Are you planning to buy car insurance, but not sure how to go about it? Well, you can start by understanding the different types of car insurance available in the market. This would help you make a decision on the kind of benefits you want from your policy. So, let’s get started.

Types of car insurance policies

Broadly, there are two types of car insurance policy available in India -- third-party liability-only insurance and comprehensive car insurance. Let’s take a detailed look at both of them:

This type of car insurance policy covers financial liabilities towards a third party which you might face in the event of an accident. Suppose your vehicle damages another vehicle or injures or kills an individual in a road accident, then the third-party liability-only insurance would pay for all these expenses on your behalf.

Notably, per the provisions of the Motor Vehicles Act 1988, a third-party car insurance policy is mandatory for all cars plying on Indian roads.

This has been made compulsory to make sure that every car owner has a basic form of insurance that can help him/her duly compensate another person in case of an unfortunate event.

As per the regulatory norms in India, third-party property damages are covered up to a sum of Rs.7.5 lakh. However, there is no upper limit in case of bodily injuries or death.

It is important to note here that this type of car insurance policy does not cover any loss or damage to your own vehicle. When you buy this type of policy, remember it is just liability-only insurance. That’s why it is also the cheapest in terms of premium.

This type of car insurance policy covers third-party liabilities as well as loss or damage to your own vehicle in the event of an accident or theft.

Unlike third-party liability-only insurance, comprehensive car insurance is not mandatory by law in India. However, it is advisable to prefer comprehensive car insurance as it provides all-round protection to you and your vehicle.

Premiums for comprehensive car insurance policies are higher than that for third-party insurance policies as they also include the own-damage (OD) component. The OD premium amount depends on the make and value of the car, the state of vehicle registration, and the manufacturing year.

In order to enhance the coverage of your policy, you can also buy many optional add-ons with your comprehensive car insurance policy by paying a little extra premium.

Besides third-party and comprehensive insurance, there are 3 other types of vehicle insurance policies that are also available in the market, though they are not that popular. Let’s glance through these 3 types of car insurance policies:

• Collision insurance: This type of car insurance covers your vehicle only in the case of a collision. So, it would pay for the repair of your car only if it’s damaged in a collision with another vehicle or object.

• Personal Injury Protection: Personal injury protection policy covers the healthcare expenses associated with a car accident. It would cover medical expenses for all those sitting in the vehicle during the accident, irrespective of whether they have health insurance or not.

• Uninsured Motorist Protection: This type of insurance protects you if you are involved in a road accident and the at-fault driver that has caused you and your vehicle damages does not carry the third-party liability insurance policy. In such a case, instead of paying the repair and medical expenses from your own pocket, you can use the Uninsured Motorist Protection policy.

Conclusion:

Before you choose a car insurance policy, it is important that you assess your requirements carefully and also estimate the maximum amount of premium you can afford. Depending on these two factors, you can choose the type of car insurance policy that would suit your requirements the most.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.