Buying car insurance is a legal obligation for all car owners in India. In this write-up, we list down a few important things about car insurance that every car owners ought to know.
Today, cars have become an indispensable mode of transportation for several people in India, both in the urban and rural area. Over the past few years, the number of car owners in the country has increased significantly. Thanks to the growing purchasing power of the people and the easy availability of vehicle loans. If you are a car owner in India, as per law, you must purchase motor insurance. The insurance fulfils your legal liability that may arise due to bodily injury or damage caused to third-party.
What is Car Insurance?
A car insurance policy protects you against the financial losses you may suffer due to theft of the vehicle or damage to the car as per the terms and conditions of the plan.
What Are the Types of Car Insurance?
In India, most insurance companies offer two types of car insurance, which are:
- Third-Party Insurance
- It is a basic type of vehicle insurance, which covers damages, bodily injuries or losses caused to any third-party vehicle or property by the insurance holder
- Comprehensive Insurance
- Comprehensive insurance, as the name suggests, provides complete coverage to the damages caused to the third-party as well as damages suffered by the insurance holder.
What does car insurance cover include and exclude?
The car insurance typically provides cover against:
- Damages caused to the vehicle due to accident, malicious acts, natural calamities like earthquakes, floods, and riots
- Loss or theft of the insured car
- Damages caused to the third-party vehicle
- Personal accident cover to the driver
While buying car insurance, just as it is vital to know the inclusions, it is equally important to know the exclusions. Generally, car insurance policy in India does not cover:
- Damage to the car due to electrical or mechanical breakdown
- Damages caused due to wear and tear
- Damages caused to your own vehicle or third-party vehicle/property if you are found guilty of driving under the influence of alcohol, or drugs
- Damages caused by the driver who does not hold a valid driving license
- Any loss or damages occurred while driving outside India
What are the factors that affect the car insurance premium?
If you are looking to buy car insurance, you would want to know the premium amount. Many factors affect the premium, which are:
The type of insurance
The premium amount of car insurance varies based on the type of insurance cover you want to buy. Since the comprehensive plans provide enhanced protection, it attracts a higher premium than the third-party insurance plan, which provides only a basic coverage.
Car model and variant
The insurance companies determine the premium amount for car insurance based on the type of car you drive. If you are driving a sports vehicle or a high-speed car, the premium is likely to be more than for a basic car.
RTO (Regional Transport Office)
The location of the car registration office also influences the premium of the car insurance. In India, the RTO locations are classified in two categories – Zone A and Zone B. Zone A consists of the metropolitan cities like Mumbai, Delhi, Chennai, Bengaluru, Pune, Kolkata, Hyderabad and Ahmedabad. Zone B covers the rest of India. The premium for cars registered in metro cities is higher than in other cities.
Past claim history
If you don’t have prior history of claim during the policy term, you can be sure to get a bonus claim on the renewal of the insurance. The bonus can be as high as 50%. The insurance companies reward the insurance holders for being safe drivers. However, if you have claimed for damages before, the insurance company may increase the premium during renewal.
If you are a first-time car insurance buyer, do thorough research about the different insurance companies, their services, claim process and settlement history to take an informed decision.