If not a luxurious lifestyle, every individual dreams to lead at least a comfortable one. Having a car is one of the checkboxes to living a hassle-free and comfortable life. In other words, a car is not a luxury anymore, but a basic necessity if your goal is to lead a comfortable life. Unfortunately, it is a basic necessity that can cost a fortune. All the more reason, you must buy car insurance if you haven’t already. Not just that, you should choose the right insurance wisely if you want to do justice to your investment.
But here’s a fact which you might or might not know. Even though buying car insurance is recommended, it’s not a choice.
In India, it is mandatory by law to get your car insured. The basic car insurance taken by people is third-party liability insurance. However, it is always better to go in for comprehensive car insurance and have complete peace of mind.
- Car insurance is mandatory as per the Motor Vehicles Act, 1988
- There are many types of policies, including third-party liability and comprehensive
- You must always renew your policy before it expires to continue enjoying its benefits.
What is Coverage in Insurance?
Insurance is meant to protect against various types of risks that the insured asset could be exposed to. Some insurance policies provide complete protection, which is called full coverage insurance. However, to reduce the premium amount, some people only opt for protection against particular incidents. In such cases, the insurance will only cover the damages caused by the specific incident. The meaning of coverage in insurance is simply the extent of protection the insurance provides. Hence, the coverage in different forms of insurance can vary on a case-to-case basis.
What is Comprehensive Car Insurance?
Now that we have understood what is coverage in insurance, let us understand comprehensive insurance coverage in depth. Comprehensive car insurance coverage is a type of motor insurance policy for private car owners that provides complete protection to the vehicle owner. The coverage can be divided into three components.
Third-party Liability Coverage
This portion of the comprehensive coverage is for the unexpected liability in case of a car accident. When the third party who was injured in the car accident files a legal case against the insured vehicle and its owner, this liability will help compensate for the damages caused to the third party. It covers the compensation for medical expenses, compensation in case of death or compensation for repairing the damages caused to the third party’s property.
This part of the comprehensive coverage safeguards the car owner, as the insurance policy will pay the third party or their beneficiary for the losses.
This part of the comprehensive car insurance plan offers extensive coverage to the car insured.
It covers any liability arising as a result of the following incidents:
- Damages to the insured vehicle in case of natural calamities like floods and earthquakes.
- Damages caused to the car in case of accidents, fire or theft of the vehicle.
- Damages caused as a result of man-made threats like riots and vandalism.
- Damage to the car during transit via road or being transported via rail, sea or air.
Personal Accident Cover for Driver
This cover is meant for owners or the driver of the car. It provides coverage against accidental injuries and death. The co-passengers are not covered in this; however, if one wishes, then they can take an add-on coverage offered by the insurance companies to extend the benefit to other passengers as well.
Did you know?
In India, there are 33 general insurance companies. Out of them, 31 companies offer car insurance.
Some of the add on covers provided by insurance companies for the car insured are:
- Zero Depreciation cover
- Engine protection cover
- Roadside assist cover
- Return to invoice cover
- To protect personal belongings in the car
- To retain the no claim bonus in spite of the claim
- Tyre protect cover
- Consumable cover
- Passenger cover
- Key replacement cover
- Gearbox protection cover
The Exclusions in Comprehensive Car Insurance
One of the most critical elements of understanding what is coverage in insurance is knowing that different forms of coverage protect against different incidents.
Therefore, most coverages don’t include certain specific incidents. These are called exclusions, and the insurance provider will not approve any claim that is related to the specific exclusions mentioned in the insurance policy.
- Drinking and Driving – Insurance is not covered if under the influence of alcohol or other narcotic substances.
- Electrical and mechanical breakdown – You have to pay the expenses from your own pocket if the insured car suffers a mechanical or electrical breakdown.
- Driving without a license – If the driver of the insured car is found without a license during the time of the accident, then insurance is considered null and void.
- Depreciation – Insurance cover will not compensate if the value of the car gets depreciated since the value of a vehicle reduces with time naturally.
- Contributory negligence – It will not cover for loss or damage to the insured car because of your negligence. For example, you purposely take your car out despite a flood warning.
