- Date : 18/09/2020
- Read: 5 mins
Super excited about buying your dream car? Don’t forget to back it up with the right insurance. Here’s what you need to know about the types of motor insurance policies available in India.
Its been established that in the modern world, a car is a necessity. However, unfortunately, a rise in car sales will witness a rise in road accidents. This will compromise the safety of the vehicle, the driver and other individuals on the road as well. 2019 saw a new wave of governance in India and the implementation of many road safety rules. Motor insurance is now more essential than ever.
Consequently, are you confused about the right safety cover for your vehicle? Before we divulge into the types of motor insurance policies you can choose from, let’s first understand what is motor insurance policy.
A motor insurance policy with a basic third party liability cover is mandatory for all vehicles. It protects the interest of other people and assets who may get into an accident with your vehicle. This does not provide any direct benefit to the policyholder, hence we have a comprehensive motor insurance plan that protects the policyholder from financial losses arising out of damage or theft, in addition to providing third party coverage. We will touch upon these in detail a little later.
There are five types of vehicle insurance that can be availed individually or as a combined package, these are:
- Third party liability cover to protect others
- Collision cover for repairs in case of an accident
- Personal injury cover for the driver and passengers
- Uninsured motorist protection, in case you get hit by another vehicle that may not have an insurance
- Comprehensive motor insurance that covers for weather damage, theft, natural calamities, etc in addition to all of the above.
Types of motor insurance
1. Car insurance: As per the law, the owner of any private car must at least have a third party liability insurance cover. The other type of car insurance is comprehensive insurance. Depending on the type, the insurance covers the vehicle against damages in case of unforeseen events such as accident, fire, theft, natural disasters, and even terrorist attacks or vandalism. It also provides cover against injuries to the owner and the third-party in case of an accident.
2. Two-wheeler insurance: Just like car insurance, two-wheelers can also be insured against damages from accidents, fire etc. Most two-wheeler insurance policies also come with a mandatory personal accident cover for the owner or rider. You can extend this for the pillion rider as well.
3. Commercial vehicle insurance: As the name suggests, this motor insurance covers heavy commercial vehicles like trucks, buses, agricultural vehicles, etc. It also includes light commercial vehicles like ambulance, auto-rickshaw, etc. The premium on insurance is calculated on the basis of the vehicle’s manufacturing date, current showroom price, model and make, place of registration, etc. There are also different premiums for individual and corporate owners.
While these are the popular types of motor insurance policies available for different categories of vehicles, they can be further divided into two types of policies:
1. Third-party motor insurance: In insurance parlance, if you own a vehicle, you or the insured vehicle become the first-party. The company that sells you the insurance becomes the second party, and the person or property that gets damaged in case of an accident involving your car becomes the third-party. In India, it is mandatory to have a third party motor insurance policy. This type of motor insurance only covers the losses incurred by the third-party. The insurance does not cover any damages that your car may have incurred in the accident. Third-party insurance offers a personal accident cover but does not cover damages caused due to theft, fire, or natural calamity.
2. Comprehensive motor insurance: Unlike third party insurance, a comprehensive policy is more inclusive and wholesome. It covers the damages incurred by the third-party as well as damages caused to the insured vehicle. Comprehensive motor insurance covers thefts, fires, accidents, natural calamities, terrorist attacks etc. It offers personal accident cover and takes care of legal complications in case of vandalism. Unfortunately, comprehensive motor insurance does not include regular wear and tear of the vehicle that may occur with time or other mechanical breakdowns. However, there are various add-ons that you can consider to cover these exclusions. These add-ons are:
a. Zero depreciation: Over time, a vehicle naturally depreciates in value. Hence, with this add-on, the final settlement is based on the original price of the vehicle and not on the depreciated price.
b. Tyre protection: Normal motor insurance policies only cover tyre damages in an accident. The tyre protection add-on also covers cuts and burst that may happen otherwise.
c. Roadside assistance: Imagine being stranded in the middle of nowhere because your car broke down. With roadside assistance, you can easily call your insurance provider for immediate help in such cases. They will either repair your vehicle on the spot or arrange for it to be towed to the nearest repair outlet.
d. Engine protection: Whether there is oil leakage or damage due to excessive rain, this add-on provides coverage from all engine-related issues.
Given the benefits, comprehensive motor insurance works better in the long run and provides more advantages to all parties involved in an accident. Several insurance providers offer different plans based on the type of vehicle you own. You can either visit the branch of the insurer or opt for an online motor insurance policy. However, remember that policies are only valid for a certain period. You must renew all types of motor insurance policies well before they expire. Driving a vehicle without a valid insurance policy is not only unsafe but also illegal in India.
The old saying, ‘It's better to be safe than sorry’ is more accurate than ever when it comes to motor insurance. A few add-ons may cost more in terms of premium, but they will also bring you peace of mind!
Are you planning to buy a car insurance policy? Keep in mind these dos and don’ts before you buy motor insurance.