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What is state minimum car insurance? Is it valid in India?

Prem recently saw at a local news channel that there is a state minimum car insurance. He has never heard of this before and he immediately wondered if that is applicable for him and for people in India.

We understand that there has been a lot of confusion recently in regards to a car insurance policy in India. A lot of people have been wondering if they have got the right four-wheeler car insurance plans with them or not.

We don’t want Prem or you to go through that trouble anymore. This is why today we are going to discuss the meaning of state minimum car insurance and if that is applicable in India.

What is State Minimum Car Insurance?

According to the state minimum car insurance rule, a minimum car insurance requirement exists for different states. This means that the car insurance coverage and limits that work for one person in a state might not work for some other person in another state.

To understand the requirement of a car insurance policy in a state let’s go over the major points below.

  • Liability Insurance

Most states require a minimum amount of liability insurance. This cover helps pay for any damages that are caused to another driver, passengers, or property. There are three main components of car insurance liability coverage. These components are:

  • Bodily injury coverage per person
  • Bodily injury coverage per accident
  • Property damage coverage per accident

These insurance limits are usually expressed in numbers and these numbers also keep changing with time. This is why it is suggested that if a state minimum car insurance regulation is valid in your state, then you should keep going through it to make sure that you are abiding by those rules and regulations.

It is also beneficial to consider an umbrella policy that comes with several benefits at the same time. This type of coverage is a good option for individuals who own expensive vehicles or have a high net worth.

Other benefits that are often included in a state minimum car insurance policy are:

  • Motorist Coverage

Apart from car driver-owners, there are a lot of people who prefer to travel through motorcycles. It is important for those individuals to also get a comprehensive insurance policy. This will ensure that one gets protection from any damages to oneself and to a third party.

  • Personal Injury Protection

A lot of states require individuals to get car insurance policies with a personal injury protection cover. This cover provides protection against medical expenses for the insured and passengers in case of an accident. This benefit is provided regardless of fault. A benefit for lost wages is also provided.

  • Medical Payments Cover

This benefit is somewhat similar to personal injury protection. However, there are some differences between both the benefits. In this benefit, the cover is provided towards medical expenses if one is injured in an accident. However, no additional benefits are provided like lost wages.

Exceptions to State Minimum Car Insurance Requirements

When it comes to good car insurance policies, there are several benefits and covers that one can get. If one purchased all of those benefits, then the premium cost can come out to be quite hefty. Because of this reason, there are also some exceptions made to the state minimum car insurance requirements.

Do you want to know about these exceptions? If yes, then go through the list that is mentioned below.

  • Proof of Financial Responsibility

There are some states in which individuals need to carry or provide a bond, certificate of deposit, or cash to the department of motor vehicles in case of minimum car insurance. The payment for this bond can vary greatly from one state to another.

  • Collision and Comprehensive Coverage

There are hardly any states that have collision and comprehensive coverage as their minimum requirement. This is why it is completely dependent on the individual whether he or she wants to opt for a collision and comprehensive coverage or not.

Ideally, it is suggested that one should get collision and comprehensive coverage as it provides better quality protection to the individual. It will provide financial cover to the owner-driver, passengers, and the third party.

  • Rental Reimbursement

This cover pays for the rental car if the car owned by the individual is in the shop after a covered claim.

  • Roadside Assistance

In case of technical or mechanical issues, this cover comes in handy as it provides the required protection to the insured or the policyholder. Costs for towing, mechanical assistance, and full-glass coverage are also provided.

Why is Motor Vehicle Insurance Mandatory in India?

Motor vehicle insurance is mandatory in India for a large number of reasons. However, it all boils down to the fact that purchasing insurance allows one to get financial coverage for oneself and for the third party in case of an accident or mishappenings. According to the Motor Vehicles Act, one must have an insurance policy if he or she owns a vehicle in India.

Understanding the Motor Vehicles Act in India

In India, the Motor Vehicles Act clearly states that it is mandatory for all vehicles that operate in any public space to have a motor vehicle insurance cover. Policyholders must have at least a third-party liability motor insurance cover even if he or she is opting for a basic insurance plan.

A third-party cover is vital in the event of an accident that is caused by the vehicle owner or by some other person who is driving another vehicle. One should remember that the vehicle insurance coverage may or may not cover damages caused by the owner.

Further, the Indian Parliament amended the Motor Vehicles Act of 1988 by reviewing all aspects concerning transport vehicles. These changes were implemented on 1st July 1989. The act lists out several provisions that are related to:

  • Licenses of conductors
  • Licenses of drivers
  • Registration of vehicles
  • Controlling vehicles using permits
  • Traffic rules
  • Liability
  • Offenses
  • Insurance covers
  • Penalties

Because of these reasons, vehicle owners must carry their motor vehicle insurance documents with them at all times.

Carrying the Documents

Prem now understands the minimum of the state minimum car insurance and how it applies to India too. He also learned today that he needs to carry all of his important documents with him at all times. He has been forgetting to do that these days but now he has remedied that and made a special folder for all his documents. We think that this is a great idea.

But what about you? Do you follow the minimum state requirements in India? Do you always remember to carry your documents with you?

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