What is Car Insurance?

Car insurance is essential for protecting both you and your vehicle from potential financial risks caused by accidents or liabilities involving third parties. Here are some compelling reasons highlighting the importance of having car insurance:

1. Mandated by Law: According to the Motor Vehicles Act of 1988, it's a must for all vehicles, including electric cars, to have Third-party Insurance. Not following this law can lead to a penalty of up to Rs. 4,000 and/or imprisonment. So, to stay on the right side of the law, make sure you get or renew your car insurance. 
2. Financial Protection:  By having a car insurance policy, the insurer can drive peacefully, knowing that he won't have to pay out of his pocket for any damages the car may have in case of an accident. A small scratch or a dent can lead to high financial losses, and hence, insurance provides protection from such losses. 
3. Protection from Uninsured Drivers: In case you meet with an accident with an uninsured driver, your car insurance will protect you from financial losses arising out of getting the other person’s vehicle repaired. 
4. Coverage Against Vehicle Theft: If your car is insured under a Comprehensive Car Insurance Policy and gets stolen with no way to trace it, the policy will provide you with compensation for your financial loss.
5. Coverage Against Natural Calamities: Comprehensive Car Insurance comes to the rescue when natural disasters like floods, cyclones, or earthquakes cause big damage to your car. It helps cover the huge repair costs and gives you financial support during tough times.

There are different categories of car insurance plans that are curated to cater to different needs of customers. The types are: 

Third-Party Insurance: This insurance covers the cost if you accidentally cause damage to someone else's car or injure them in an accident. In India, it is mandatory for two-wheelers and four-wheelers to have third-party insurance. So, if you ever find yourself in a situation where you accidentally damage a third person’s property or cause injuries, this insurance steps in to take care of the other person's repairs and medical bills. But remember, it doesn't cover your own car's repairs – that's where comprehensive insurance comes in!

Comprehensive Car Insurance: This is a robust and inclusive form of car insurance that provides extensive coverage against a wide range of risks. Unlike basic third-party insurance, which primarily covers damages to other vehicles and individuals in accidents, comprehensive insurance goes above and beyond by protecting your own vehicle from various incidents such as accidents, theft, vandalism, natural disasters (e.g., hail, floods, fire), falling objects, and damage caused by animals. Think of it as the all-in-one package that keeps your car safe from almost anything that comes its way. Comprehensive policies cover both - damages to your own vehicle as well as third-party liabilities. 

Standalone Own Damage: This cover is like a personal bodyguard for your car! It specifically protects your own car from unexpected damage. Unlike regular comprehensive insurance that covers both your car and damages to third party, Standalone Own Damage focuses only on your vehicle. So, if your car gets scratched, dented, or needs repairs after an accident or natural disasters (e.g., hail, floods, fire) etc or is stolen, this insurance has your back! It's a great option if you want to give your car a little extra protection. 

Third-Party policy: In third party policies any damages to your own vehicle will not be covered

Comprehensive policy: Some exclusions of comprehensive policies are listed below:

• Normal wear & tear and aging of the vehicle
• Damages due to driving without valid license or under the influence of liquor or drugs
• Mechanical/electrical breakdown of the vehicle
• Damages to car being used for commercial purposes
• Damages due to war, mutiny or nuclear risk
• Consequential or indirect losses

Standalone Own damage policy: Exclusions for a Stand alone damage policy comprises all the exclusions listed above in Comprehensive policy and additionally, it also does not cover liability or losses arising from damages to someone else’s property/life by your car in an accident.

Zero Depreciation Cover:  Depreciation is the reduction in the value of the car and its parts over time due to wear and tear. In car insurance policies without Zero Dep cover, when you make a claim, while the garage will charge full price for the repairs or replacement of the car, the insurer will not settle this entire amount to the garage or to you. The insurer will take depreciation of those parts into account and will settle a lesser amount than what the garage charged and hence, you will end up bearing the depreciation related costs from your own pocket. By opting for Zero Depreciation Cover, you can bypass this deduction for depreciation to the insurance company, and then, they will cover the entire cost of repairs or replacements without considering the age of the car or its parts. This means you get higher claim settlements and end up paying less from your own pocket.

Engine Protection Cover: Engine is one of the most important components of your car and can bring significant financial burdens. Damages to the engine are not covered by the comprehensive policy as it usually gets classified under Consequential damage, or a damage that is not directly a result of an unfortunate incident. Events like waterlogging during heavy rains or driving through flooded areas can cause severe damage to the engine. Without the Engine Protection Cover, you might have to bear the entire cost of engine repairs or replacement, which can be a significant financial burden. Hence, it is a wise decision to buy an engine protection cover. 

