Usually, when we think of buying a car, we are gung-ho about the make and model, the color, engine, mileage, etc. of the car. However, it is rarely a case where people think about which car insurance to buy, which is an important factor too.
In the present day and age, there are a multitude of companies that offer motor insurance, whether the car is brand new or second hand. It is mandatory, after all, for people to go for it as a precautionary measure that safeguards both the owner/driver as well as the person who may have fallen victim to a mishap involving the newly acquired car.
Types of Car Insurance Policies in India:
- Third Party Liability (Mandated by Law): This provides protection to the third-party for damages to property or an individual where the policyholder is responsible for the accident
- Comprehensive Cover: A comprehensive insurance coverage includes all kinds of risk associated with your vehicle, passenger, driver, third-party vehicle, passenger, driver as well as damage to third-party property
- Add-On Insurance Covers: Some of the key add-on covers include
- Roadside assistance cover
- NCB (No-Claim Bonus) Protection Cover
- Zero depreciation Cover
- Road Site Assistance Cover and more
When it comes to car insurance, the adage ‘You may not need it, but you should have it’ rings very true. It is a necessary aspect of owning a car and it has an ongoing involvement for as long as you own it. It is because you have to renew the car policy every year, whether you have had the opportunity to claim under the plan or not in the previous years. Of course, there is an underlying advantage in that system. It pertains to you not having had any claims which proves that you have been a good driver who adheres to all the rules when it comes to driving your vehicle as well as caring for fellow travelers and the pedestrians alike.
That being said, although you may get the advantage of the no claims bonus, the amount of insurance may decrease in the next year and subsequently thereafter. This is because the insurers valuate the car and the premium of motor insurance as well as the policy amount is decided based on this. That is why a brand new car is not insured at the full price that you may have paid, leaving aside the add-ons that you may have purchased with the car.
What does your Car Insurance Cover?
- Loss or theft of vehicle
- Personal Accident Cover available for owner driver
- Damage to vehicle caused due to accident, riots, strikers, malicious acts, earthquake, flood, storm etc.
- Liability to third parties
Since there are a number of players in this particular market, the valuations differ by wide margins. However, the same is also true for the premium as well as the policy amount that the car gets insured for. The silver lining here is that you are not tied to the same insurer as with the case of a life insurance product. When it comes to a car insurance policy, you can choose among the various options you may find when you search for motor insurance online.
Also, a car insurance policy can further be divided based on the purpose of use i.e.:
- Commercial Car Insurance: This type of insurance is typically purchase by businesses who employ these cars for commercial purposes
- Private Use: This type of insurance is typically aimed at individual who purchase and use cars for private purposes. For example,
To conclude, this is an industry which is presently in what Adam Smith said with reference to economics: a state of perfect competition where you have a multitude of sellers competing for the eyeballs of a whole gamut of buyers looking for anything, especially car insurance.