Motor Vehicles Act, 1988. As per the Act, every vehicle, including a car, should have a valid insurance cover on it. If not, you, the owner would be held responsible for violating traffic rules and face heavy penalties.

Given the necessity of a valid insurance cover, there are different types of car insurance policies available in the market. Let’s understand what these policies are –

Types of car insurance based on the type of car

There are two types of car insurance policies based on the type of car that is being insured – private car insurance policy or commercial vehicle policy. Private car insurance plan covers privately owned four-wheelers while commercial car insurance plans cover taxis and other commercially used cars.

Types of car insurance based on coverage

This is, perhaps, the most common and popular basis on which car insurance policies are differentiated. Based on the coverage offered, there are two types of car insurance plans –

  • Third-party liability only plans
  • Comprehensive plans

Let’s understand these plans in details –

Third-party car insurance plans

Third-party policies cover the legal and financial liability that you face when you hurt or damage another individual due to your car. The policy covers the following types of claims –

  • Financial liability faced when an individual gets killed due to your car
  • Financial liability faced when an individual gets hurt by your car
  • Financial liability faced when you damage an individual’s property

Third-party plans are mandated by the Motor Vehicles Act, 1988. If you have third party coverage on your car, you are fulfilling the required rule of the Act.

Comprehensive car insurance plans

While third party plans are legally compulsory, comprehensive car insurance plans are voluntary in nature. You can choose to buy the policy for wider coverage of your car. Comprehensive car insurance plans are recommended because they also cover the damages suffered by your car besides the third party liability that you face. Thus, in comprehensive plans, you get coverage for the following contingencies –

  • Financial liability faced when an individual gets killed due to your car
  • Financial liability faced when an individual gets hurt by your car
  • Financial liability faced when you damage an individual’s property
  • Financial loss suffered when the car is damaged by natural causes like lightning, earthquake, floods, storms, cyclones, landslides, etc.
  • Financial loss suffered when the car is damaged by man-made causes like explosion, implosion, fire, malicious activities, riots, etc.
  • Financial loss suffered when the car is stolen
  • Financial loss suffered when the car is damaged while being transported

Comprehensive car insurance plans, therefore, have a wider scope of coverage and cover third party liability as well as damages suffered by the car.

There is also a mandatory personal accident cover which is available in both third-party and comprehensive car insurance policies. This cover is available for INR 15 lakhs and covers accidental death and permanent disability suffered due to an accident.

Types of car insurance plans based on coverage duration

As per a rule passed by the Insurance Regulatory and Development Authority of India (IRDAI), if you buy a car on or after 1st September 2018, you would have to buy a long-term car insurance plan on it. The rule mandates a long-term third party cover for three years and so, based on the rule, the following types of car insurance plans are available in the market –

  • Long term liability-only policy

This policy covers only third party liabilities for a continuous period of three years. The policy is available only for new cars.

  • Annual comprehensive policy

This policy provides third party coverage as well as coverage for the damages suffered by the car itself. The comprehensive policy, as the name suggests, is offered for one year.

  • Bundled policy

Since a long-term comprehensive cover might prove unaffordable for car owners, a bundled policy is also issued. Under the bundled policy, third party liability cover is allowed for three years while the comprehensive cover is allowed for one year. 

For cars bought before 1st September 2018, one-year third party or comprehensive cover is valid.

Thus, car insurance policies can be differentiated on the following types –

car insurance policies

Customizing your car insurance policy through add-ons

Comprehensive policies offer different types of car insurance add-ons. You can add these add-ons to increase the coverage benefits of your policy. Some of the most common and popular add-ons include the following –

  • Roadside assistance 

Under this add-on, you get the promise of round the clock assistance from the insurance company for any car breakdowns that you face

  • Zero depreciation

This add-on enhances the claim payable under the policy by removing the deduction for depreciation on the parts of the car which have been repaired or replaced

  • No Claim protect

This add-on protects the accumulated no claim bonus under your car insurance policy even after you make a claim

  • Engine protect

The add-on covers engine damages which happen due to water seepage into the engine

  • Return to invoice

The add-on pays the invoice value of the car in case of theft

  • Medical expenses 

In case of an accident involving your car if you are hospitalised and incur medical expenses, the expenses would be covered under the add-on

Roadside assistance in car insurance plans

Roadside assistance is an optional add-on that promises to offer 24*7 assistance and support if your car breaks down or stops in the middle of a remote place and you cannot find any help. The roadside assistance cover gives assistance for flat tyres, key replacement, accommodation, taxi services, fuel supply, battery jumpstart, etc.

Though the roadside assistance coverage is offered as an optional add-on with an additional premium, some plans incorporate the benefit in their coverage structure itself. You would, thus, find the roadside assistance cover inbuilt under the scope of some car insurance plans.

If you frequently take your car for long commutes or travel remotely, opting for the roadside assistance cover would be a wise choice.

How to choose the best car insurance?

When buying an insurance policy for the car, you should choose the best policy so that you get the most inclusive scope of coverage. To choose the best car insurance plan, here are some tips –

  • Opt for a comprehensive plan

A comprehensive plan not only covers the legal liability but also the damages suffered by your own car. Moreover, in the case of theft of the car, a comprehensive car insurance plan gives you a lump sum benefit that might help you replace the stolen car. Thus, opt for comprehensive coverage to avail of the best protection.

