Car insurance is a contract between the car owner and the insurance company wherein the latter promises the car owner to protect the owner from any damages or risks to the insured car which might lead to financial losses.
What are the different types of Insurance Policies available in India?
There are 3 types of car insurance policies based on the scope of coverage:
1. Third-Party Car Insurance
Also known as Liability Only or Third Party Car Insurance Policy, Third-Party car insurance is the most basic car insurance plan. Third-party Car Insurance is compulsory for driving a car in India. As a part of this kind of insurance policy, the insurance provider is liable to pay for the permanent and temporary disability, any bodily injuries, or the death of the third party due to an accident involving the insured’s car. In addition, third-party car insurance protects from financial loss towards a third party’s property.
2. Standalone Own-Damage (OD) Car Insurance
A standalone Own-Damage car insurance policy was introduced in September 2019 by India’s Insurance Regulatory and Development Authority (IRDAI). It aims to provide flexibility to the insured in terms of the insurance company they want to select. As a part of this form of insurance policy, the policyholders are covered only for their own damages sustained by their own four-wheeler vehicle due to road accident, fire, explosion, natural/man-made calamity, theft, or any other mishap.
3. Comprehensive Car Insurance
A Comprehensive Car Insurance policy covers financial liabilities sustained towards a third party as well as own damages incurred towards the insured’s car. It is the most extensive car insurance policy applicable to road accidents, natural calamities, fire, theft, man-made disasters, self-ignition, lightning, explosion, etc. Furthermore, comprehensive car insurance cover can be extended by adding add-ons such as accessories cover, zero depreciation cover, engine protector, medical expenses, etc. It is the most popular form of coverage as it provides end-to-end coverage and keeps the policyholder stress-free.
Key Features of Car Insurance Policies
|Third-party cover||Coverage for only third-party injuries and property damages|
|Personal Accident Cover||Available up to Rs 15 lakh|
|Own Damage Cover||Covers the loss and damage sustained by the insured four-wheeler|
|Add-on covers||Over 10 add-ons are available based on the policy such as roadside assistance, zero depreciation cover, return to invoice cover, etc.|
|Cashless Claim||Available at the network garages of the insurer|
|No Claim Bonus||Up to 50%|
|Claim Assistance||Available 24/7|
How to select Car Insurance Policy Online?
Below are the steps to follow to opt for the ideal car insurance policy online:
- Choose the plan type: Evaluate your car insurance requirements and then determine the required policy type, whether it is a third-party cover, comprehensive cover, or own-damage car insurance.
- Compare policies: Compare various car insurance policies online and then choose the best car insurance plan based on your requirements and budget.
- Check for the car’s IDV and premium payable: The current value of your vehicle in the market and the maximum amount that the insurance company will pay you in case of any damage beyond repair or total loss refers to the IDV. A higher IDV can provide extended coverage, but it increases the premium as well. So, before buying car insurance, you should check for the IDV amount and opt for the one which fits your budget and requirements.
- Add-on Covers: Add-on covers are available at additional premium and help in expanding the policy coverage. This is available only with the comprehensive insurance plan, and you should inquire about the add-ons before buying a policy and select the one that best suits your needs.
- Inquire about the Claim Process: Opt for an insurance provider which has a simple and smooth claim process. You can check the claim settlement ratio (CSR) to be sure about the claim process of insurers. Claim Settlement Ratio (CSR) refers to the percentage of claims settled by the insurer in a year. It is better to buy a car insurance plan from an insurance company with high CSR.
10 Best Car Insurance Companies in India
Below is the list of the top 10 car insurance companies according to the claim settlement ratio (CSR) in 2019-20.
|Companies||Claim Settlement Ratio|
|Bajaj Allianz General Insurance||88.83%|
|Bharti Axa General Insurance||87.99%|
|Hdfc Ergo General Insurance||91.23%|
|Icici Lombard General Insurance||87.71%|
|Iffco Tokio General Insurance||95.30%|
|Kotak General Insurance||82.81%|
|National General Insurance||85.71%|
|New India General Insurance||89.60%|
|Reliance General Insurance||84.26%|
|Sbi General Insurance||89.51%|
5 Top Benefits of Purchasing a Car Insurance Policy
The key benefits of buying a car insurance policy include:
- Protection against Third-Party Liabilities: A car insurance policy helps cover third-party liabilities such as temporary/permanent disability, bodily injuries, property damage, or death. The compensation in case of third-party property damage is restricted to Rs. 7.5 lakh and there is no compensation cap towards third-party bodily injuries, disability, or death.
- Staying Legally Compliant: As per Indian Motor Tariff, every car owner must have a third-party car insurance policy. The absence of the insurance policy is a punishable offense with a fine of Rs 2,000 and/ or imprisonment of up to 3 months. Hence, having third-party insurance helps you to stay legally compliant.
- Coverage against Own-Damages: A car insurance policy keeps you financially safe against the expenses towards the own-damage of your car. Damages sustained due to natural calamities, road accidents, fire, explosion, man-made disasters, vandalism, etc., are covered under comprehensive car insurance as well as a standalone own-damage insurance policy.
- Theft Coverage: Car insurance also covers theft of your car. If your car gets stolen, your insurer will provide you with the Insured Declared Value (IDV) of your car as per the market price of your car.
- Personal Accident Cover: Car Insurance policy offers accident cover up to Rs 15 lakhs which covers bodily injuries, death, as well as policyholder’s disability in a car accident.
A car insurance policy comes with a host of benefits and features and helps keep you away from financial liabilities related to your car’s damage. Hence, if you are a car owner, then having car insurance is a must. You can visit iiflinsurance.com to gain more information about different types of car insurance policies and the ideal one for yourself.