Comprehensive Car Insurance Policy

In India, car insurance is a mandatory requirement by law. The minimum level of car insurance required to be able to use the vehicle on the roads is referred to as the third-party liability insurance. However, it is highly advised to be in possession of a comprehensive car insurance policy as it offers extensive protection to the car and its owner.

What Is Comprehensive Car Insurance?

Comprehensive Car Insurance Policy

Comprehensive car insurance is a standalone motor insurance policy that provides complete protection for the vehicle owner. It usually includes three categories of coverage:

  1. Third-party liability insurance - This part of the comprehensive coverage safeguards the car owner from legal liability claims from third parties following an accident. So, if a vehicle insured with this coverage meets with an accident in which a third party was injured or faced death, the insurance policy will pay the third party/beneficiary for the losses. Liability insurance also covers third-party property damage up to certain limits. This insurance coverage is also available as a standalone policy and can be bought by cost-conscious car owners who do not drive too much.
  2. Own-damage insurance - This part of the comprehensive car insurance plan offers extensive protection to the insured car.
    1. It safeguards the vehicle from damages due to natural calamities such as hail storms, floods, lightning, earthquakes, etc.
    2. It protects the car from man-made disasters arising out of vandalism, riots, strikes, etc.
    3. It offers coverage for in-transit damages to the car while it was transported via road, rail, air, lift, inland waterways, etc.
    4. It safeguards the vehicle from theft, accidents, and fire.
  3. Personal accident cover for driver - The comprehensive car insurance policy also protects the owner-driver of the vehicle from accidental injuries and death. The passengers in the car are not offered this coverage. However, most insurance companies offer add-on coverage that can be bought separately to provide insurance protection to the passengers.

It should be noted that the comprehensive car insurance policy can be extended by attaching add-on covers to it. This will amplify the coverage offered by the plan, but at an additional cost. Some of the most popular car insurance add-on covers are the zero depreciation cover, engine protect cover, return to invoice cover, and roadside assistance cover. Add-on covers are also available to protect the personal belongings in a vehicle and retain the No Claim Bonus (NCB) in spite of a claim.

Features And Benefits Of Comprehensive Car Insurance:

  • If your vehicle is equipped with comprehensive coverage, you can claim from the insurance company for accidents that were your fault.
  • The full car insurance policy also protects the car owner when the fault of an accident can’t be proven. For instance, a car owner whose vehicle has suffered damages while parked from a hit-and-run accident will be offered compensation under this cover.
  • Without a comprehensive insurance plan the car owner will have to pay for all the damages suffered by the vehicle. If the car was stolen, he/she would not receive any compensation from the insurance company.
  • The comprehensive insurance plan provides the car owner complete peace of mind, as he/she will not have to pay for any expensive repair work. The car owner will be required to pay only the compulsory deductible and voluntary excess (if opted for) at the time of a claim.

Exclusions - What Is Not Covered Under A Comprehensive Car Insurance Plan?

Although the insurance policy is referred to as a “comprehensive” plan, it does not offer coverage for various incidents. The exclusions under a comprehensive car insurance plan are as follows:

  • Depreciation of the vehicle and its parts are not covered under this insurance policy.
  • Normal wear and tear of vehicle parts is not offered coverage.
  • Electrical and mechanical breakdown of the car is excluded from coverage.
  • Damages caused to the car when the driver was drunk or intoxicated with drugs are not included in the coverage.
  • Driving the car without a valid license will not be offered coverage.
  • Damages to the tubes and tyres are usually not offered coverage. But if the vehicle is also damaged at the same time, the insurer will pay 50% of the replacement cost.
  • Damages to the car due to mutiny, war, or nuclear risks are not covered under a full car insurance policy/package plan as it is commonly referred to.
  • Consequential losses are usually not covered under a comprehensive car insurance policy.
  • Damages to the vehicle outside the geographical limits mentioned in the policy documentation are not offered coverage.

