• Thu. Apr 25th, 2024

Why Is Car Insurance Necessary In India?

ByLori Magana

Mar 16, 2023

A new automobile is considered a prized possession. With the available EMI options, buying a car in today’s world is easy. However, it is about the costs associated with purchasing a new vehicle. According to the Motor Vehicles Act of 1988, every car owner in India must purchase a third-party liability policy.

However, one should not buy a car insurance policy simply because it is required; the ideal motivation should be to protect yourself from financial liabilities resulting from accidents.

What exactly is car insurance?

It is a contract you sign with an insurance company in which they ‘insure’ your vehicle against any damage or risk in exchange for a premium. You cannot predict circumstances such as vehicle theft, total vehicle damage, and so on, which can result in unnecessary financial liabilities. In such cases, your car insurance policy will protect you.

Every year, you must pay a certain amount to the insurance company, known as the premium. This amount is determined by various factors, including the make and model of the vehicle, the city in which you live, the age of your car, the type of coverage you’ve chosen, add-ons you’ve chosen, and so on.

It is beneficial to have your car insured because it relieves stress and allows you to drive without worry. Other factors, however, emphasise the significance of having a proper car insurance plan.

  1. Required by law:

Purchasing a car insurance policy or current car insurance policy renewal benefits you in various ways, but it is also true that it is mandated. According to the Motor Vehicles Act of 1988, every car on Indian roads must be covered by basic third-party liability car insurance.

This coverage protects you from any liabilities arising from an accident that causes bodily harm or property damage to a third party. This cover, however, will not protect your vehicle. If you want extensive coverage, you should go with a comprehensive policy.

  1. Car insurance for third parties:

The insurance company documents into a contract with you and offers you the insurance policy, making you the policyholder or first-party, while the insurer becomes the second party. The third party is any other person involved in an accident with the insured vehicle.

Any legal liabilities caused in an accident due to your vehicle will be compensated regardless of your policy type, whether third-party car insurance or comprehensive car insurance.

It is wiser to practise car insurance check online to understand the specifications, inclusions and exclusions in detail, prior to finalising the insurer.

  1. Damage coverage for the insured:

In the event of an accident or other type of collision, your vehicle may be damaged and require repair. The insurance company will reimburse you for repairing such damage if you have comprehensive coverage. If your car is damaged due to a natural or man-made disaster, you can file a claim to be compensated for the repair costs.

  1. Added protection:

You can select from several add-on covers provided by the insurance company. These additional coverages supplement your existing insurance plan. If you enjoy driving long distances, consider purchasing a 24-hour roadside assistance plan to assist you if your car breaks down anywhere. There are other covers to choose from, such as key and lock replacement, engine protectors, etc.

  1. Theft of a vehicle:

If your car is stolen, your car insurance company will compensate you. However, before filing a claim, you must first file an FIR. If the police cannot locate your vehicle through any means, you will be compensated for the loss of your car. To be clear, the amount reimbursed will be your car’s insured declared value (IDV), not the price of a brand-new vehicle.

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* Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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