Car Insurance Explained!
Types, Coverage & Best Car Insurance Companies in 2022
Car insurance covers the cost of damage to your car caused by an accident, theft, natural disasters, and so on. It also provides third-party liability coverage, which ensures that if your vehicle is involved in causing harm to another person, vehicle, or its property, it is well taken care of.
It includes protection against unwanted costs for medical care, unintentional damage, and legal responsibility. Insurance of a car must be purchased in accordance with the Motor Vehicle Act of 1988.
Types of Motor Insurance In India
Private car insurance: Buying insurance for your own car is referred to as private car insurance. The government requires third-party liability coverage as soon as you purchase a vehicle, thus having private car insurance guarantees that third-party responsibility and any damage to your own vehicle that results from an accident, theft, natural disaster, etc. are also covered.
Additionally, you can add other features to your current personal car insurance, such as zero depreciation coverage, engine and gearbox protection, and others.
Two-Wheeler/Bike Insurance: Insurance for a bike is a sort of agreement between the owner of the vehicle and the insurance company, wherein the company is responsible for paying for losses and damages that happen to the vehicle and through the vehicle.
For vehicles operating on Indian roads, the Motor Vehicle Act of 1988 mandates third-party bike insurance. The cost of the loss and damage from an accident, theft, natural disaster, or third-party liability is covered under bike insurance. All two-wheeled vehicles, including bicycles, scooties, scooters, and mopeds, are financially covered by this insurance.
Commercial car insurance: Commercial car insurance provides financial security for vehicles used for business purposes, including cars, rickshaws, buses, lorries, taxis, coaches, vans, tractors, cranes, and bulldozers. These vehicles are mostly employed for moving items from one location to another. It also covers harm to a third party’s person, car, or property.
5 Types of Car Insurance in India
Following are the Five different categories of car insurance coverage to choose from:
Liability coverage: Also known as third-party liability, this policy protects you from being held liable for losses caused by your negligence.
The insurance provider will pay for your expenses, including medical care, property repair or replacement costs, third-party injuries, deaths, total or partial disabilities, etc. According to the legislation, this coverage is required.
Collision coverage: Under this, the insurance provider will pay for the cost of repairing the car in the event that damage was brought on by an accident. Even if the cost of repairs surpasses the vehicle’s current market worth, the company will cover the expense at the going rate.
Uninsured motorized protection: If you are hit by a car without third-party liability insurance, you can get uninsured motorized protection coverage rather than paying for repairs and replacement out of pocket. It aids in reducing the costs of medical care and damage repair.
Personal injury protection: As implied by the name, this insurance protects against accidents and their associated costs, including hospital expenses. No matter who is charged, the corporation pays the expenses. The plan can include involving the owner, the driver, and the passengers.
Comprehensive Coverage: Under this coverage, the insurance company covers every type of risk associated with a car, including third-party liability, theft, natural disasters, vehicle damage, and personal accidents.
Note* Purchasing insurance for a car might be confusing because there are so many firms on the market that sell plans, but you should always consider a number of criteria depending on your specific needs.
These considerations may be vehicle-specific, third-party-specific, etc. Keep in mind that excessive coverage entails expensive premiums, so you should think about tailoring your plan to your needs.
Key Features of Car insurance
– Cashless Repair is covered by the policy.
– Third-party damage includes both property damage and injuries to third parties.
– Under the personalized and comprehensive plan, personal damage coverage is offered.
– Up to 15 lakhs in personal accident insurance is provided.
– No-claim bonuses are granted up to 50%
– More than ten add-on coverages as specified in the plan.
How are car insurance premiums calculated?
Every time a car insurance policy is acquired, three parties are involved:
First party: This referred to the individual who bought the insurance.
Second party: The organization that offers the service is referred to as the second party.
Third-party: A third party is referred to when a third party suffers damage as a result of the first party’s negligence.