  • Choose an optimal IDV

The Insured Declared Value (IDV) is the coverage amount of the comprehensive car insurance plan. It is calculated by deducting the depreciation of the car from its market value. Insurers allow you to customize the IDV for maximum coverage. Choose an IDV as close to the value of the car as possible so that you get a high claim amount in the case of total loss or theft.

  • Opt for add-ons

Add-ons enhance the scope of coverage and also the claim amount. Choose suitable add-ons depending on your coverage needs to make your policy all-inclusive.

  • Hunt for discounts

Different types of premium discounts are available under car insurance plans. Hunt for the maximum possible discounts to reduce the premium outgo.

  • Opt for a wide network of garages

Networked garages allow you cashless claim benefits. So, when buying car insurance, you should opt for an insurer that has the widest network of cashless garages. This would help you locate the nearest garage easily and avail of cashless claims.

  • Check the CSR

The Claim Settlement Ratio (CSR) of the insurance company shows its claim settlement history. The higher the ratio, the more trustworthy the insurer. So, choose an insurer with a high CSR for a favourable claim experience.

  • Compare and buy

More than a dozen general insurance companies offer different types of car insurance plans. So, when buying a policy, the comparison is a must. When you compare you can find a plan that offers all the above-mentioned benefits and also costs the most reasonable.

How to buy car insurance plans?

You can buy any type of car insurance policy online or offline. For the offline mode, you can visit the insurer’s office or contact an insurance agent. For the online mode, which is much easier, you can visit the insurer’s website and buy the plan in an instant. For finding the best car insurance policy, though, you should visit platforms that allow you the facility of comparison.

Turtlemint is one such platform that allows you to compare and then find the best car insurance policy. Turtlemint is tied up with some of the best car insurance providers so that you can find only the best plans that are available in the market. To buy a suitable type of car insurance plan from Turtlemint, here are some common steps that you should follow –

  • Visit Turtlemint’s platform at https://www.turtlemint.com/car-insurance/
  • Provide the details of your car like the registration number or location, make, model and variant, registration and manufacturing year, details of previous policy (if any), type of policy needed, etc.
  • Also provide your contact details so that you can avail of personalized services to buy the best car insurance plan
  • When you submit the details you would be shown a list of the best car insurance plans available in the market
  • Compare the different plans based on their coverage and premium
  • Choose the most suitable policy, fill up an online application form, pay the premium through any digital mode and your policy would be issued instantly.

Buying car insurance through Turtlemint is simple and takes only a few minutes of your time.

Making a claim under different types of car insurance plans

Claims under car insurance policies depend on the coverage offered by the policies. Thus, it is important to know the process of making a claim under each type of plan. So, here’s a brief look into the claim process of the third party and comprehensive plans –

  • Claim under third party policies

    In the case of third party policies, the claim is reported to the Motor Accidents Tribunal where the financial liability is decided. The process is as follows –

    • Inform the insurance company as soon as the claim occurs
    • File a police FIR and the claim would be taken to the tribunal
    • The tribunal rules out the liability that you face and the insurance company pays the liability to the third party
  • Claim under comprehensive policies

    Under comprehensive policies, third party claims are made as per the above-mentioned process. However, if your car suffers damage, the claim process is as follows –

    • Inform the insurance company immediately. The company then tells you the location of the nearest garage where you can claim cashless repair services
    • Take your car to the networked garage of the company where a surveyor would assess the damage and prepare a claim report
    • Based on the surveyor’s report the insurance company approves the claim. Once the claim is approved, repairs on your car begin
    • After the repairs are done the insurance company settles the bill directly with the garage. You might have to pay a part of your claim after which you can take delivery of your car
    • In case you get the repairs done at a non-networked garage, you have to bear the repair costs and then get the costs reimbursed by the insurer

Amidst the different types of car insurance plans available in the market, choose the policy which suits your coverage needs. A comprehensive cover is recommended as it pays for the repair costs of your car. You can also increase the coverage with available add-ons and enjoy a wider insurance cover. Since car insurance is mandatory, choose the best plan and avoid legal hassles.

Frequently Asked Questions

  1. Do add-ons require additional premiums?

    Yes, since add-ons provide additional coverage, they require additional premiums. For each add-on that you choose you would have to pay an additional premium.

  2. Will there be premium discounts if I buy three-year comprehensive coverage?

    Yes, various types of premium discounts are allowed under comprehensive car insurance plans. You can claim a discount for the following –

    • Long term coverage
    • Installing safety devices
    • Becoming a member of automobiles associations
    • Modifying the car for disabled users
    • Choosing voluntary deductible
    • Existing no claim bonus
  3. What is the premium for personal accident cover?

    A personal accident cover for INR 15 lakhs costs INR 750

  4. If I don’t buy comprehensive plan would I face a penalty?

    No, if you have bought only a third party liability policy, you would not suffer any penalty for not buying a comprehensive plan. However, if your car faces any damage, you would incur huge repair costs in the absence of a comprehensive car insurance policy.

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