Factors Affecting Premium Of A Comprehensive Policy:

The premium for a comprehensive car insurance policy is dependent on several factors:

NCB accrued If the car owner has accumulated a significant amount of No Claim Bonus, he/she will receive a good discount at the time of policy renewal.
Online policy When an individual purchases motor insurance online, the insurance company does away with the distribution and processing costs. Hence, the insurer is able to offer handsome discounts on online policies.
Automobile association membership If a car owner is a member of a recognised automobile association in India, such as Automobile Association of Southern India (AASI), Automobile Association of Upper India (AAUI), etc., he/she can receive a premium discount.
Installation of safety equipments If a vehicle has adequate safety equipments that are approved by the Automotive Research Association of India (ARAI), the car owner will receive a car insurance premium discount.
Make and model of car Insurance companies offer various kinds of discounts based on the make and model of the vehicle and its age.
Driving record of the car owner If the car owner has a very good driving history, he/she is liable to receive a discount on motor insurance premium.

Apart from the above, opting for a higher voluntary deductible brings down the insurance premium. If the car owner has opted for add-on covers, he/she will have to pay a larger amount as premium.

Claim Settlement For Comprehensive Car Insurance:

The claim settlement process under a comprehensive car insurance policy varies from insurer to insurer. It is important to notify the insurance company of the mishap at the earliest. Most insurers provide a 48-hour window within which it is mandatory to report the incident.

The claimant should register an official claim by calling the insurance company. He/she should also notify the local police and log an FIR. This will be useful in the claim registering process with the insurer.

The updated claim form and vehicle registration forms will have to be submitted to the insurance company when raising a claim. In the event of theft of the car or death of a third party in an accident, it is mandatory to submit an FIR. Some insurers also allow claim registration online.

If the car was damaged in an accident, the car owner can choose to get it repaired at any of the network garages affiliated to the insurer. This way, he/she will have to pay only the deductibles and the cost of depreciation upfront. The insurance company will settle the expenses directly with the network garage. This is referred to as a cashless claim settlement.

Comprehensive Car Insurance FAQs:

  1. Is comprehensive car insurance more expensive than liability-only plan?
  2. A comprehensive insurance policy need not be more expensive than a third-party liability plan. In most cases, it is, but there are instances wherein you can benefit from a reasonable premium for such a plan. For instance, if you opt for a high voluntary deductible at the time of purchasing insurance, you can save considerably on premium. If you also purchase the plan online, you may be liable to receive attractive discounts on the policy. This way, the cost of a comprehensive car insurance policy may be lower than a third-party liability plan.

  3. Is there a limit on the amount I can claim under comprehensive car insurance?
  4. There is a limit on the maximum amount your insurance company will pay towards an own-damage claim. This is usually the market value of the vehicle at that point of time. This is also referred to as the Insured Declared Value (IDV). So, for example, if your car is stolen, the insurance company will pay the depreciated value of the vehicle. To replace the car with a newer make and model, you will have to pay a certain amount from your own pocket, apart from the reimbursement provided by the insurer.

    In the case of a third-party liability claim that involves the death of a third party, there is no limit on the amount that the insurer will offer as claim payout. This will be decided in court.

  5. Can I shift from a third-party liability insurance policy to a comprehensive plan?
  6. Yes, that is possible. In case you are taking a comprehensive plan from the same insurance company, you can call the insurer and request for a switch. The insurer may send a surveyor to get the vehicle inspected before the change in insurance policy is implemented.

    It is also possible to shift between insurers. You will have to inform your current insurance company about your intention to shift, at least 1 month in advance. This will enable a seamless transfer without any gap in insurance.

  7. Does comprehensive car insurance cover animal damages?
  8. Yes it does. You will have to inform the insurer as soon as you detect animal damage on your car. The insurance company will get the vehicle surveyed to assess whether the damages were actually due to an animal attack. The claim processing will happen as usual.

  9. Is it necessary to buy comprehensive motor insurance for an old car?
  10. Comprehensive car insurance covers various risks, including fire, windshield damage, accidents, natural calamities, etc. that are beyond the control of the vehicle owner. These damages can cost just as much to repair, irrespective of whether the car is old or new. Hence, it is advisable to protect your vehicle with a comprehensive cover, particularly if you use it very often.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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