It is important to understand car insurance plans and policies before purchasing one. This saves the hassle and expenses in case of any damage/loss to your car. The market is full of companies and products related to car insurance. You should select what is best for you in terms of cost-effectiveness and benefits. Many questions come to the mind when you purchase your first car insurance. Which policy should you choose? What are the benefits and drawbacks of the policies? What are the reliable and unreliable options? The below article is the answer to all these questions.
Car Insurance Coverage types
Five major types of covers can be involved in a car insurance policy. The types of insurance covers are briefly explained below:
Comprehensive coverage: A policy with a comprehensive coverage provides end to end coverage for all the risk factors related to the car, first party, co-passengers, and third party. Other risk factors that are covered in this policy are theft, weather, fire, and floods. The premium rates can be negotiated if the vehicle is installed with security gadgets like anti-theft devices.
Protection of Uninsured Motorist: If your car meets with an accident and the third party is an uninsured motorist, some of the basic policies fail to provide coverage. This is a rider policy that can be added to the base plan to avail benefits in case the third party is uninsured. If you do not avail this policy, the expense of vehicle damage and injuries to the third party have to be borne by you.
Personal Injury Coverage: To increase the benefits of your insurance plan you can opt for personal injury coverage rider. This will cover all the injuries caused to the driver and co-passengers during an accident. The medical bills will be paid by the insurer regardless of who is at fault in the accident.
Collision Coverage: The collision coverage covers all the damage repair cost of the vehicle. It highly depends on the age and current market value of the car. If the damages to the car exceed the current market value of the car, the insured is provided with car’s current market value. The collision cover is lowest for old vehicles.
Liability Coverage: The liability coverage provides coverage in case you are not at fault for the accident. The features of this coverage are as follows:
- It is compulsory as per government rules
- The policy involves the minimum coverage for damages to the third party
- The policy covers any damage to a third party (damages and injury)
- If you choose minimum coverage, only limited coverage will be provided by the insurer. In case of heavy damage to the third party, the insured may have to bear the expenses exceeding the limits of the policy
- The choice of higher liability insurance than the mandatory coverage helps to gain much more benefits than the basic policy. It will help in reducing out of pocket expenses to a great extent
Inclusions and Exclusions of Comprehensive Coverage Plan
Comprehensive coverage plan provides the most coverage as compared to any other vehicle insurance plan. It is expensive when compared to other insurance plans. Hence it is important to weigh the benefits and drawbacks before the purchase properly. The major benefits of a comprehensive plan are listed below:
- It provides roadside assistance to the insured which is very beneficial while traveling
- The comprehensive plan allows you to purchase at highest IDV hence increasing the insurance claims at the time of damage.
- This plan is best suited for a new vehicle as most companies provide insurance on bumper to bumper terms. This makes it easy to claim invoice price in case of any unforeseen event like a road accident.
- If the car is very expensive, then it is required that a comprehensive cover is purchased for it even though it is expensive for these cars. Because in case of an accident or disaster the damages would be much higher than the policy amount.
Apart from providing all the benefits mentioned above there also certain exceptions that the policy does not cover. These exceptions are listed below:
- Aging of the car
- Usual wear and tear
- A nuclear attack or war damage
- Damages in tube and tire
- Any damage caused with the fault of an unlicensed driver
- Any damage to the vehicle due to drunk driving
- Mechanical and electrical parts damages
There are certain exclusions to the policy, but again these exclusions are covered in no other car insurance policies. This makes the comprehensive car insurance plan most reliable especially for new and luxury cars. This is because it saves a lot of hassle and money in case of any damage to the car, be it due to an accident or disaster. It is very important to get your car insured to keep you on a safer side in case any unfortunate situation arises with your car.
Which insurance policy to choose?
