Sunday, September 23, 2018

Car Insurance Basics You Need to Know

by Editor (editor), , September 14, 2018

Hence, you should buy the right type of car insurance policy based on your risk factors.

Car insurance is mandatory as per the law. Besides, it will protect your financial interests. If you are involved in an accident, there will be a great financial loss. The cost of repair or restoration of the car will be borne by the insurance company. The small premium that you would pay on annual basis will give you great peace of mind. Hence, you should buy the right type of car insurance policy based on your risk factors.

Optional car insurance policy

Comprehensive car insurance policy is optional. If you would like to cover various kinds of risks associated with your car and third-party damage, you should choose the Best Car Insurance Policy. A comprehensive car insurance plan will certainly fulfill your needs.

What do you get?

If you met with an unfortunate accident, the insurance company will settle the claim. The protection is applicable throughout the policy year.

The following risk factors are covered with a comprehensive car insurance policy:

  • Damage to the car
  • Loss of car (theft of robbery)
  • Loss of personal belongings
  • Personal accident cover for the driver
  • Personal accident cover for passengers
  • Third-party damage

What will you not get?

If there is no damage to the vehicle, you will lose the premium. However, the insurance company will reward you by offering NCB (No-Claim Protection). The NCB varies from 20% to 50%. It will increase with every claim-free year. The first year, the insurance company will apply 20% if you do not claim the insurance.

Third-party car insurance plan

To minimize the insurance premium, you can choose a third-party car insurance plan. The following are the advantages of the third-party car insurance plan:

  • Low insurance premium
  • Coverage of the third-party car
  • Coverage of the third-party property

Drawbacks of the third-party car insurance plan

Even though the third-party car insurance plan is cheap, you should understand the fact that it will not cover all kinds of risk factors.

The third-party car insurance plan will not cover the own damage. If your car is damaged or lost, the insurance company is not liable for compensation.

If there are injuries to the driver or passengers, the insurance company will not pay damages. Unless you purchase the personal accident cover, the insurance company will not entertain your claim.

Why should you buy a car insurance plan?

  • Mandatory as per the law – You should buy third party car insurance policy (either third-party or comprehensive) as it is mandatory as per the law.
  • To avoid legal prosecution – If you are responsible for the damage of the third-party car or third-party property, you will be tried by the court of law.
  • Penalty – If you fail to buy a car insurance policy, the road transport authority may impose fine.
  • Out of pocket expenses – The damage of third-party (injured person or car or property) restoration cost should be paid from your pocket. Hence, there will be a heavy financial loss.

Benefits of a comprehensive car insurance policy

You can enjoy the following Car Insurance benefits by subscribing to a comprehensive car insurance policy:

  • Damage of car due to natural calamities – If your car is damaged due to natural calamities such as fire, floods or cyclone, the insurance company will offer the compensation.
  • Loss or damage of the car due to manmade disasters – The loss or damage of the car due to manmade disasters will be borne by the insurance company.
  • Loss of the car – Robbery or theft of car will be compensated by the insurance company.
  • Personal accident cover – The insurance plan will cover the driver and passengers.
  • Third-party liability – It will cover your obligations towards the third-party damages. If there is injury or death of third-party and you are responsible for the damage, the insurance company will pay damages to the third-party on your behalf.

How to buy a car insurance policy in India?

You can buy Car insurance India plan either directly approaching the insurance company or online.

  • Factors of influence – The car insurance premium will be affected by various factors. You should be aware of those factors and relevant factors should be included in your policy.
  • IDV – Insured Declared Value will denote the market value of the car. If there is complete loss or damage to your vehicle, the insurance company’s liability will to the extent of IDV mentioned in the insurance contract.
  • Disclosure of information – You should disclose complete information to the insurance company so that the insurance company will be aware of the inherent risk factors. When you fill the insurance proposal form, the insurance company will assess various risk factors and the insurance premium will be based on the risk factors.
  • Comparison of insurance policies – You are advised to compare various insurance plans offered by different companies in India so that you will settle for the best insurance product. You can research and compare various car insurance products available in India. The online insurance aggregators will help you find the right product for your needs.
  • Get insurance quotes from multiple companies – The online insurance calculators can be used to calculate your car insurance premium. The insurance plan can be customized as per your needs. After comparing the quotes offered by several companies, you can settle for the best product.
  • Renewal of car insurance policy – You should buy car insurance policy for a new vehicle as well as the used vehicle. Generally, the insurance contract is applicable for one year. Hence, you should renew the car insurance policy before the deadline.
  • Discounts – The insurance company will offer various kinds of discounts. If you renew the policy before the deadline, you will get a discount on the premium. If you had not claimed the policy in the previous year, the discount will be applied while renewing the policy. By attaching additional security-enhancements to your car, you will get a discount on the insurance premium.


The car insurance premium is based on the type of car, the age of the driver, the location of the car and the purpose of the car. You should be aware of the terms and conditions of the insurance contract before signing the contract with the insurance company. You should be aware of the insurance claims process as well.

About the Writer

Editor is an editor for BrooWaha. For more information, visit the writer's website.
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