Roadside assistance cover:

The 24x7 Roadside Assistance Cover is a valuable add-on that offers policyholders assistance in case of breakdowns, punctures, accidents, or running out of fuel while on the road. This cover provides a range of services, including towing the car to the nearest garage, flat tire change, battery jump-start, and emergency fuel delivery. Having this cover ensures convenience and peace of mind during unexpected road emergencies, especially during long trips or when riding in remote areas where immediate help might be scarce. It proves to be a reliable companion, offering timely assistance when policyholders need it the most.

Tyre Protect Cover: Insurance where Tyre Protect add-on is not opted doesn't cover tyre damage unless the damage happens as a result of an accident. Opting for a tyre-Protect add on provides you with the benefit of safeguarding and covering tyres even in case of non-accidental damages such as bursts, bulges, or cuts, etc, This add on covers the repairs and replacement charges along with labour charges 

Consumables protect Cover: 

This add-on provides coverage for certain consumables for your car, like engine oil, nuts, bolts, chain lubricants, etc. Although these components do not cost much, they provide relief to the insured that the insurance company is taking care of these costs and provides end-to-end assistance. They help in saving expenses (up to a certain limit) on small items and should be opted for cars which are no less than five years old. 

Pay as you Drive Cover: This insurance cover calculates your premium based on how much you drive. It is available with a comprehensive policy and helps in saving Own Damage premium. You pay for the insurance depending on the actual miles you cover. It's beneficial for low-mileage or occasional drivers and encourages responsible driving. A telematics device or app tracks your driving to determine the premium. 

Loss of personal belongings covers: It offers protection for your personal belongings, including your laptop, phone, and clothes, within your car, ensuring they are covered in the event of theft or damage during an accident.

Return to Invoice Cover: In the unfortunate event of your car being stolen or rendered irreparable, this add-on proves invaluable. With the "return to invoice" feature, the insurer will take care of the expenses involved in replacing your car with an equivalent or similar model, including covering the road tax and registration fees.

Breakdown Assistance: This add-on is useful in the event that your car breaks down, and you need immediate assistance. The best part about this add-on is that it does not even count as a claim!

Daily conveyance benefit: This add-on is designed to provide a fixed daily allowance to policyholders for alternative transportation during the period when the insured vehicle is under repair due to an accident. This add-on ensures that you can carry on with your daily activities even if your vehicle is out of commission without bearing the additional costs of transportation during the repair period.

Key and Lock Replacement: As part of the Key and Lock Protect add-on cover, the insurer covers the expenses incurred by the policyholder for repairing or replacing the car's lockset in case of theft, loss, or damage. This additional coverage ensures that you are financially protected against such unfortunate events involving your vehicle's keys and locks.

1. Policy Inclusions: Carefully review what is covered in the policy. Ensure that it includes the essential protections against accidental damage, theft, fire, riots, and natural calamities such as floods, earthquakes, and cyclones.
2. Insured Declared Value (IDV): IDV is the current market value of your car, and it affects the claim amount in case of total loss or theft. Ensure the IDV is accurately calculated, neither too high nor too low.
3. Claim Settlement Ratio: The claim settlement ratio indicates how efficiently an insurance company settles claims. Look for insurers with a high claim settlement ratio, as it indicates a higher probability of getting your claims approved without hassle.
4. Deductibles: Deductibles are the amount you agree to pay from your pocket during a claim. Higher deductibles might lead to lower premiums, but be sure to choose an amount you can comfortably afford in case of an accident.
5. Network Garages: Check if the insurance company has a wide network of authorised garages for cashless repairs. This ensures easy and convenient servicing in case of a claim.
6. Customer Reviews: Read reviews from existing policyholders to get insights into the insurer's customer service, responsiveness, and reliability during claim settlement.
7. Comparison of Prices: Obtain quotes from various insurance providers for the same coverage and features. Compare the premiums to find the best deal. Take note of any discounts or offers provided by insurers, such as loyalty discounts or multi-policy discounts if you already have other insurance policies with the same company.

The main difference lies in the scope of coverage. Comprehensive car insurance is a single policy that covers both your vehicle and third-party liabilities. On the other hand, a combination of Standalone Own Damage and Third-Party Insurance allows you to tailor the coverage to your specific needs and budget by obtaining separate policies for each aspect. It's essential to assess your requirements and preferences before deciding which option is best for you. You may want to talk to an insurer about this to get more clarity.