Understanding The Basics Of Car Insurance


In this fast-paced world, owning a private car has become a necessity for many. As a responsible car owner, it is imperative to ensure the safety and security of your vehicle and one way to achieve this is by choosing the best insurance coverage for your four-wheeler.

This blog is your one-stop guide to understanding the basics of car insurance. We'll break down the key concepts, explore different coverage options, and equip you with the knowledge to choose the right plan for your needs.

Before delving into the specifics, it is crucial to grasp the fundamentals of car insurance. 


What Is Car Insurance?

A car insurance policy is a safety net for your four-wheeler that protects you from unpredictable financial burdens arising due to personal accidents, third-party losses, or natural and man-made calamities. Having a good insurance policy for your four-wheeler gives you financial protection and peace of mind.


Why Do You Need It?

Purchasing a car insurance policy is mandatory by law; hence, you are not only safeguarding yourself from the uncertainties of the future but also fulfilling the legal requirements. Securing your vehicle against own damage and third-party liabilities is a crucial step towards your safety. 

Types of car insurance coverage

  • Comprehensive Car Insurance

    This type of car insurance plan covers your vehicle and third-party liabilities under one policy, giving you all-in-one coverage for your four-wheeler.

  • Third- Party Car Insurance

    As the name suggests, this plan offers protection against third-party losses or damage but does not cover your own vehicle. 


Comprehensive Coverage for Complete Peace of Mind

Although you can choose the plan that best suits your needs, however let us look at the benefits of choosing a comprehensive car insurance plan


Comprehensive Car insurance

Third-Party Car insurance

Natural calamity cover

Yes No

Theft cover

Yes No

Accident cover

Yes No

Availability of add-ons

Yes No

Cashless claims

Yes No

Availability of No claim bonus (NCB)

Yes No

Wider coverage

Yes No

Personal accident cover

Yes Yes

Third-party damage (person/property)

Yes Yes


Checklist for Buying the Right Car Insurance

Consider the following list to get the right car insurance policy 

  • Consider your driving habits- Evaluate your driving habits like whether you drive frequently or occasionally, in crowded cities or highways.

  • Assess your car- Your car’s make & model, age, and IDV are some of the factors that influence the premium of car insurance policy.

  • Evaluate policy- Properly look at the coverage of your policy and check for inclusions, add-ons, premium cost, etc.

  • Budget- Evaluate your finances in advance to determine how much premium you can comfortably afford to pay annually. 

  • Network garages- Choose an insurance company where you get a wide network of cashless garages for quick service.

  • Online price comparisons- With the help of online tools, you can compare the premium cost of car insurance from different insurers.

  • Claim settlement ratio- Look for high claim settlement ratio as this ensures that the claims are settled efficiently.


Demystifying Car Insurance Terms

Understanding the basic terms related to car insurance can help you gain clarity facilitating better decision making.

  • Coverage- It refers to the level of financial protection that your car insurance policy would offer. This may vary depending on the type of coverage you choose.

  • Premium- It is the amount you have to pay annually to avail yourself of the benefits of your car insurance policy.

  • IDV- This term stands for ‘Insured Declared Value', which is the market value of your vehicle after depreciation. This is the maximum amount your insurance provider would compensate in case of a total loss of your four-wheeler.

  • Depreciation- The decrease in the value of your car each year at a fixed percentage is called depreciation.

  • Add-ons- You can enhance the coverage of your car insurance policy by adding the layers of additional financial protection in the form of add-ons.

  • Zero depreciation- Zero- depreciation is an add-on cover with which you will not have to pay the depreciation amount of damaged parts of the car if a claim arises.

  • No Claim Bonus- NCB is like a discount on premiums that you can avail of at the time of renewal of your policy for every claim-free year.



Finally, when it comes to selecting the best insurance coverage for your personal vehicle, comprehensive coverage is often the best option. When comparing insurance providers, it is essential to tailor the coverage to your specific needs by considering a variety of factors and selecting a plan that best suits your car insurance needs and fits your budget well.

Let IFFCO Tokio be your partner in this journey, offering you simplicity, support, and peace of mind.

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