What is car insurance and how does car insurance work?

What is car insurance

If you have bought a car for yourself then you would know what is car insurance?  If you are thinking of buying a new car, then you must know about car insurance.  Car insurance helps you financially in case your car meets with an accident.

Let us know in detail what is car insurance?  How does it work, what is covered and what is not covered in car insurance, and what are its advantages or benefits?

What is car insurance?

Car insurance provides financial assistance to you against the damages caused to your car in an accident.  This type of insurance is also known as package motor insurance. It covers if your car is stolen and causes damage to the insured, insured car and third person or their property in an accident and the insurance company provides financial assistance.

How does car insurance work in India

Car insurance is a contract between the insurance company and the car owner.  Under which the car owner pays the premium (as per the plan of the insurance company) to the insurance company.

In which the insurance company provides you financial assistance in case of loss or damage to the insured car. Most of the insurance companies in India have partnerships with car companies.  And when a person buys a new car, he is given car insurance under some offers.

Types of car insurance

There are mainly two types of car insurance available in India.  Let us know in detail about these car insurance-

Third party car insurance

Third party car insurance covers damages caused to a third party person and his property.  For example, an accident involves injury to a third party person, his death and damage to the property of a third party person. Third party insurance is mandatory for all types of road vehicles in India under the Motor Vehicles Act.  As a car owner, you must also have third party insurance.

Comprehensive Car Insurance

Comprehensive car insurance covers death/injury to the driver, passengers of the car and damage caused by the car to a third party vehicle, property. This insurance covers the insured car as well as the third party cover.  It covers the expenses of both the insured car and third party damages.

What is covered in car insurance?

Third Party Property Damage: Pays for damage to third party vehicle and death/injury to third party person if the insured car meets with an accident with another vehicle.

Damage to your car: Damage caused to your car due to theft, accident or natural calamities is covered.

Bodily Injury: In case of an accident, injury to the driver, passengers and third party person is covered.

Car Damage: Covers damage to your car as well as third party vehicle in an accident.

Death: Payable in case of death of the driver and passenger in the car due to an accident.

What is not covered in car insurance?

  • Accidents caused by driving under the influence of alcohol or other drugs are not covered.
  • Accidents caused by driving without a driving license are not covered.
  • Car damage caused by an intentional accident is not covered.
  • Damage caused due to aging of the car is not covered.
  • Damage caused to your car due to oil leakage is not covered.
  • Losses due to non-compliance of the conditions of the insurance company are not covered.
  • If you sell your car to someone and the insurance of that car has not been transferred.  Then if there is any loss in an accident then it is not covered.

Car Insurance Benefits

Personal Accident: Financial assistance is provided to a third party in case of injury, death or damage to his/her vehicle.  Apart from third party, you also get personal accident cover, in which you are covered in case of injury, death or disability.

No Claim Bonus (NCB): When a person does not make a single claim within the insurance period after taking the insurance, then he is given a bonus.  Which is known as No Claim Bonus.  This bonus helps in reducing your premium at the time of renewing the policy.

Damage Cover: Provides financial assistance against damages caused due to theft, accident, fire, terrorist activities, riots, explosion and natural calamities.

Garage Network: Many insurance companies have a large network of garages.  which is spread everywhere.  With which you can get your car serviced anywhere.

Online Car Insurance: Nowadays it is the era of technology, taking advantage of this, many companies sell their insurance policies online.  You can also buy online by choosing the right insurance policy for you.

Optional add ons: You can take optional add ons in car insurance as per your requirement.  Like zero depreciation, road side assistant, replacement cover etc.  This add on can further enhance your security.

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