7 MinsAug 26, 2020
When you purchase a new car, the insurance is usually offered by the dealer. You buy it without much thought because it is convenient to do so. But when it is time to renew your motor insurance, do you put much thought into it?
You should, because motor insurance for your car offers you peace of mind if something happens to the vehicle. You are spared the high repair costs in case of damage to your vehicle in an accident or natural calamities such as floods or fire.
Car insurance policies are of two kinds. Let us see what they are:
Third-party Motor Insurance
- This is the basic insurance cover, which is mandatory by law. It covers liabilities towards a third party, person or property, in case of an accident.
- This is called Third-Party Insurance and it is illegal to drive your vehicle if you don’t have it.
- It is possible to buy only Third-party Insurance
- The premium rates are regulated by the Insurance Regulatory and Development Authority of India.
Comprehensive Motor Insurance
- It includes the mandatory Third-Party Cover and the Own Damage component hence has a wider scope of coverage
- The Own Damage component pays for damages caused to your vehicle, by an accident, fire or natural calamities as well as injury to you.
- The premium for Comprehensive Cover includes a premium for Third-party cover plus a premium for the own damage component. Hence it works out to be costlier than Third-party Insurance
- Insurers are free to fix the premium for the own damage component.
- It is not mandatory to buy Comprehensive Motor Insurance
The premium for your vehicle is based on its make, model, age and the Insured Declared Value (IDV), which is pre-determined by the motor authorities. Since your vehicle depreciates every year, you will find that the premium rates also decline correspondingly. Besides, your premium will also be lower if you have not made any claims during the year, as you would be eligible for the No Claim Bonus.
While skipping the Comprehensive Cover because it is not mandatory would help you reduce the cost, it is not advisable to do so. Even minor repairs to your vehicle may set you back by a tidy sum. And since these tend to be unexpected expenses, you could be caught unprepared when they occur. Hence, before you think of economizing and not buying a Comprehensive Motor Insurance, consider the benefits it offers:
Damage to the vehicle in an accident
India is among the countries that see high instances of road accidents. If your car is involved in an accident, the Third Party cover may protect you from liabilities towards the other person/vehicle involved the crash. But it does not protect you from damage to your car.
With Comprehensive Insurance, damages to your car are covered. The insurance company will compensate you for the damages or you can just take your car to one of its network garages, where the car will be repaired.
Injury or death of the owner-cum-driver
India again is among the top countries concerning the number of fatalities caused by road accidents. A Comprehensive Motor cover is a personal accident cover for the owner-driver, up to Rs. 15 lakh. This is useful in case you need to undergo hospitalisation, but don’t have a separate personal accident or health insurance cover.
Legal fees and costs
Third-party liability coverage may pay for damages done to the other party's car and/or person. But it does not cover the fees and costs that you have to endure in case of a legal dispute. A Comprehensive Motor Cover does that.
With climate change, a reality, natural calamities like floods are no longer a rare occurrence. Cars getting damaged due to waterlogging or tree-falling during monsoon is common. Comprehensive insurance ensures that damages to your vehicle from natural calamities like floods and earthquakes are compensated.
[Also Read: Why You Should Get Car Insurance]
Any damage to your vehicle on account of vandalism, such as a violent strike or protest, is also covered under Comprehensive Motor Insurance. This damage could be in the form of broken windows, damaged tyres, or even more serious damage to the chassis of the vehicle.
Your car getting stolen is a real threat, especially if you are forced to park your car on the road due to space constraints in your housing society. But Comprehensive Motor insurance covers theft of a vehicle.
What is not covered?
A Comprehensive Motor Insurance will not cover regular wear and tear of the vehicle, mechanical or electrical breakdown, damage caused by a driver with no valid driving license or under the influence of intoxicants and depreciation of the vehicle.
Buy add-on covers at additional cost
Most comprehensive car insurance policies come with several add-on options that cover other expenses at an additional cost. Some of these are:
- Zero Depreciation (where the insured value of the vehicle doesn’t depreciate for a few pre-defined years)
- Road-side assistance which will pay for towing services or for the mechanic to reach you and other repairs, in case you are stranded on the road
- Engine protection which pays for damages or wear and tear of your vehicle’s engine.
Some insurers offer some add-on covers, such as Road-side Assistance, as part of the comprehensive cover, by charging a nominally higher premium. Check the add-ons available with your car insurance policy, their costs and then make a choice based on your needs.
Buying motor insurance online is not only convenient and easy, but you can also save on the agent’s commission. This will in no way hamper your claim process since most insurance companies today offer online claim processing. There are tools by way of which you can upload pictures of your damaged vehicle using the insurer’s app and submit your claims online.
Axis Bank has partnered with leading insurers like Bharti Axa and TATA AIG to offer comprehensive motor insurance, instantly online in a completely paperless process. Just click here. You can also customise the policy to suit your needs and budget by selecting suitable add-ons.
Disclaimer: Source, a Mumbai-based content creation and curation firm, has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.