What is vehicle insurance? What are its benefits?

What is vehicle insurance? What are its benefits?

Vehicle Insurance, not only protects you from financial and physical problems in case of an accident, but also protects you from all kinds of mental problems and legal action.  In India, if you own a car or a two-wheeler or any type of motor vehicle, it is mandatory to get it insured.  In this article, we will share all such important information related to vehicle insurance.

Vehicle insurance and its types

In the form of vehicle insurance, only third party insurance is mandatory.  It helps you in case your vehicle causes damage to another vehicle, person or property.  But, if you want help in case of damage to your own vehicle or body, then you should take comprehensive insurance.  In comprehensive insurance, you get compensation for damages to others as well as your own vehicle.  Similarly, there are options for adding various other types of insurance covers as well.  Overall, there are 4 types of insurance protection options available to you-

1. Third Party Insurance: This insurance is legally mandatory, you can leave the rest if you want
2. Comprehensive Insurance
3. Personal Accidental Insurance
4. Add on insurance 

Third party insurance policy

If your vehicle collides with another vehicle or causes damage to another person or property, then it is compensated with the help of third party insurance.  In the absence of this insurance, you may have to bear all the loss yourself.

The other person gets compensation from this insurance plan in case of physical harm or death (injury/death).  Compensation for damage to another person’s property is also available under this.  However, this insurance does not cover any damage caused to your own vehicle.

In case of third party insurance, due to an accident, the legal liabilities arising on you are settled by this policy.  For this reason it is also called Liability Only policy.

Note: Personal accident cover is also compulsorily available with third party insurance.  With this, you get compensation of up to Rs 15 lakh for the damage caused to your body in the event of an accident.

Comprehensive Insurance Policy

If, along with the benefits of third party insurance mentioned in the above paragraph, you also want to get compensation for damages caused to your own vehicle, then your vehicle should be comprehensively insured.  It is also called Package Policy.  Although it is not legally mandatory.  On having Comprehensive Insurance, your vehicle gets compensation for the following types of damages-

Benefits of third party insurance: In comprehensive insurance, third party insurance is also included, so

  • If someone else’s vehicle is damaged by your vehicle, then the insurance company pays for it.
  • If your vehicle causes bodily harm to another person, then the insurance company pays for it
  • If your vehicle damages the property of another person, then the insurance company pays compensation
  • Personal accident cover is also compulsorily available along with third party insurance.  With this, you get compensation of up to Rs 15 lakh for the damage caused to your body in the event of an accident.

Benefits of having Own Damage Cover: In comprehensive insurance, Own Damage Cover is also included, so

  • Compensation for damages caused to your vehicle due to natural disasters
  • Gets compensation for damage caused to your vehicle due to arson or explosion
  • Compensation for damage caused to your vehicle by falling objects.  Such as satellites, asteroids, meteors, space debris etc.
  • Compensation for damage caused to your vehicle due to theft or vandalism
  • Compensation for damages caused to your vehicle in case of Civil Disturbances etc.

Personal accident insurance policy

By taking personal accident cover, you get compensation for bodily harm caused by an accident.  If you want to get insurance of more than 15 lakhs of compulsory accident insurance, then you can get this insurance done.

Apart from yourself, you can also take personal accident cover for your employee / driver.  You can also take it for other co-travellers/riders in your car.  Personal accident cover for other passengers is available according to the capacity of the seats present in your vehicle.

Add on insurance

Apart from the above mentioned vehicle insurances, there are many types of additional insurance covers, by taking which you get compensation for damage to your vehicle or its equipment or your belongings.  These are called Add on Covers or Riders.  The names of some of the more popular add-on covers are as follows-

  • Zero depreciation
  • no-claim bonus protection
  • Engine Protection: For compensation in case of damage to the engine of your vehicle
  • Accessories Cover : For compensation in case of theft of valuables kept in the vehicle
  • Return to invoice: To get compensation based on the receipt (ex-showroom price) of the vehicle
  • Roadside Assistance : To help you at the accident spot

What types of risks are covered in vehicle insurance

Under vehicle insurance, you get insurance protection in the following types of incidents-

  • Natural disasters: Damage caused by earthquakes, floods, storms, landslides, avalanches, lightning, etc.
  • Man-made disasters: such as collision with another vehicle, damage caused by theft, fire, riots or malicious act, etc.
  • In transit: When sending a vehicle by rail or road or air.  Or the damage caused during loading and unloading of the vehicle on the goods carrier.

Vehicle insurance benefits are not available in these situations

You will not be entitled to claim insurance in the following situations.

  • minor wear and tear
  • In case of mechanical or electrical breakdown
  • Using the vehicle for any other purpose (such as using a private car as a taxi)
  • If the driver does not have a valid license
  • When the person driving the vehicle is intoxicated
  • No proof of accident
  • claiming too late

What is cashless facility in vehicle insurance?

The way cashless treatment is arranged in health insurance, in the same way many companies provide cashless facility along with vehicle insurance.  But, for this facility, the vehicle should be repaired in the authorized garages on their behalf.  Apart from this, if you get the repair done in a garage at your convenience, then you can claim its reimbursement later as well.

You can also change the insurance company midway

Like the portability of mobile number, your vehicle insurance is also portable.  That is, you can change the company of your insurance policy whenever you want.  Even if you change the company, the benefits of no-claim bonus will be available with your policy as it is.

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