- Normal wear and tear – You will have to pay for any damage due to regular wear and tear of your used car.
- Non-accidental damage to tyres and tubes- It does not cover if the damage to the tyres or tubes is not a direct result of a car accident.
- War or nuclear perils-Loss or damage to the insured car due to a war-like situation, nuclear weapon or related perils.
Who Should Buy Comprehensive Car Insurance?
- People living in crowded places or metropolitan cities – People living in big cities are more exposed to traffic jams, frequent accidents and pollution.
- People who have purchased a new car – It is important to save and protect your newly bought possession from damage.
- People owning high end or luxurious cars – You should ensure your car is financially protected. It protects against theft and damage.
- People who love to travel – Those who enjoy long road trips need to get this cover. It protects you and your car from unexpected accidents and exposure to natural calamities.
- When different People drive the car – Such people are more prone to accidents and likely to damage the car. Thus comprehensive cover is a must for them.
Did You Know?
There are many ways of reducing the premium amount for your car insurance. Some of them include:
- Installing tracking and anti-theft devices in your vehicle – This adds a layer of safety and reduces the possibility of bogus claims, thus reducing the premium.
- Opt for Voluntary Deductibles from time to time when raising a claim – If you pay a certain portion of the claim, there is a bigger probability that it is not a bogus claim, and this reduces the premium burden.
- Timely renewal – There are many benefits for paying the premium on time and renewing the policy before it expires.
Pros and Cons of a Comprehensive Car Insurance
- Protects against a wide range of unexpected liabilities
- Expenses arising from accidents can be significant. Insurance helps reduce the financial burden
- Premiums can be paid monthly.
- No-claim bonuses and other methods can help reduce the premium
- Comprehensive covers can be expensive
- If very few claims arise, the premium could be looked at as an unnecessary expense
- When you sell the car, the no-claim bonus is of no use to the new owner
- Unless you have a cashless policy, the claim process might be lengthy since the insurance provider will have to verify and approve the claim before disbursing the amount.
Word to Remember
Third Party Damage:
Third party damage in car insurance refers to the damage inflicted on the property of another individual. For instance, if you damage someone else’s car, that would be regarded as third party damage.
How To Get Comprehensive Coverage For The Car?
These days, you can buy comprehensive insurance for your car from the comforts of your home. The quickest and most convenient way to purchase car insurance is to buy it online.
- First of all, you need to do little research on comprehensive car insurance and compare the quotes offered by different insurance companies.
- After getting the quotes, analyse them and see which plan fits your budget and whose features meet your requirement. Don’t get carried away by the low-cost premiums offered. Instead, assess your risks and choose the insurance that best covers most of the risks your car can be exposed to.
- To get an estimated quote for your car, you can also use a car insurance calculator. The insurance calculators have accurate formulas to calculate premiums on the basis of different variables.
- Once you have finalised your plan, you purchase it by submitting the required documents and paying fees online. An ideal policy would be one with a low premium but adequate coverage.
If you need all-around protection for your car, then comprehensive car insurance is the best. Although its premium is slightly on the higher side, it can ensure a stress-free life.
Documents Required to Get a Comprehensive Car Insurance Coverage
- ID proof and address proof (Aadhaar card / pan card / passport / driving licence / government-issued photo ID)
- Your most recent passport size photograph
- Driver’s licence details
- Registration documents of the car
- Previous Insurance Policy documents of the Car(if any)
Frequently Asked Questions (FAQs)
Yes, it is better to buy one. Certain risks are not in the control of the vehicle owner. Repairing the damages caused can result in spending a heavy amount.
IDV stands for Insured Declared Value. It is the value received in case of any damage or loss to the insured car.
On renewing the policy, a discount is given by the insurance company. It is a way of rewarding the insured for not claiming anything in the previous policy.
No. Once it crosses the expiry date, it becomes inactive. That is why it is necessary to renew it before it expires.
Did You Know?
The no-claim is transferable if you opt for a different insurance provider. However, a no-claim bonus does not apply when the insurance is transferred to another person.