A Guide To Car Insurance: Here’s What You Should Know

By Adhil Shetty | April 13, 2018

If you are the owner of a car, then a Car Insurance policy is a must to protect your vehicle from damage, theft and mishaps. Read on to know how a Car Insurance policy helps.

A Guide To Car Insurance: Here's What You Should Know

Purchasing a car is an exciting experience which includes choosing a brand, design, colour and features. However, quite often the same thought is not given to the intricacies of Car Insurance which protects the car from damage, theft, and accident. It’s not enough to rely on a basic, third-party insurance, which is mandatory as per the law. This insurance basically protects the third party – any party apart from the insurer or the insured.

In simple terms, any damage to property, injury or death caused to any third party is covered under this. A comprehensive auto insurance safeguards your vehicle against most eventualities, including natural calamities, breakdowns, and can also protect components typically not covered by a standard insurance.

In this article, we discuss the need for a car insurance, and what should be considered while buying one.

Different Types of Car Insurance

There are two types of car insurance products – Third Party Insurance and Comprehensive Insurance.

As mentioned above, third party insurance is mandatory which covers the vehicle owner from legal liabilities caused by death or damage caused to a third party.

The second type is the Comprehensive Insurance Policy. This provides overall protection for any damages caused to your own self and your vehicle. Additionally, this also protects your vehicle against accidental fires, theft, or natural calamities.

Like any insurance product, you need to pay an Annual Premium to avail these benefits. Your car insurance premium is based on factors like the model of the car, purpose of the vehicle (personal or commercial), safety devices installed within the car, and the insurance zone, which is the area of your residence and location where your car is registered.

What All A Comprehensive Car Insurance Covers

Besides the third party insurance, a comprehensive policy can cover the following.

  1. Protection from natural calamities: This covers things that are not in your control, natural disasters like earthquakes, floods, hurricanes, lightning, storms, cyclones, landslides and tsunamis.
  2. Personal Accident Cover: This protects the insured in case of injury or death due to mishaps.It will secure your family’s future in case you suffer permanent or temporary disability or death in the eventuality of an accident.
  3. Robbery or terrorist attacks: A comprehensive policy comes to your help when there is a terrorist attack, robbery or damages due to an accident.
  4. Breakdown Assistance: The policy also comes to your aid when you have a breakdown in terms of flat tyre or fuel shortage. The on-road repair cover assists you with an access to the mechanic, towing of the vehicle and accidental repairs or replacements of tyre and tubes.
  5. Lost Key/Lockout Assistance: This will assist you in case there is a loss of, or damages to, or the replacement of, the car’s keys, locks or alarm system.

You can go for additional covers like Depreciation Cover, Paid Drive Cover, Accident cover for passengers, Engine Cover, Invoice Cover, Electrical, Electronic & Non-electrical Accessories Cover and LNG/CNG Bi-fuel Kit.

What Is Typically Not Covered

Most car insurance policies don’t cover the following.

  1. Aging, wear and tear, etc. of the vehicle
  2. Depreciation
  3. Electrical or mechanical breakdown
  4. Damage to tyres and tubes. However, if the vehicle is damaged at the same time, the liability of the company will be limited to 50% of the replacement cost.
  5. Damage caused by a person driving without a valid license.
  6. Damage caused due to drunken driving or driving under the influence of drugs.

Loss/ damage caused by war, mutiny or nuclear risk.

Things To Keep In Mind For A Strong Claim

  • Keep your vehicle always in a road-worthy condition with proper insurance-related documents.
  • If a person other than you is driving the car, ensure they have a driving license and are not driving under the influence of alcohol or drugs.
  • In case of an accident with a third party, ensure you take them to the hospital immediately.

Keep all the above in mind while going for a comprehensive car insurance and do compare offerings by different companies to grab the best deal.

BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for Credit Card, Personal Loan, Home Loan, Car Loan, and insurance.


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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of BankBazaar.com. Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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