Types of Car Insurance Policies You Should Know About

The main aim of a car insurance policy is to provide you protection against the damage to the vehicle. It also gives you protection from third-party liability. As per Indian law, you must have minimum third-party insurance to drive a car on Indian roads legally. However, if you buy only third-party insurance, it will not provide any cover for the damage or theft of your vehicle. Also, insurance policies are different for personal and commercial vehicles. This it is important to understand different types of insurance policies available in the Indian market before you choose one for yourself.

When you start to explore more about car insurance policies available in the market, the process can become overwhelming. There are so many questions that you have to answer before you can buy or renew your policy. Such as how are you going to assess the cover that you require so that you do not have to pay from your pocket, what kind of policy with or without add-ons you should buy to keep it affordable, and more.

You can differentiate the car insurance policies based on coverage types and purposes. Let’s discuss the policies based on coverage first.

Third-party liability insurance

As per the law, you must have a third-party liability insurance policy to drive a car on Indian roads. Such an insurance policy provides you protection from third-party damages in case of an accident. The insurance policy will cover the damage to the other vehicle, property, and injuries, as well. This policy will provide you financial cover where you are responsible for the accident and save you from legal proceedings. Such policies do not offer any protection for the damage to your vehicle or for the injuries that you have suffered during the accident.

Comprehensive car insurance policy

This type of insurance policy covers both third-party liability and the damage to your vehicle and injuries sustained by you during the accident. With a comprehensive Car Insurance Policy, you also get personal accident cover, which will provide you compensation in case of disability or provide financial help to your family in case of your unfortunate demise. Please keep in mind that some factors are not covered even under comprehensive insurance plans. For additional benefits or cover, you will need add-on covers.

Add-on covers

Any insurance policy cannot cover everything. You should opt for additional add-ons in case you feel you are not getting enough protection. Here are some add-ons that you can choose.

  • Zero Depreciation Add-on: It is one of the most favored add-ons. It ensures that you get a full claim on the receipt value of replaced parts in case of an accident. It is available only after three years of the original purchase date of the vehicle.
  • Roadside assistance Add-on: In case of a breakdown, empty fuel tank, flat tire, or engine problem, you can call your insurance’s customer care and ask for roadside assistance with this add-on. It comes in handy, especially when you are in remote areas. The insurance company will provide you cab services, fuel assistance, tire replacement, and in some cases, accommodation as well.
  • NCB Protection Add-on: When you do not make any claim during the year, you get a discount on premium known as No Claim Bonus. It gets nullify as soon as you claim in any subsequent year. This cover will not let NCB get nullified. It only reduces the percentage of NCB and brings it to the previous bonus percentage. For example, the maximum NCB that you can get is 50%. In case you file a claim, NCB will come down to 20% without this add-on. However, with this add-on in case of a claim, it will reduce to the previous slab, which can be 45% or lesser.
  • Key Replacement Add-on: Nowadays, car keys are quite expensive. In case you lose the ignition key, this add-on will cover the cost of an additional key without affecting your policy.

Let’s discuss the policies based on the purpose

There are two different categories of car insurance policies available based on the purpose.

Private Car Insurance: This type of policy is available for those who are going to use the vehicle for personal use only. This insurance policy will provide third-party liability protection, damage to your car, and financial support for medical attention for the injuries sustained during the accident.

Commercial Car Insurance: If you are planning to use the vehicle for commercial purposes, you have to declare it while buying an insurance policy. This type of insurance policy is on the expensive side. It provides financial support to cover damages to a commercial vehicle. It also protects from third-party liability and covers for medical expenses of the driver. With this policy, you will also get an accident cover for the driver of the vehicle.

You should choose the insurance policy wisely and compare the options available before you buy or renew it. In case of a commercial vehicle, you should inform the insurance company that you are going to use it for commercial purposes so that in case of an accident, you can get proper cover.

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