The cost of premiums is determined by a variety of factors. One can check the premium for the same by using an online car insurance calculator. Before setting the cost of car insurance, insurance companies typically take the following into account:
- Insured declared value (IDV) of the vehicle
- Age and car type
- Geographical zone
- Engine’s cubic capacity
Calculating IDV is done using the following formula:
IDV = Car’s Showroom Price + Accessories Cost – Depreciation Value
Own damage premium is calculated using the following formula:
IDV X (Car premium as determined by the insurer) + Any Additional Benefits – NCB/ Discount
Frequently Asked Questions
Is commercial auto insurance less expensive than personal?
No, the costs for commercial car insurance are higher than those for personal cars, and there are also a number of other distinctions, including the following:
Risk element: Since private cars are often used occasionally, they have lower accidental risk and liability. However, commercial vehicles are frequently used to transport big products, which exposes them to significant danger, accidental damage, and third-party liability. This affects how their premium rates are calculated. High risk entails high premiums, while low risk entails a reduced premium.
Personal Accidental Coverage: Under the insurance of a personal car, accidental benefits are provided to the vehicle’s owner or driver in the event of injury, fatality, or temporary or permanent disability resulting from an accident. Additionally, drivers who are employed and their passengers are provided with accidental coverage under commercial insurance, and the owner is shielded from any legal responsibility resulting from an accident.
Legal requirements: In accordance with the law, third-party liability insurance is required for private vehicles, and third-party, legal liability, and personal accident insurance are required for commercial vehicles.
What is comprehensive insurance for cars?
Under a comprehensive car insurance plan, the policyholder is financially protected from losses brought on by theft, fire, war, strikes, personal injury, damage, and other calamities that are either natural or man-made. Comprehensive insurance, as opposed to third-party liability, covers the insured’s own vehicle as well as third-party liabilities, whereas third-party insurance only provides coverage for third parties.
A comprehensive plan can be strengthened even further by adding extra protections like zero depreciation, engine protector, accessories cover, medical expense, etc. Vehicle owners typically pick a comprehensive plan since it provides total coverage, which keeps them stress-free.
What advantages do insurance for a bike offer?
The following are just a few of the many advantages of bike insurance:
Financial safety: Having insurance for a bike protects you financially in the event of an accident, theft, or other incident involving a vehicle. Otherwise, minor damage could result in exorbitant costs that would be compensated without becoming a financial strain.
Accidental protection: The cost of unintentional injuries caused by an accident is also covered, in addition to the cost of damaged property.
On-the-road assistance: When necessary, on-the-road help is provided, including towing, minor repairs, and flat tires.
All two-wheel vehicles: This motor insurance covers all two-wheel vehicles, including bikes, scooters, mopeds, and scootys.
Peace of mind: As we all know, damage to a vehicle can be extremely expensive. With two-wheeler insurance, the owner can relax knowing that the expense will be covered by an insurance provider.
What is covered by third-party insurance?
Companies provide third-party insurance to pay for harm that a policyholder’s car causes to a third party’s person, vehicle, or property. All personal and commercial vehicles must have third-party liability insurance in accordance with the Motor Insurance Act of 1988. Prior to anything else, understand who is involved in insurance:
– First party: The policyholder/individual who acquired the insurance
– Second party: A company that sells insurance to a policyholder is referred to as a second party.
– Third Party: An individual who claims liability for the loss and damage the first party caused.
If the policyholder/first party is responsible for any harm to a third party resulting from an accident, the insurance company will be responsible for paying any liabilities. The policyholder of this insurance is not provided with any coverage. Prior to making a claim, the policyholder must also notify the insurance company right away so that the necessary survey may be conducted. Once the verification is finished, the insurer will settle the claim.
As previously mentioned, this insurance gives protection against harm to third parties’ physical injuries, partial or permanent disabilities, vehicle damage, property damage, death, etc. The owner of the car should be covered by this insurance to avoid unexpected costs resulting from medical care, financial loss, accidents, or legal liability to third parties.
What does commercial car insurance include and exclude?
The following examples are just a few of the inclusions and exclusions that come with commercial car insurance:
|Loss and damage to commercial vehicle||Intentional damage|
|Theft, self-ignition||Drunk and drive|
|Strikes, riot||Private car as a taxi|
|Natural calamities||Mechanical breakdown|
|Landslide, rock slide||Driving with an invalid license|
|terrorist attack||Contractual liability|
|accident etc.||Policy not active at the time of the accident|