Car Insurance is insurance that saves you against any unwanted incident. It is a legal agreement between the car owner (insured) and the insurance company (insurer). It is also an important requirement for every car owner. As it is necessary by law. Some coverages protect your car and passengers as well in case of accidents. Here you will find the importance, tax benefits, and types of car insurance. So that you can choose your policy wisely.
Moreover, when you buy new motor insurance you might be confused. As it is a bit difficult to select the right policy for your car. There are various types of car insurance plans. Few policies also pay for your car damages due to natural calamities. You need to find which policy fulfills all your needs. So let’s drive more towards the importance and benefits of the car insurance policy.
As motor insurance is necessary by law. It could be a legitimate necessity to have insurance before driving a car in India. Also, it covers any damage to the car or even if it gets stolen. You only need to pay the annual premium to buy the policy. The premium is calculated on the Insured Declared Value (IDV). If the IDV of the vehicle is high then the premium paid to be also high. On the other side, the premium can be low if the IDV is less.
Features of Car Insurance
- Offers protection from damage to your car.
- Provides Personal Accident cover.
- Covers the loss of insured car due to theft or natural calamities.
- Covers the financial burden caused by the injury or death of a third party.
- Also provides tax benefits on car insurance.
Documents Needed for Car Insurance
Furthermore, motor Insurance needs very minimal document proceedings. To buy new insurance, you are only required to fill up the proposal form of the insurance company. Also, a copy of your registration certificate is required while buying. For the renewal of the policy, you need to submit a copy of your RC and previous insurance details. Be careful while filling all the details. As it will assist you in making claims.
Points to remember while buying a Car Insurance
- Shortlist your insurance requirements
- Compare the policy options
- Compare the Insured Declared Value (IDV)
- Make a comparison of Insurer’s Claim Settlement Practice
You can also buy the car insurance policy from the government. Click here to know more about it.
Importance of Car Insurance
According to the Motor Vehicle’s Act,1988, it is compulsory for a vehicle operating in a public place to be insured. That’s why it is required to get motor insurance. Apart from this, it also covers the damage to the car or injury of a third party. Moreover, many reasons reflect the importance of buying car insurance.
Pay Now and Save Later
Motor insurance protects you and your family from immense expenses. You only need to invest a little amount for the policy. This will avoid costly expenses in the future.
Protect Yourself and Others
The right car coverage policy protects you, your family members, your passengers, and other drivers. After an accident, you can take care of any property or bodily injury costs that may arise by having the right insurance.
Save Time and Hassle
Another importance of car insurance is that it saves time and hassle. With the right policy, you do not need to negotiate with other drivers and car owners involved in the accident and managing the repairing costs or replacing your vehicle. This will surely save you lots of time and avoid headaches.
Peace of Mind
Everyone makes mistakes. But sometimes the mistake of another driver can become your problem. So with the right type of policy, you can be sure that you are protected. Even if you are hit by an uninsured driver.
Boost your Health Insurance
Further, car insurance also pays for medical expenses that are normally included in health insurance. So a good policy also covers expenses such as dental work and medical treatment required as a result of an accident.
Benefits of Car Insurance
As per the Motor Vehicle Act, third party insurance is mandatory and one has to buy it for new or used vehicles. One can also buy comprehensive insurance. Both these types of car insurance provide you major benefits.
Damage or loss of the insured vehicle
Suppose your vehicle is damaged due to an accident, or any other cause, you are insured. Moreover, if the car faces any losses due to theft, strikes, terrorism, or riots, your car insurance covers these losses. Also, it covers the damage while in transit by air, road, lifts, or rail.
Personal accident cover
Car insurance gives a personal accident cover for a fixed amount. Personal Accident cover offers safety and security against the destruction of the vehicle or death due to an accident. Furthermore, this cover can also be purchased for other passengers for a fixed amount under the policy.
A large network of garages
Car Insurance provides a large network of garages throughout the country. This ensures that you receive cash-free services in all the locations if the need arises. This feature makes it convenient to take repair services in case of any emergency.
If your car gets involve in an accident that leads to damage of property to any third party. This policy will cover it. Besides, if you face any legal problem in the event of any personal injury or death of a third party, this will protect you against the same.
