As per the Motor Vehicles Act 1988, it is legally mandatory for any person owing a car to have a car insurance in India. This is to legally cover the accidental damages incurred by the owner and is bound to pay this amount to who so ever concerned.
There are two types of motor insurance policies in India.
1. Third party insurance: This is a mandatory one, which all the vehicle owners should have in India. The reason for having this policy is because it includes the following provisions:
In case of an accident, it will cover the owner against legal liabilities to a third-party
Under this insurance plan, the third-party injuries or death will be covered
Any damage to third-party property is borne under this cover
2. Comprehensive car insurance cover: Having a comprehensive car insurance cover may not be compulsory, but it is like having a life line. It gives many add-on benefits.
Under third party insurance, self-injuries or damages to the own property is not covered. So what happens to the financial losses that the owner faces? Under comprehensive, both the parties are included in the coverage. Apart from the pay-out to the third-party injuries or in case of any damages to their vehicle, this also covers the pay-outs in the event of your own vehicle being stolen, set on fire or in case damages in accident (regardless of whose fault that was).