Car Insurance Policy – Knowing What It Is, Types, and Benefits

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Car Insurance policy is an agreement between you and an insurance company for your vehicle. It is created to financially protect your car in the event of an accident or an unforeseen event. A car insurance policy also pays for the damages done to your car due to man-made or natural calamities. In India, it is mandatory for both personal and commercial vehicles to have a car insurance policy. It has been mandatory since the Motor Vehicles Act was passed in 1988. According to the act, failing to have  car insurance  attracts hefty fines.

 There are primarily two types of insurance policies in India: 

  • Third-party liability insurance or TP Only
  • Comprehensive car insurance

 What is Third Party Liability Insurance?

Third-party liability insurance protects the insured vehicle from any legal consequences and an extensive damage caused to third party vehicle on road. The damages covered under third party liability could be- damages caused to vehicle, property damage, injury, disability and even car insurance quotes death in extreme cases. This policy also safeguards you from any financial liability that may arise because of the above-mentioned circumstances.

 What is a Comprehensive Car Insurance?

A comprehensive car insurance policy gives extensive coverage to both third party liabilities and for the damages done to your own car. A third-party liability policy covers only one aspect of the policy, whereas a comprehensive policy offers extensive coverage and benefits that not only cover the vehicle insured but also its accessories*. They protect the vehicle both from man-made situations and natural calamities. Coverages under a comprehensive insurance policy:

  • Explosion or fire
  • Theft and burglary
  • Riots, strike
  • Earthquake, floods, landslide etc.
  • Terrorist and malicious activity
  • Damage in transit
  • Natural calamities like typhoon, hurricane, storm, cyclone etc.

 Benefits of a car insurance policy:

It is mandatory to have a car insurance in India. Not havinga car insurance will not only attract fines but can also lead to huge losses in case of any damagedue to external forces.

Let’s discuss some of the perks of having a car insurance policy:

  • In case a person dies due to a car accident; the car insurance policy indemnifies the beneficiary
  • When a person survives a car accident, he also gets benefits from the insurance company
  • Provides coverage to legal lawsuits and any other legal expenses that may arise due to an accident
  • Covers the expenses of the damaged parts of the vehicle caused due to accident
  • Covers the expenses of the damaged parts of the vehicle caused by natural or man-made calamities
  • If you do not make any claim for your car during a policy year, then you qualify for a no claim bonus discount during renewal
  • Keeping a car insurance policy reduces a lot of your expenses as the insurance policy provides coverage for major damage expenses

Apart from the listed benefits, one can even get extra benefits at an additional cost

Therefore, never let your car insurance policy lapse. Always keep your policy active as because it is mandated by law but also helps you in case of any misfortune.

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