Let’s start with basics: What is auto insurance? It’s is a contract between you and the insurance company that protects you against financial loss in the eventuality of an accident. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance also provides own damage and third party liability coverage.
Car insurance or third party insurance is mandatory by law. Following is a list of possible car insurance coverage:
Car Insurance Coverage
* Third party Bodily injury liability: It covers bodily injury claims of people who get injured in an accident.
* Property damage liability: It covers property damages to third parties such as another person’s car and property.
* Accidental Benefits: This payment is done to the policy owner and other passengers in the policy owner’s car.
Physical damage covers damage to your car in the following instances:
* Covers losses to your car involved in a collision.
* Covers non-collision physical damage if your car is damaged in storm or windshield breaks, etc.
Car insurance is packaged into different coverage types and is broadly divided into two:
Own Damage car insurance policy: It protects against any loss or damage caused to the vehicle and its insured accessories due to natural and man-made calamities (‘Natural Calamities’ and ‘Man Made Calamities’). Natural calamities include: fire, explosion, lightning, flood, typhoon, storm, inundation, cyclone, landslide, earthquake-related damages, etc.
Man-made calamities include: burglary, housebreaking, theft, riot/strike, accidents, malicious acts, terrorist acts and damage during travel by road, rail, waterways, or air. This also provides accident cover for the driver.
The owner can avail personal accident cover for passengers in the vehicle. Another mandatory feature is the third-party legal liability cover. It protects the owner against legal liability arising from an accident causing any permanent injury, death or damage to the property. It also covers for fire and theft provided the vehicles are parked in a garage.
Third Party car insurance policy: It protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any damage to the property.
A third party is someone who is neither the insured nor the insurer. Those inside the vehicle such as driver, owner/passengers are also third parties. The third party car insurance policy covers your legal liability for any compensation to be paid arising from accident caused by your vehicle. It includes liability for death or injury to third parties like pedestrians, outsiders other than passengers, passengers of private vehicles and pillion riders. As an owner of the vehicle you are insured against death or injury caused to passengers carried in the vehicle for hire. The liability covered is unlimited in case of death or injury. Damage to third party’s property is covered by the insurance policy.
This cover entitles you to claim the full cost of replacing car parts damaged in accidents. Standard motor insurance policies take into account the depreciated value of car parts. Zero depreciation add-on helps you receive the full claim without such deductions for depreciation.
This add-on is meant for vehicles which are vulnerable to damages caused by floods, water logging, etc. An add-on cover like the ‘engine protector’ is ideal here. It also covers damage caused to gear box due to leakage of oil.
Return to invoice
Buying a return to invoice cover will ensure that in case of total loss or theft of your car, you will get the original invoice value. IDV is the market value of your car which depreciates with time. Such add-on plans pay the difference between the approved claim amount for your car and the original purchase (on road) price of the vehicle in case of total loss.
Under this add-on cover, insurers provide certain round-the-clock services like refuelling, towing, change of flat tyre, arranging for a mechanic’s services and so on in case of car breakdown.
This add-on cover compensates you for the cost of hiring an alternative vehicle if your car is stolen or is under repairs. The amount could range from Rs 500-100 per day, depending on the car model. The number of days for which the allowance is handed out can range from 10-15 days.
Key Replacement Compensation
If you misplace your keys or they are stolen, the insurer will compensate you for the cost of replacing your lock and key if your vehicle is burgled. A registered police complaint is required in case of burglary.
You can buy this add-on if you wish to seek compensation for money spent on nuts and bolts, screen washers, engine oil, bearings and so on, in case your car meets with an accident.
The author Pushkaraj Shete is CEO & Principal Officer, claimvasooli.com