Types of car insurance in India

Car insurance is a mandatory requirement for every car owner in India. It not only protects you from financial liabilities but also ensures that you can drive on Indian roads legally. With various car insurance options available in the market, understanding the types of  insurance can be confusing.

Types of Car Insurance

In India, there are primarily three types of car insurance:

Third-party Liability Insurance

Third-party insurance cover is the mandatory requirement for car owners in India. It covers any damage or injury caused to a third party, including life and property, due to your vehicle. This type of insurance does not cover damages to your own vehicle. It is mandated by law under the Motor Vehicles Act, and driving without it is illegal.

Comprehensive Car Insurance

Comprehensive car insurance, as the name suggests, provides broader coverage than third-party liability insurance. It not only covers damages and injuries to third parties but also covers damages to your own vehicle. Comprehensive insurance is not mandatory by law, but it is highly recommended for all car owners to ensure comprehensive protection.

Standalone Own Damage Car Insurance

This type of insurance covers the damage to your own vehicle. It is available as a separate option or can be purchased in addition to a third-party insurance policy. It protects your car against accidents, theft, and natural calamities without the third-party liability component.

What is Included in Different Types of Car Insurance

Third-party Liability Insurance

• This insurance policy covers the loss of any third-party property, such as vehicles or buildings, in an accident. 
• It covers the medical expenses and compensation for injuries or death caused to a third party in an accident involving your car.

Comprehensive Car Insurance

• Comprehensive insurance includes coverage for damages to your own vehicle. This can include accidents, theft, vandalism, natural disasters like floods or earthquakes, and even fire damage.
• Just like third-party insurance, it covers damages and injuries to third parties, making it a complete package.
• Comprehensive policies often come with personal accident cover for the owner-driver. In the event of an accident, it provides compensation for accidental injuries or death of the owner-driver.
• You have the option to enhance your comprehensive insurance with various add-on covers. 

Standalone Own Damage Car Insurance

• Coverage for own vehicle damage due to accidents, including collisions and overturning.
• Coverage against theft and vandalism.
• Protection against natural disasters like floods, earthquakes, and cyclones.
• Fire and explosion damage coverage.

What is Not Included in Different Types of Car Insurance

While car insurance provides critical protection, there are certain exclusions that policyholders should be aware of:

Third-party Liability Insurance

• Third-party insurance does not cover any damages to your own vehicle, no matter how severe.
• It does not cover your personal injuries or those of your passengers. Personal accident cover must be purchased separately.

Comprehensive Car Insurance

• Most comprehensive policies do not cover the depreciation of car parts. You might have to bear a portion of the repair or replacement cost.
• Damages resulting from mechanical failures or wear and tear are typically not covered.
• If you are found to be driving under the influence of alcohol or drugs, your comprehensive insurance might not cover the damages.
• Any damages or accidents that occur while engaging in illegal activities will not be covered.

Standalone Own Damage Car Insurance

• No coverage for third-party liability. This type of insurance is meant to cover your vehicle's own damage only.

Add-On Covers in Car Insurance

Add-on covers, also known as riders or endorsements, allow you to customize your car insurance policy to better suit your needs. Here are some common add-on covers available in India:

1.  Zero Depreciation Cover

This add-on cover eliminates the deduction of depreciation from the claim amount. Without it, the insurer would deduct depreciation, reducing the claim payout. With zero depreciation cover, you get the full claim amount for the damaged parts.

2. Engine Protection Cover

Engine damage is a common concern, especially in flood-prone areas. Engine Protection add-on covers the repair or replacement cost of your car's engine and its parts.

3. Roadside Assistance Cover

In case your car breaks down or you face an emergency on the road, this cover provides services like towing, fuel delivery, and even minor repair assistance.

4. No Claim Bonus (NCB) Protection

NCB is a reward for claim-free years. With this add-on, you can retain your NCB even after making a claim, ensuring lower premiums in the future.

5. Consumables Cover

This cover includes expenses for consumables like engine oil, coolant, and brake oil, which are usually not covered by standard policies.

6. Personal Belongings Cover

It covers the loss of personal belongings in case of theft or damage to your car. This is especially useful if you often leave valuable items in your car.

Which is a Better Car Insurance?

Choosing between third-party liability insurance and comprehensive car insurance depends on your individual needs and budget.

Third-Party Liability Insurance

• Suitable for those on a tight budget.
• Legal requirement for all car owners.
• Provides basic coverage for third-party damage and injury.

Comprehensive Car Insurance

• Offers comprehensive protection for your vehicle.
• Recommended for new and high-value cars.
• Customizable with add-on covers for enhanced protection.
• Protects you from unforeseen expenses related to accidents, theft, and natural disasters.

Standalone Own Damage Car Insurance

• Ideal for those who want to protect their own vehicle but already have third-party coverage. This is applicable for newer cars since while buying a new car one has to buy 1 year Own Damage + 3 years Third Party Insurance, hence for the next 2 years you would have to buy Own Damage Car Insurance.
• Provides coverage for accidents and own vehicle damage without the third-party liability component.
  
  

Ultimately, the better car insurance policy is the one that aligns with your specific requirements.

FAQs

1. What are the types of car insurance available in India?

In India, there are primarily two types of car insurance: Third-party Insurance and Comprehensive Insurance.

2. What is Third-party Liability Insurance, and is it mandatory?

Third-party insurance cover is required by law under the Motor Vehicles Act, 1988. It covers damage or injury caused to a third party due to your vehicle but does not cover damages to your own vehicle.

3. What does Comprehensive Car Insurance cover?

Comprehensive car insurance provides broader coverage. It covers damages and injuries to third parties and also covers damages to your own vehicle. It provides cover against accidents, theft, vandalism, natural disasters, and fire damage.

4. What is included in Third-party Liability Insurance?

It covers Third-party Property Damage (repair or replacement cost of third-party property) and Third-party Body Injury (medical expenses and compensation for injuries or death caused to a third party).

5. What additional coverage does Comprehensive Car Insurance offer?

Comprehensive insurance includes Own Damage Cover, Third-party Liability, Personal Accident Cover for the owner-driver, and the option to add various add-on covers.

6. What are the exclusions in Third-party Liability Insurance?

It does not cover damage to your own vehicle or personal injuries. Personal accident cover must be purchased separately.

7. What are the exclusions in Comprehensive Car Insurance?

Exclusions typically include depreciation of car parts, damages from mechanical failures or wear and tear, accidents while driving under the influence, and accidents during illegal activities.

8. What are add-on covers in car insurance, and how do they work?

Add-on covers, also known as riders or endorsements, allow you to customize your car insurance policy to better suit your needs. They provide additional protection beyond the standard coverage.

9. What are some common add-on covers available in India?

Common add-on covers include Zero Depreciation Cover, Engine Protection Cover, Roadside Assistance Cover, No Claim Bonus (NCB) Protection, Consumables Cover, and Personal Belongings Cover.

10. Which is the better car insurance policy for my car?

The insurance cover that best aligns with your requirements and budget is the best car insurance policy for your car. Consider your car’s value, your budget, and the level of insurance cover you need before choosing the insurance policy.