Most of us aspire to buy a car once we settle down in our lives, be it job or business. There are host of responsibilities that get tagged along with the decision to buy a car. Responsibilities such as keeping the roads safe and securing yourself or anyone else from any unknown events that can occur in the future. This is exactly where car insurance comes into the picture. It acts as a protective shield against anything bad that future might throw at you.
What is car insurance?
Car insurance exists to ensure that any damage or injury caused by your car to any other individual or their property is compensated. It also covers any damages caused to your car during any accidents or in the case of theft. Thus, it becomes extremely important to understand the basics of your car insurance before spending any money on the same.
It so often happens that people choose the wrong car insurance or pick up features that are not useful to them. Either due to the fact that they were not informed properly or because the insurance agent told them to do so. Choosing your insurance and its components sensibly will serve you well in the long term.
Do you need it?
You need to pay insurance premiums every year to ensure your car is covered for the worst circumstances. What if you choose to skip car insurance all together and drive around more carefully? Well, that’s just not possible. The law mandates every vehicle in the country to have insurance so that they are road legal. One must at least have third party liability insurance before they can take their car out for a spin. The presence of car insurance ensures that you don’t have to pay any liability from your pockets in case of accidents.
What are the different kinds?
Car insurances are usually categorized as third-party liability and comprehensive insurance. The following are the details about these two categories.
Third Party Liability insurance
This is a mandatory cover as per the Motor Vehicle Act. It provides protection to the insured if an accident or incident occurs involving your car and damage is caused to another individual or property, where you are liable to pay for the compensation. Having third-party liability insurance protects you from such scenarios. For an instance, if you meet with an accident and it causes injury to another individual, the medical expenses would be covered by the third-party liability.
It also offers 2lacs personal accident cover for the insured (i.e. owner driver) in the event of an accident while driving your vehicle.
The insurance premium for third party liability is calculated based on the cubic capacity of the engine. As the scope of this insurance is pretty limited, the premiums are also relatively lower when compared to that of a comprehensive insurance. It must be kept in mind that it doesn’t cover any damages that your car incurs during the accident.
Comprehensive insurance is a complete insurance in terms of features and benefits. It includes the third-party liability, complete protection to your vehicle and additional riders. Comprehensive insurance provides cover for your car if you meet with an accident, natural calamities (flood, landslide, etc.) and theft. Thus, you can claim for damage repairs using this insurance type.
One of the best features of a comprehensive insurance is that it allows you to add riders.
Riders are essentially add-ons, which increase the benefits of your insurance coverage. One of the most common riders is Zero depreciation cover. Similarly, one can choose a cover for accessories, roadside assistance, cover for personal belongings in the car or personal accident cover. Each of these add-ons has their own benefits and must be selected carefully.
Even though purchasing of car insurance is mandatory as per the law, it must not be taken as a burden. Selecting the right mix of insurance type and add-ons can help you achieve a balance between lower insurance premiums and features that you would need. Getting to know the basics of car insurance helps you take a more informed decision about car insurance.