5 Types of Car Insurance Coverage Explained

India accounts for 1% of the global vehicle population, but it contributes to 6% of the world’s road accident cases. With thousands of road accidents registered each year, it is important to invest in comprehensive car insurance to protect your vehicle. 

However, how well your vehicle is protected depends on the type of car insurance coverage you choose. ‘Coverage’ means the scope of protection provided by your car insurance. It includes specific risks, events, and circumstances while excluding others. 

When you set out to buy a car insurance plan, you must compare the different types of car insurance coverage available and select one that meets your requirements. This helps you ensure that your vehicle is adequately insured. 

5 Types of Car Insurance Coverage

Let’s look at the 5 types of car insurance coverage, what they include and exclude, and if it is the right choice for you. 

Standard Types of Car Insurance

1. Comprehensive Car Insurance 

Comprehensive car insurance is a holistic type of car insurance coverage. While offering basic accident protection for third parties and personal accident cover, it also includes coverage for: 

• Theft 
• Vandalism 
• Natural disasters 
• Accidents with animals
• Falling objects 
• Civil disturbances

Apart from these, you can enhance the protection of your insurance plan through riders or add-ons. Some popular add-ons are roadside assistance cover, zero depreciation cover, engine and gearbox protection, and No-Claim Bonus protection. 

What’s not covered? 

Though comprehensive car insurance covers a lot of risks, it excludes: 

• Wear and tear due to normal ageing and deterioration of the car
• Accidents caused by driving the car under the influence of alcohol or drugs
• Accidents when the driver is not listed in your policy 

Who should buy this?

Comprehensive car insurance is suitable for all drivers and needs. You can consider getting this insurance if you have a high-market-value vehicle and want to protect it against a wide range of damages. It can also be helpful if you live in a natural disaster-prone area or an area with high theft rates and vandalism. 

2. Third-Party Liability Only Cover

Third-party liability only covers the most basic form of car insurance, and it is mandatory by law. It only protects you from liabilities that result from any damage or injury caused to a third-party vehicle or person. It covers expenses for:

• Damages to third-party vehicles 
• Medical treatment for injuries
• Legal expenses 
• Compensation for death

What’s not Covered? 

Third-party liability only cover does not include the following: 

• Damages to your vehicle 
• Your injuries 
• Theft or vandalism 
• Natural disasters 

Who Should Buy This? 

Third-party car insurance is a good choice if you own an older car with a lower market value. You can also consider this if you have a low budget and need to meet a legal requirement affordably. Lastly, this basic coverage might be all you need if you drive infrequently. 

3. Own Damages Cover

Own Damages Cover is a type of car insurance that protects you against financial losses due to damages to your own vehicle. It includes protection against theft, vandalism, fires, and natural disasters. 

What’s not covered? 

Exclusions from the own damages cover generally include: 

• Damage due to wear and tear
• Mechanical or electrical breakdowns
• Accidents caused by driving the car under the influence of alcohol or drugs
• Damages caused when an unauthorised driver drives the car

Who should buy this?

Consider getting this type of insurance if you have third-party insurance and want to protect your own vehicle. You can also get it to protect your vehicle from specific risks not included in third-party liability-only cover (when you have an existing third-party policy).

Other Car Insurance Types

4. Pay-as-you-drive (PAYD) Car Insurance

Pay-as-you-drive insurance is a flexible model in which the premium is calculated based on the distance you actually drive. It is available for a few providers, in the case of own-damage and comprehensive policy.

What’s not covered? 

While this type of car insurance provides comprehensive coverage, you may face extra charges or reduced coverage beyond set mileage limits. 

Who should buy this?

This type of coverage is perfect for infrequent drivers. 

5. Zero Depreciation Car Insurance

Zero depreciation car insurance ensures you receive a total claim on replaced parts without a depreciation deduction. It is an add-on which can be opted while buying an own-damage or comprehensive policy.

What’s not covered? 

It does not cover engine damages or costs incurred due to wear and tear. 

Who should buy this?

This is an excellent choice for owners of new cars and luxury vehicles. Additionally, you can look into this insurance if you are concerned about the high cost of spare parts. 

Key Takeaways

Comprehensive cover is the best choice for most drivers as it offers extensive coverage and protects you in most situations. Its flexibility to be customised with add-ons enhances the protection it offers. However, in some cases, like for older vehicles or for those on a tight budget, the option for third-party liability only cover or pay-as-you-drive insurance may be more suitable. 

Consider platforms like PhonePe for a seamless and hassle-free car insurance purchase experience!