Many car insurance agencies provide plans for automobile insurance from basic to comprehensive plans. The best companies that are providing car insurance along with the types of insurance plans are listed below:
|Company Name||Policy Description||Major Benefits|
|Bharti AXA||Bharti AXA provides two plans for car insurance under general insurance. One Plan is third party liability coverage, and the other is Comprehensive Car Insurance. Bharti AXA car insurance is one of the most trusted among the Indian customers.|
|Bajaj Allianz||Bajaj Allianz is another big name among the private insurance service providers of the country. It is known for its customer friendly services.|
|The Oriental Insurance Co. Ltd.||This company has an impressive framework of finances and has therefore been rated by ICRA under iAAA. This rating has been provided to very few companies in India.|
|Tata AIG||This company is a rather new player in the market established only in 2011. It is known for easy claims and a wide distribution channel in terms of vehicle insurance.|
|HDFC ERGO General Insurance Co. Ltd.||HDFC is yet another top-notch name in the finance sector of India. It is another name in the list of iAAA rating by ICRA, and it is certified under ISO 9001:2008.|
|The New India Assurance Co. Ltd.||This is a government-owned company and is rated by A.M. Best Co. as excellent (A). It is the only Indian company to be rated by an international agency. It’s widely known for introducing innovative and unique insurance products in the market.|
Among all the above plans Bharti AXA car insurance is recommended to you due to the highest number of network garages and high coverage not only in the base policy but also through the add-ons. The option of NCB (No-Claim Bonus) and AAI Membership allow its customers to avail the policy to cost-effectively. Another very important feature is easy online purchase which removes the hassle of agents, brokers, and documentation. It also provides policies at one of the lowest car insurance rates in the country.
Third Party Car Insurance – A Compulsion in India
Getting your car insured or not is your choice but third-party insurance in mandatory for all car owners as per government rules. Motor Vehicle Act 1988, has made it compulsory for your car and therefore the proper understanding of it is necessary for all car owners. The first party is the insured, insurer is the second party, and the third party is the person that gets injured in case insured meets with an accident. The meaning of this plan is the policy that provides coverage for any damage made to the damage of property or injury to a third party. Third party insurance mainly provides coverage in the below areas:
- Body Injuries
- Any disability (Permanent or Partial)
- Damage to Property
There are also other benefits of the policy that help to get a cover for any harm caused to a third party in case of an accident, not only in financial but also in legal terms. Some more benefits of third-party insurance are:
- The procedure of procurement of this policy is online in most of the insurance companies, so it is very easy to avail
- This policy is very cost effective and does not dig a hole in the pockets of the insured
- Not only expenses but legal formalities are also covered in this policy, i.e., the insured gets legal security in case of an accident
The policy is very helpful not only for the third party but also for the first party in minimizing the loss of the accident. It is recommended to you that the purchase of this product should be made only from a reputed company. This is so as proper coverage and benefits are provided by them and in much more hassle-free and reliable manners.
Other Add-on Insurance Covers
Apart from all the plans mentioned above and policies, some more rider plans can help maximize your insurance coverage. These covers can maximize the value of your base plan without being very heavy on your pocket. These additional riders are explained below:
Nil Depreciation Cover: Under this cover, your car gets insured based on the invoice price and ensures minimum losses or depreciation. This helps in getting the maximum possible compensation for the car hence increasing the value of your investment in the car.
Engine Replacement Cover: This coverage helps to cover the damages to the engine and its parts and helps to keep your car engine covered. This also involves replacement of the engine if required.
Roadside Assistance Cover: This cover ensures that in case your car breaks down in the middle of the road the insurer will take responsibility to take your car to the next service station. This helps you save a lot of hassle at the time of emergency plus it gets you out of a difficult situation safely.
All these covers help the insured in different ways. You can pick up the best add-on coverage depending on your car and its usage. For example, if you go on frequent road trips, the roadside assistance cover can help you avoid uncomfortable situations while traveling.
It is very important to browse car insurance companies as well as the policies offered by them before investing in policy for one of your most prized possessions- your car. Do consider factors like legal compulsions, the age of your car, the market value of the car, etc. before choosing your insurance plan. Most people focus on the premium value for choosing their plan which is not a wrong approach, but it is very important to scale the benefits and exceptions against the premium before taking a decision. You can consult a broker/agent to guide you towards the right policy for insurance of your car and help make out the most of your money.