Why do you need car insurance, and what does it benefit?

Why do you need car insurance, and what does it benefit?

Why do you need car insurance, and what does it benefit?

Motor insurance is a contract between a car owner and a general insurance company that promises protection to the car owner from financial losses caused by an unfortunate event involving his car. Thus, on the grounds of scope of coverage, there are three types of motor insurance policies: third-party motor insurance, standalone own-damage (OD) motor insurance, and comprehensive motor insurance.

Policyholders must renew the policy on time to continue enjoying the benefits of such policies.

Full Coverage Car Insurance The most common insurance cover is comprehensive motor insurance. This is a kind of car insurance policy under which an insurer is liable to make payments for financial liabilities incurred toward third parties and own damage caused to the insured’s car. Besides road accidents, this may come under this policy if the vehicle undergoes a natural disaster or artificial disaster, self-ignition or lightning, explosion, fire, theft, etc.

Act necessarily, third-party car

A car insurance policy is mandatory when someone has to drive a car in India. This is the most basic car insurance plan and hence is also termed liability-only car insurance policy. Under this cover, the insurance company is liable to pay for bodily injuries, permanent disability, temporary disability, as well as death of the third party due to an accident caused by the insured’s car.

The scheme also insures property damage caused by a Third Party for a maximum of Rs.

Own Damage Car Insurance

In September 2019, the Insurance Regulatory and Development Authority of India (IRDAI) launched the standalone own-damage car insurance policy. In this plan, the insured receives insurance coverage for damage only to his four-wheeler in a road accident, natural/artificial disaster, fire, explosion, theft, or any other accident. The objective behind the introduction of a standalone, own-damage car insurance policy is to offer flexibility to an insured in respect of the choice of an insurance provider.

How to Choose an Auto Insurance Plan Online

  1. Buy the Type of Plan You Require – Assess your car insurance needs and conclude the type of policy you require. Select a third-party cover or comprehensive cover according to your requirements.
  1. Compare policies – You should compare different car insurance plans online. Comparison facilitates the selection of the best car insurance plan for your budget and needs.
  1. Check the IDV: The Insured Declared Value is the maximum amount your insurance company will settle in case of a complete loss or theft of your car. The premium charged on your car insurance is directly proportional to the IDV; that is, the higher the IDV, the greater your car insurance premium.
  1. Check the premium: Depending on the car’s IDV, model, fuel type, age, and other factors, the car insurance premium varies accordingly. Hence, it is wise to compare car insurance premiums first and then make a final decision.
  1. Demand add-on covers: As the name suggests, add-on Covers are the covers that extend your policy coverage. You can buy it to do so. You should demand the add-ons and go for the one that suits you according to your needs. However, for now, a comprehensive insurance plan is a must to get these additional covers.
  1. Look for ease of claim process — Look for an insurance company with a simple and fast claim process. To confirm the quality of the claim process of the insurers, you can check the claim settlement ratio (CSR) before finalizing. This essentially means that a company with a higher CSR is better, rather than comparing singularly the percentage of claims settled by the insurer in a year.
  1. Network Garages: The network, or cashless garages in car insurance, serve to help the policyholder avail of cashless settlement of claims. Hence, it is more beneficial for the policyholder when there are many network garages.

Benefits of buying car insurance

Car insurance gives you the jurisdiction to comply with the law because, according to the Indian Motor Tariff, each car owner has to have at least one third-party car insurance policy; not having this can attract a fine of up to Rs. 5,000 and imprisonment up to 3 months.

Protection from Third-Party Liabilities

A car insurance policy helps you mitigate third-party liabilities such as bodily injuries or temporary/permanent disabilities, death, and even property damage. Third-party property damage compensation will be paid to the claims, up to Rs. 7.5 lakh, but there is no limit for the compensation in case of third-party bodily injury, disability, or death.

Own Damage Protection A car insurance policy helps you to stay financially safeguarded towards the own-damage expenses of your car. It includes damage caused during road accidents, natural calamities, artificial calamities, fire, explosion, vandalism, etc., under standalone own damage as well as comprehensive plans for car insurance. Coverage Against Theft Theft: An insurance policy will also pay for a car that has been stolen.

In case of theft, an insurance company pays you an IDV for your car which is in line with the market value of the car. Personal accident cover Along with this is the car insurance policy, including personal accident coverage—death, bodily injuries, and disability of the policyholder in a car accident—up to Rs. 15 lakh.


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