Understand Car Insurance Needs and Benefits

In our society, cars symbolise aspiration and success, with the luxury and grandeur of your vehicle often seen as a measure of your achievements. We readily spend lakhs in buying our dream car, yet settle for the cheapest car insurance option. Such decisions often come back to bite us. 

Take the example of Sumesh– a budding entrepreneur who finally bought his dream car at the age of 30. Sumesh spent a whopping ₹25 Lakhs to buy his extravagant SUV, yet his insurance was the cheapest option. Sumesh was confident in his driving skills. A sudden move to avoid a dog while driving to the office crashed his new SUV into a telephone pole. Though Sumesh was unscathed, the car sustained significant damage, incurring ₹40,000 in repair costs. 

The insurance company, in response, declined to cover his car damage since he had only third-party cover– a valuable lesson as to why you need comprehensive plans for complete protection.

Take our advice: Do not be like Sumesh. 

Read this article to explore avoiding such mistakes by buying the right insurance plan and discovering the trick behind comparing car insurance plans.

What Is Car Insurance?

At its core, car insurance is an agreement between you and the insurance company. In this arrangement, you are expected to pay your premiums on time. In return, the insurance company promises financial coverage during unfortunate events like accidents, car theft, or other damages. 

In India, car insurance is of three types– third-party cover, own damage cover and comprehensive cover insurance (combination of third-party and own damage). Third-party coverage deals with all damages caused to another individual on the road, whereas comprehensive coverage protects you from damages caused to your car as well as financial liabilities towards the third party for the damages caused. 

In India, third-party car insurance is mandatory for every car owner. However, we recommend comprehensive plans to get maximum benefits during any mishaps. 

Understand Car Insurance Benefits

Do you think that car insurance benefits are only limited to accidents? Think again. Motor insurance benefits transcend accidental costs, offering a plethora of extra advantages. 

Here are some of the most essential car insurance benefits that you should be aware of:

1. Accidental Damage Cover 

Cars are expensive, but their damage repairs can be just as costly. A dent repair alone can cost you more than ₹10,000– which may be even higher depending upon damage extent. This is where motor insurance benefits come in handy. Owing to their accidental damage coverage, most car insurance can help you easily bear those hefty repair costs.

2. Theft Cover 

Did you know more than 1 lakh vehicles^[1] are stolen annually in India? So, how do you protect yourself from suffering such significant financial loss? Once again, the answer is car insurance. In case of theft, a theft cover add-on will allow you to recover your car’s Insured Declared Value (IDV). However, if you get a comprehensive plan, this comes built-in.  

3. Third-Party Liability Cover

Accidents go both ways. Not only do they damage your car, but in some cases, they can also risk other people’s lives. This is why the government has mandated the requirement of a third-party liability cover. As per the Insurance Information Bureau of India, reported Death claims cost an average ₹10 Lakh approximately, and reported injury claims cost an average ₹2.6 Lakh.^[2]

With third-party insurance coverage, any costs incurred due to compensation for third-party losses and injuries will be borne by your insurer. 

4. Car Insurance 

According to the Motor Vehicles Act 1988, you cannot ride a car without purchasing valid vehicle insurance. At the very least, you must possess a third-party cover insurance plan to fulfil the legal obligation. If caught without one, you will be charged a penalty of Rs. 2,000 or may even face imprisonment for three months. 

5. Add-on Options 

If you opt for a comprehensive insurance plan, you can avail of extra benefits through add-ons or riders. These are extra protection plans that you can include in your vehicle insurance. They are added privileges and covers not included in your standard car insurance benefits and may come with a nominal surcharge. Roadside assistance, zero depreciation, and engine protection add-ons are some of the most popular options available for your convenience.

How Do You Select the Right Car Insurance Policy?

When buying the perfect car insurance, it is easy to feel overwhelmed by the choices. We have made things simpler for you. 

Here is how you can compare different vehicle insurances and pick the one that is best for you:

• Assess Your Car Insurance Needs: Start by identifying your needs. There are three types of car insurance in India: third-party, own damage and comprehensive cover. Third-party insurance, a legal requirement, covers you against damages inflicted on another person. A comprehensive plan, on the other hand, provides coverage from third-party, self-inflicted, and various other risks. Our advice would be to select a comprehensive cover for all-round protection.
  
• Browse Car Insurance Add-ons: If you choose a comprehensive cover plan, opting for add-ons is a no-brainer. With riders, you can customise your insurance plan, allowing you to opt for extra protection and added benefits. Some of the most popular add-ons are:
  • Zero Depreciation: This add-on promises that you receive the total amount for your claim, with no deductions for depreciation
  • Engine Protection: This add-on covers repairs or replacement costs for expensive engine parts. 
  • Roadside Assistance: This add-on allows you to avail of immediate services in case of an accident or breakdown mid-journey.
    
• Network of Garages: To select the right policy, it’s important to ensure that the insurance company offers a vast network of garages– the more, the merrier. Make sure your nearest garages are included in the insurer’s network. Additionally, if you want repair services only at major service stations, check if the brand is part of the insurer’s network list.
  
• Check Claim Settlement Ratio: To ensure your insurance company does not rampantly reject insurance claims, check their car insurance settlement ratio. Experts recommend anything above 96%.
  
• Compare Wisely: The range of add-ons, premium amount, NCB feature, claim process, copayment, IDV options, deductibles, and exclusions are some criteria to judge different plans.
  
• Buy Car Insurance Online: To do honest research and compare plans seamlessly, you can explore buying car insurance online. With transparent research, a simple application process and instant policy issuance, you can instantly get the right car insurance and access the policy document anytime, anywhere.

Key Takeaways

The government’s mandate should not be the sole motivator behind a car insurance purchase. Think of it as a protective shield that guards you against legal troubles and protects you from mishaps like accidents or theft. The best part is that you can maximise this protection by customising your motor insurance benefits according to your needs.