Car Insurance Basics You Need to Know

 Car owners are sure to have their car insured. But do they really understand insurance? You must have had certain intentions in mind when taking out insurance, but are you sure your car is protected from these risks? So here are the basics you should know about car insurance and help you make an intelligent decision.

Is car insurance compulsory?

Under Indian law, every vehicle operating on the road in India must have a valid insurance policy that covers at least the damage caused by the vehicle to other people or vehicles.

The insurer is liable for damages covered under the terms of the insurance contract (and as long as there is no fraud) instead of having to pay out of pocket. In most cases, the insurance covers the costs of accidental damage, theft, fires and natural disasters such as floods, earthquakes or hurricanes.

Forget the compulsion; even without it, a new car is worth insuring. The neighbor is not always hurt; your car can also be involved in an accident. You really need to spend some money on car insurance. Car insurance must be renewed annually.

Types of car insurance

There are basically two types of car insurance: third party and comprehensive insurance. Let's look at them in detail.

Third party insurance

This insurance covers damage to the car caused to third parties. It is the minimum amount you must have under Indian law so that if another person or vehicle is damaged as a result of driving, you will have to pay compensation to a third party. For example, if you have an accident while driving, the insurer will indemnify you for the damage caused to another vehicle and the people in that car. However, this insurance does not apply to you or your car.

Here, the premium is calculated based on the engine volume of the car. Because this insurance only covers third party damages, the premium is relatively lower compared to full insurance coverage.

Comprehensive insurance

The name explains it; it is comprehensive. This car insurance covers damage to you and third parties. In the event of an accident, the medical expenses of you, the occupants of the car and the other party will be reimbursed. The insurer will also take care of the costs for both your car and the other vehicle.

According to this insurance, the insurer will also pay for damage to your vehicle in the event of a natural accident, theft, burglary, terrorist activity or repair during transport. There are insurance companies that even cover car accessories such as a music system and air conditioning.

Here, the insurance premium is calculated based on the insured value of your vehicle. Paid car insurance is generally higher because the coverage is extensive compared to third party insurance.

What coverage do I need?

There are two things to keep in mind when choosing car insurance:

1) What is my ability to pay the premium?

Third party insurance is the legal minimum protection you must have in India. If you want to choose something higher, think about what risks you can afford to hedge. You may already have a car loan, any other loan to repay, or to meet other financial obligations. Calculate and find out if you would be able to pay the outstanding insurance premium for your car insurance.

2) Extent of subsidiary protection

Additional security is available as long as you are willing to pay more in the situation you want to cover. For complete protection, you may want an all-inclusive policy for your car. The amount of the fee varies depending on the protection you choose. The types of coverage are usually as follows:

Protection from personal injury: You and the passengers in your car will be protected in the event of an accident. There is one more feature if you want protection for the driver of the car.

Uninsured / Underinsured Coverage: If you collide with another vehicle that is not insured, the insurer will pay for the damage to you and your car.

Collision: If a collision occurs with another car or object, the insurance covers repairs to the car. All repair costs for your vehicle, except for the optional amount you want to pay yourself, will be reimbursed.

Car accessories: This extra cover covers damage to the car's accessories, such as the music system and air conditioning.

As your car ages, its value also decreases, as does the car insurance premium if you have chosen comprehensive insurance. However, in the case of third party car insurance, the amount of the premium remains constant because the amount decided is based on the size of the engine, which is always the same.