A car insurance policy is not just a legal mandate, but a step you take today to secure the needs of your vehicle in the future. Before purchasing car insurance, you must know that there are three different types of car insurance policies available:
Third-Party Liability Insurance
Standalone Own Damage Insurance
Comprehensive Insurance.
In addition to coverage under these policies, policyholders can also opt for add-ons to enhance the coverage of the base plan. Understanding the details of the three main categories of car insurance policies helps you make an informed choice while purchasing a plan.
Types of Car Insurance in India
The primary goal of purchasing a car insurance policy is to build coverage against damages such as theft, accidents, explosions, and repairs. Here are three types of policies that are designed for different types of coverage for your vehicle: 1
1. Third-Party Liability Car Insurance
According to the Motor Vehicle Act of 1988, every motor vehicle owner must have at least third-party liability insurance to drive their vehicle in India legally.
A third-party liability car insurance is a type of policy that offers coverage against any form of damage or injury done to a third party or property by the insured vehicle. Although this type of insurance is mandatory in India, the scope of its coverage is limited. Typically, a third-party liability insurance provides coverage for:
Damage caused to a third-party vehicle.
Damages caused to third-party property.
Liabilities arising due to the death of a third party.
Did You Know that the premium for third-party car insurance is predetermined and fixed by the Insurance Regulatory and Development Authority of India (IRDAI)? 1
2. Standalone Own Damage Car Insurance
A standalone own-damage car insurance policy primarily covers damage to your own vehicle. This type of car insurance is not mandatory, but can be purchased only when you have third-party cover. A standalone policy allows coverage for damages done to your own vehicle due to accident, theft, fire, man-made, or any natural disaster.
The premium for standalone own-damage car insurance is primarily determined by factors such as car age, model, the city where the car is typically driven, fuel type, safety features installed, etc.
Pro Tip: While purchasing standalone own damage car insurance, be mindful of the Insured Declared Value. IDV is the maximum amount your insurer will pay if your car gets stolen or damaged beyond repair.
Comprehensive Car Insurance
As the name suggests, comprehensive car insurance is a policy that combines the benefits of third-party liability insurance and a standalone own insurance policy. Through a single policy, you can build extensive coverage.
Purchasing a comprehensive car insurance policy has several benefits, such as:
You can extend the coverage by purchasing add-on covers.
A comprehensive policy typically also builds a personal accident cover (PAC) with a sum assured of ₹15 lakh.1
You can ensure legal compliance and personal safety with a single policy.
You can learn more about personal accident cover by reading our blog What is Personal Accident Cover- A Detailed Guide.
What Type of Car Insurance Do You Need?
When purchasing car insurance, remember that one size doesn’t fit all. Here are a few things that you must be mindful of to buy the right kind of insurance:
1. The age and condition of your vehicle are the first things you need to consider. For instance, if your vehicle is less than 5 years old, you can opt for comprehensive coverage with a zero-depreciation add-on. For cars older than that, regular comprehensive cover can be enough. For older and infrequently used cars, a third-party liability policy might be adequate.
2. The city where you drive and the frequency with which you drive your vehicle. Typically, if you stay in a city with high traffic, the chances of a collision are high. Thus, comprehensive coverage might be the right choice.
3. The kind of vehicle you drive. Usually, for EV owners, a comprehensive coverage along with a battery add-on cover is recommended.
4. The coverage and premium your insurance company is offering. Generali Central ensures a balance between the coverage you receive and the premium you pay.
To Conclude
Purchasing a car of your dreams is only the first step. You need to ensure its safety at all times, and what better than a car insurance policy that offers extensive coverage against different types of damage? Now that you have understood different types of car insurance policies and how to select the right one, you are ready to purchase a policy.
Ensure to read the policy documents carefully to understand the inclusions, exclusions, claim settlement process, and claim eligibility.
