What Are The Different Types Of Car Insurance?

Motor insurance is one of the crucial things you must have if you own a two-wheeler or a four-wheeler. Read further to know what different types of car insurance cover you can buy.

If you are a car owner in India, you would know that buying third-party car insurance is mandatory. The primary objective of the car insurance policy is to get protection against the damages that may occur to your vehicle or the third-party’s vehicle in an accident. But, when you start looking for a car insurance policy, with the sheer number of options available, choosing the right plan can be overwhelming. There are several factors you must consider like the amount of coverage you want, do you need any add-on covers, but most importantly, you must determine the type of car insurance policy you want.

In India, car insurance policy is broadly classified into two types – based on the coverage they offer and the purpose of use.

Based on the coverage offered, car insurance policies are further classified into the following types:

Third-Party Insurance Policy

Third-party car insurance is mandated by law. It is a basic type of insurance coverage that protects against the damages you may cause to the third-party car or property. It also compensates for the third-party’s physical injuries.

One of the significant features of a third-party car insurance policy is that the premium for this policy is much cheaper than the comprehensive policy. Also, with third-party insurance, you cannot customise your plan; you cannot purchase add-ons. Additionally, third-party car insurance does not protect you from the damages or theft of your car.

Comprehensive Car Insurance Policy

This type of insurance policy provides complete protection.  It covers both third-party liabilities as well as damages to your vehicle. Also, with a comprehensive cover, you can get compensation if the accident results in your death; the family members will receive the benefit. Although the premium for the comprehensive policy is higher than the third-party insurance, the coverage you get provides complete financial protection against all unforeseen risks.

Additionally, with a comprehensive insurance policy, you can widen the scope of your policy coverage by purchasing add-ons. Add-ons or Riders are additional coverage that you can buy at an additional premium to get protection against risks that are not covered under your basic policy. The insurance companies offer a variety of add-ons to suit the varying needs of the policyholders. Some of the most common add-ons that most people buy include:

1. Zero-Depreciation Cover

In the event of an accident, if any of your car parts get damaged and you need to replace the same, insurance companies do not pay for the entire replacement cost, they deduct the depreciation. But, with a zero-depreciation add-on cover, you can get full compensation for the replacement of parts. However, you must know that you can buy this cover only if your car is less than three years old.

2. Roadside Assistance Cover

Breakdown of a vehicle is a common problem, and it sometimes can put you in a difficult situation. In the event of any emergency like a flat tyre, battery issues or mechanical failure, the roadside assistance cover can help you get immediate help even if you are stranded in a remote area.

3. NCB Protection Cover

The NCB or No Claim Bonus is a reward to all policyholders who do not file for a claim in a policy year. The NCB can help you get a significant discount on the premium upon renewal of the policy. Some insurers offer NCB by increasing the sum insured upon renewal. However, if you claim a couple of years, you may lose the accrued NCB benefits. This is where buying an NCB protection cover can be useful. As the name suggests, this type of add-on cover does not nullify the NCB benefits in the event of a claim.

4. Key Replacement Cover

Often people tend to lose their car keys or misplace it. In such a situation, you may not be able to use your vehicle, and getting an original replacement key from the car manufacturer can be highly expensive. If you have a key replacement cover, the insurer will offer reimbursement for getting a substitute key.

 

Car Insurance Types Based On Usage

Cars can be used for personal or commercial purposes, and based on the purpose of use, you must buy the insurance accordingly.

1. Private Car Insurance

This type of motor insurance policy is purchased by car owners who intend to use the vehicle for private purposes. Based on your needs, you can either buy a third-party cover or a comprehensive policy for your car.

2. Commercial vehicle insurance

This is the best type of car insurance for business owners who have a fleet of vehicles that are used for commercial or business purposes. Commercial car insurance offers third-party liability cover.

Irrespective of the type of car insurance you buy, make sure that you choose sufficient sum insured so that you get full protection against the damages. Also, do your research well about the different insurance companies and opt for an insurer that offers the policy at the most competitive premium.