No claim bonus
One of the major advantages of car insurance is the no-claim bonus (NCB). The customer is eligible for this benefit for each year without a claim. It can be available as a premium discount, which makes policy even more affordable.
Tax Benefits of Car Insurance
Well, there are tax benefits too of car insurance. Thus, the policyholders can claim exemption from tax for the premium paid on motor Insurance. But this benefit is available only if the vehicles are used for business purposes. But for a personal vehicle, one cannot avail of the tax exemption on personal car coverage. The insured should have proof of the insurance premium on car insurance to avail claim.
Types Of Car Insurance
Car insurance is bundled into distinctive coverage types and is broadly classified into four as examined underneath:
Comprehensive Car Insurance Policy
This secures against any harm caused to the vehicle and its insured equipment as a result of natural and human-made disasters. These calamities are further known as ‘Natural disasters’ and ‘Man-Made disasters’. Natural disasters involve fire, blast, lightning, flood, storm, typhoon, hurricane, cyclone, etc. Human-made disasters comprise housebreaking, crisis, strike, theft, accident by outdoors means, terrorist attack, and so on.
This approach moreover involves individual accident cover for the driver of the vehicle while driving. The owner can avail of profit from personal accident cover for passengers in the vehicle. Another required attribute is third party legal liability cover. This secures the owner against legal liability emerging from an accident causing any lifetime injury or death and any harm to the property.
Personal Injury Protection
This is also known as PIP and even available only in selected states. Similar to medical expenses coverage, PIP can be useful in paying your medical expenses after an accident. Additionally, it also covers other expenses incurred due to your injuries like expenses for child care or lost income. This protection is mandatory only in some states whereas it is optional in others.
Sometimes this PIP insurance is also known as No-fault insurance. As it pays for the medical expenses of your and your passengers. In case, if you are harmed in an accident regardless of who was responsible for the accident.
Third-Party Insurance policy
In addition, the Third parties are people on footpath, fare-paying, and non-fare paying passengers in a vehicle. Individuals in the vehicles just like the driver, owner, or passengers are too third parties. This covers your legal obligation for any compensation to pay that emerges from an accident caused by your vehicle. It ensures liability for death or injury to third parties like pedestrians, drivers of other vehicles, and outsiders other than passengers.
This helps in paying for repairing or replacing your car. If it’s harmed in a car accident with another vehicle or object like hoarding or a tree. If you are renting your vehicle, collision coverage is generally mandatory by the lender. But it does not include medical expenses or the damage caused to another vehicle.
However, if still you have some doubts about which coverage you should choose. So don’t worry much as here is a guide which gives you the best suggestions.
How to Claim Car Insurance?
Whenever you desire to claim your insurance, follow some steps. The insurance companies have a fixed time within which you have to avail of your claims.
One can claim insurance only for two reasons:
If an accident or injury is caused by you to a third person, then you can claim for the third-party.
Own Damage Claim
You can also claim your insurance for your damages due to any accidents.
In both cases, it is mandatory to have the details like the number plate, and model of the other vehicle involved in the accident. The claim process in case of an accident for both the cases is listed below:
- Do inform your insurer as soon as possible after the accident.
- Insurance Companies have their garages. So take your car for further examination and repair.
- To make a claim, the companies will ask for documents.
Documents needed to make a claim
- Original FIR, if applicable
- Claim form (filled)
- Estimation of repair costs
- Copy of Insurance Policy
- Copy of the owner’s driving license and RC of the vehicle
- Medical bills in case of any injuries
FAQs Regarding Everything About Car Insurance
Costs of car insurance increase every year based on company costs. Even the premiums of your insurance depend on the IDV of your car.
The Zero Depreciation Cover provides a complete settlement on your claim without any deduction affected for depreciation.
According to the guidelines provided by the IRDA, the service tax applicable to your premium payments.
No-claim bonus (NCB) is the claim you avail when you had not availed any insurance claims during the insurance period.
Editor’s Note | Everything About Car Insurance
According to the report, the entire automotive sector has already faced a dip in the period 2019-2020. Moreover, due to this pandemic the auto insurance companies also impacted. As purchases of new cars are a major part of the premiums. Therefore, during the lockdown no one bought a car which makes the situation even more worse. The lack of purchasing new vehicles is one of the biggest challenges. The only solution to this arising challenges is the premium hike in the general insurance.