How Car Insurance Works in India?

Car insurance is an agreement between the insurance company and the car owner wherein, the car owner will pay premiums and the insurance company covers for loss or damage caused to the car. Car Insurance is mandatory in India regardless of whether it is a commercial vehicle or a personal vehicle. Most of the insurance companies in India have tie-ups with car manufacturers and they offer car owners instant quotes.

Types of Car Insurance in India

There are two types of . Listed below are the two types of car insurance.

  • Third party liability insurance cover- Third party liability insurance offers limited protection. This type of car insurance protects you only against the costs incurred from the damage done by your vehicle to another vehicle, property or person.
  • Comprehensive insurance cover- Comprehensive car insurance offers cover against damage to the vehicle, death of the driver or passengers and damage caused by the vehicle to a third party vehicle, property or person.

Car Insurance Cover

Listed below are the features that are usually covered under a car insurance policy.

  • Bodily injury- It offers cover for any bodily injury incurred from an accident where the insured car was involved
  • Damage- It offers cover for the damage incurred to the car either due to an accident, theft or certain natural calamities
  • Third party property damage- It pays up for the damage incurred by a third party vehicle involved in an accident with the insured vehicle
  • Death- It also offers cover for the death of the driver/ passengers present in the insured vehicle at the time of accident or calamity

Factors that influence the premium of the car insurance

Listed below are some of the factors that influence the premium of a car insurance

  • Vehicle related factors-The make, type of fuel, model etc, all matter when it comes to determining the insurance for the car premium. Usually diesel cars attract a higher premium when compared to petrol cars.
  • Location-The premium usually tends to be higher in urban areas and near highways.
  • Driver-The age and profession of the driver also plays a role in determining the premium of the car insurance . Multiple drivers leads to higher premiums.

Car Insurance clauses and exclusions

Listed below are some of the car insurance clauses and exclusions.

  • Any issues related to the vehicle due to general aging of the car
  • Consequential loss
  • Mechanical breakdown of the car
  • Wear and tear of car parts such as tires
  • The policy won’t offer any cover for the damages incurred from using the car outside the geographical location of the country
  • No cover will be offered if the person is driving without a license
  • No cover will be offered if the driver was under the influence of alcohol or drugs
  • Damage incurred to the vehicle during a war or nuclear attack
  • The policy does not offer cover if the car was damaged while being used for purposes other than what was mentioned in the policy

How to make a claim?

Given below is the procedure to make a claim in case your car was involved in an accident or in any other valid incident.

  • As soon as the accident occurs, the driver or the passenger should note down the number plate of the other car in case of an accident with another car
  • Contact your insurance company immediately
  • File a claim with the insurance company and note down the claim reference number
  • Submit the documents required by the insurance company in order to make the claim
  • File an FIR at the nearest concerned police station

Advantages of a car insurance

Listed below are the advantages of a car insurance.

  • Car insurance provides benefit in case of death arising out of accidents
  • Covers the repair cost of vehicle repairs due to damage caused in an accident.
  • Covers damage caused by other than an accident for example, theft, fire, etc.
  • Offers cover for damage caused to third party

Car insurance is a very efficient tool that will protect your dream car against damages and mitigate your costs in case of an accident. There is no dearth of options for car insurance schemes on the market. It is always advisable to compare between different plans and choose the one suitable for you best.

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

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