Car Insurance, more broadly called Motor Vehicle insurance in the Indian market, is one of the subtypes of Insurance. As we have mentioned before on this site, Insurance is a kind of protection from the devastating effects of a loss or possible loss of life, property, damage of vehicle, theft, or injury. Car or Motor Vehicle Insurance) therefore is that aspect of Insurance that deals with vehicles and the unfortunate events that can take place surrounding them. Those events can be theft, accident, destruction of other people’s property, injury, death (to the owner, passengers within the vehicle, or pedestrians) and many more eventualities. So in this article, we are going to examine these risks, and the responses via insurance. We do so when we study the types of vehicle insurance in India.
There are many types of motor vehicle insurance policies available in the country of India. You should assess your insurance needs and decide on a policy that safeguards you in the most efficient and affordable way. Motor vehicle insurance plans are classified into different categories based on the extent of cover they provide and the type of car or vehicle for which the insurance is needed.
Amount of insurance coverage – Motor vehicle insurance plans can be split into three main types based on the amount of insurance protection that they offer:
Types Of Car Insurance In India
- Third-Party Liability Insurance
- Comprehensive Motor Vehicle Insurance
- Zero Depreciation Cover
- Engine Protect Cover
- Return to Invoice (RTI)
- Loss of personal belongings cover
- 7. No Claim Bonus (NCB) –
- 8. Personal accident insurance for the passengers
- Key replacement cover
- Roadside assistance cover
- Consumables cover
- Daily allowance cover
1. Third-Party Liability Insurance
This is the most basic and popular kind of car insurance and hence, it is also the cheapest. This insurance plan is often referred to as liability-only insurance policy or act-only policy. The (Indian) Motor Vehicles Act, 1988, states that all car owners must be in possession of this insurance policy for the protection of their motor vehicles. If anyone owns a vehicle and drives without a minimum of third-party liability insurance cover policy, he is liable to face penalties.
The insurance coverage given by this kind of insurance plan includes protection to a third party (innocent bystanders, pedestrians, and so on) for incidents such as injuries/death and property damage that are caused in an accident involving the motor vehicle that is insured.
It should be stated that the third-party liability insurance coverage does not give any cover or assistance for damage to the insured vehicle or the owner, or driver.
Some insurance companies also now offer a personal accident cover for the owner-driver along with the third-party liability insurance policy. That is usually in another package.
Although there is no ceiling on the amount of money that a third party in a motor vehicle can receive as compensation for death/disabilities, however, there is a limit of Rs.7.5 lakh as the maximum amount of money given for third-party property damages. However, the final claim settlement amount is decided by the court of law.
2. Comprehensive Motor Vehicle Insurance
Often called a package policy by some insurers, this plan provides more complete insurance protection, as it incorporates third-party liability insurance coverage and also own-damage cover.
Own-damage cover – This includes protection for the insured vehicle from the following events:
- Accidental damages of own vehicle
- Damages incurred while in transit via rail, road, waterways, lift, etc.
- Damages incurred by natural calamities, such as earthquakes, floods, hurricanes, etc.
- Damages incured man-made disasters such as strikes, riots, vandalism, etc.
- And also Theft of the insured vehicle
Third-party liability cover (liability from any damage caused to others)
Additionally, the comprehensive motor insurance plan gives personal accident coverage to the owner-driver of the vehicle.
Motor insurance add-on plans (Supplementary Plans)
Aside from the comprehensive and third-party liability kinds of insurance plans detailed above, most motor vehicle insurance providers also offer add-on covers that can boost the coverage of the main policy. These supplementary policies should be bought from the same insurance provider by paying an additional fee. A few of these add-on plans are as highlighted below:
3. Zero Depreciation Cover
This is a popular motor vehicle insurance add-on policy that offers significant monetary savings at the time a claim is made. It is also called a nil depreciation cover or a ‘bumper to bumper’ plan. Consider that your vehicle is insured with a comprehensive motor vehicle insurance policy. At the time of a claim, policy holders still have to bear the expenses relating to depreciation of the vehicle parts and the excesses. However, if your comprehensive motor vehicle insurance plan was followed up with a nil depreciation cover plan, the insurer would also bear the expenses for the depreciation of the vehicle parts.
4. Engine Protect Cover
A comprehensive motor vehicle insurance policy does not cover the vehicle from mechanical or electrical damages that can happen to the engine. Buying an engine protect cover plan gives your engine such protection.
5. Return to Invoice (RTI)
This is an add-on plan that protects your motor vehicle from total loss expenses. In the event of a total loss such as car theft, this policy provides you the actual invoice value of the vehicle, (that is the amount you paid to the dealer) without accounting for its depreciation with age.
6. Loss of personal belongings cover
Loss of expensive electronic equipment, laptops, etc., as well as jewelry, and other personal items kept in the insured vehicle is covered under this add-on insurance policy.
7. No Claim Bonus (NCB)
No Claim Bonus is a significant payment offered by some insurers to drivers who abstain from raising motor vehicle insurance claims in one policy year. One may think of it as an incentive for drivers to be more careful, rather than filing claims on a regular basis.
8. Personal accident insurance for the passengers
The comprehensive motor vehicle insurance policy can be further enhanced to offer protection for the passengers. This is done by opting for this supplementary policy.
9. Key replacement cover
Under this policy, the insurance company reimburses the policyholder for the cost of replacement of the motor vehicle keys if these happen to get lost or misplaced, or stolen.
11. Roadside assistance cover
This supplementary cover offers 24/7 insurance protection to the policyholder from incidents like having a flat tire, being stranded on the road due to fuel depletion, a faulty vehicle that calls for expert scrutiny, etc.
12. Consumables cover
Usable in a vehicle such as nuts and bolts, screen washers, engine oil, and so on are collectively referred to as vehicle consumables. With a normal policy, The insurance company does not bear the cost of these components when you make a claim. However, if your vehicle insurance was further boosted with this supplement you will receive coverage for all your vehicle consumables.
13. Daily allowance cover
This insurance supplement offers cover (reimbursement) for the expenses involved in renting an alternate vehicle when the insured car or other vehicle is undergoing repairs at a mechanic garage.
Types of vehicles – Motor vehicle insurance policies are usually classified into two types based upon the type of vehicle for which the insurance policy is purchased:
- 1. This coverage offers insurance protection for all types of cars and SUVs. Pick-up trucks and other such vehicles are also included in this plan, as they all fall within the same category.
- 2. Two-wheeler insurance – Two Wheeler include bicycles as well as motorbikes. Sports bikes and power-bikes are also included in this kind of cover. This insurance policy is aimed to protect a two-wheeler from eventualities that can happen. Such as accidents, natural disasters, theft, and other man-made eventualities, etc.
Apart from the above stated, motor vehicle insurance is also identified and segregated based on the purpose or the use of the vehicle. So, you can decide to buy a private motor insurance policy for your private vehicle. In the same manner, a commercial motor insurance plan will provide insurance cover for the vehicle which you may be used to conduct business purposes.
Finally, motor vehicle insurance in India can be of several types and brand names. It is important for you to understand your particular insurance needs and so decide on a policy that fits you best. It is also advisable to buy motor vehicle insurance online for the security and convenience that it offers. That is the current trend at the moment, and it is expected that much more insurance business will be taken online in the coming years.
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