Owning a vehicle (especially a car) brings is a sort of fulfillment/achievement. For many, it is a childhood dream to possess your own fancy set of wheels.
When so many emotions are attached with a car and you have paid a neat sum to own them, you must take every possible precaution to ensure the safety of your car.
How do you ensure the safety of your car?
Of course, you get an AutoCop installed, park it in safe places, drive carefully and undertake timely maintenance too.
But is all this enough?
What if you land in a situation where you got hit by another car in traffic? Or a ball from the neighborhood children's play smashed your windscreen or your car had a major breakdown while driving on a highway far away from the city?
What equips you to deal with all these kinds of situations? It is nothing but a car insurance. A car insurance helps you deal with many more such unexpected situations.
What Are The Covers Provided By A Car Insurance?
In India, car or motor insurance is a requirement mandated by law. Without a certain minimum level of insurance, vehicles cannot be driven on the roads here.
Car insurance covers can be categorized under two main heads:
As the name suggests, comprehensive cover provides an all-around insurance cover to your car.
It provides protection to your car against natural and man-made calamities. Among natural calamities are included occurrences like shock damage due to the earthquake, floods, typhoons, cyclones, hurricanes, lightning, and associated damages.
Theft, riots, strikes, fire, terrorist activity, burglary, house-break in, intended malicious activities, damages caused during travel by road or the car being transported by any other means are among the man-made calamities.
The comprehensive insurance cover also adds personal accident cover, which provides accident cover for the driver of the vehicle while driving.
A basic comprehensive car insurance includes damage to your car, loss, and theft of the vehicle as well as third party cover.
Third Party Car Insurance Policy
This is a very common term heard whenever you talk about insurance. In the Indian context, vehicles plying on the road should at least have a third-party insurance cover.
So, what does third party car insurance mean?
While we know what cover a comprehensive insurance policy gives to your car, let us try to learn about the utilities of a third-party cover.
While you are driving a car, there are many others who may be affected due to untoward incidents caused by your car. The third party may include people passing by, pedestrians, another car/two-wheeler drivers, property belonging to others, etc.
In a broader sense, the third party would include all those people who are not a party to the insurance. The main parties to the insurance would be the insured and the insurer.
Third-party insurance is of prime importance. It gives cover to the owner of the car for any liability that may arise due to the harm/injury caused to the third party by use of the car.
This may include accident due to your car in which a pedestrian is injured or a property belonging to someone else is damaged. There may also be passengers in your car who may be injured in an accident while traveling in your car.
If the car is being used for commercial purposes, then the fare-paying passengers will be considered as the third party here. But remember, the car cannot be used for commercial purposes without having proper authorization for the same from Road Transport authorities and adequate insurance for the same.
Other Essential Additional Covers for your Car Insurance
The main purpose of insurance is to be able to compensate you sufficiently for the loss that you incur due to damages to you or your car. Though there are comprehensive and third-party covers available for your car, many times you may find it insufficient to cover for all the possible damages. That’s when the additional covers come into play.
These covers will have to be paid extra, but they prove useful to have. Some of the important covers that you can think of including are:
Nil Depreciation Cover: If you ever have to claim an insurance, the insurers generally pay the claim for respective parts of the car/entire car at depreciated value. However, you can ensure that they pay at full amount if you are in possession of this Nil Depreciation Cover. This cover is given as an additional cover free of cost to newer vehicles. As the vehicle ages, this cover is available for purchase at a premium amount.
Engine and Electronic Circuit Cover: Over the past few years, we have learned that floods are a possibility at any part of the country. Should you be faced with such a situation, your car will obviously bear the brunt. An engine and electronic circuit cover will cover for massive repair costs when electronic circuits or the engine of your car gets damaged due to waterlogging or related issues.
Roadside Assistance Cover: This is again a very important cover that one should possess. You can get stranded anywhere, either within a city or at a remote location. It could be anything ranging from a minor error to failed batteries or a major breakdown. With roadside assistance, you are covered for all of these at any point within the country. Certain covers also provide for your accommodation and cost of a taxi to get you back.
No Claim Bonus Protection (NCB): This is quite a popular term in the insurance parlance. Did you know that there is a discount allowed during the renewal of insurance to those who do not claim insurance in the previous term? This is what we generally call as the no claim bonus. However, with a no claim bonus protection cover, you may still be allowed discounted premium on renewal in spite of making a claim in the previous year.
Recent Regulatory Changes Pertaining to Motor Insurance
In line with the orders from the court, the Insurance Regulatory and Development Authority of India (IRDAI) announced certain changes pertaining to motor insurance and its components. They are:
Long-Term Third-Party Insurance Cover
Buoyed by the incidents of accidents which involved vehicles that did not have the mandatory third-party insurance cover, the Supreme Court ordered the IRDAI to ensure that all new cars sold after 01 Sep 2018 will mandatorily require a Three-year third-party insurance cover.
This move would increase the premium outgo during the first year of the car. However, this requirement is not mandatory for cars bought prior to 01 Sep 2018.
Following would be the cost of third-party insurance according to the Cubic Capacity of the engine
Rs 5,286 for cars with engine capacity of fewer than 1,000 ccs
Rs 9,534 for cars with engine capacity of between 1,000 ccs and 1,500 ccs
Rs 24,305 for cars with engine capacity of 1,500 ccs and more
Personal Accident Cover
In line with the orders by Madras High Court, the Personal Accident Cover (PAC) for cars has been increased from Rs 2 lakhs to Rs 15 lakhs.
Personal Accident Cover is a mandatory cover that is available under Third-Party Cover as well as Comprehensive Cover. This insures the owner-driver of the car against death or disability caused due to accidents while driving, mounting or dismounting the car.
Now, the IRDAI has made it mandatory for insurers to provide a minimum cover of Rs 15 lakh under PAC for owner-driver vehicles. This is to come at a premium of Rs 750 per annum for annual policies for both cars and two-wheelers.
Insurers are free to offer higher covers in multiples of Rs 1 lakh or Rs 5 lakh as well. However, the minimum cover has to be Rs 15 lakh.
The hike in PAC will be applicable to all earlier issued policies too, as and when they come in for renewal.
Car insurance is an important necessity. Make sure you don’t drive out a car without having a current insurance so that not only you and your car but other around your car are also protected should there be a mishap.