Importance and Types of Car Insurance

India is a developing country. Per capita income and GDP is increasing day by day. Social status is also increasing. Having a Car is still a dream of many people and once they settle, they all will fulfill their dream first to buy a car. A few years back, those who have four wheeler in their houses, their social reputation were high and now four wheeler is a necessity. Now day’s we can see car in almost every house. We can see in some areas / roads where cars are more than two wheelers. Suddenly finance sector, auto sector and insurance sector progressed very fast in India.

When populations are increasing, vehicle on roads also increasing then risk also increases. For reducing this risk, we need some protection so that we can have peace of mind. Insurance is the best way to protect from any financial losses, property damages and even loss of life.

What is Car Insurance?

Car Insurance is a legal agreement between an individual and the insurance company which cover your car against the financial losses or theft of car. Losses could be anything like damages, theft, stolen, and the third party liability as well. Accidents and other unfortunate events cannot be predicted so it is necessary to take insurance policy.

Car Insurance is the best way to protect our self as well as third party’s damages. Vehicle insurance is compulsory for all that run on Indian roads. That’s why the need for insurance has also grown tremendously in recent years.

Types of Car Insurance

Car Insurance is a type of General Insurance. There are three types of car insurance policies available in the market and this is up to car owner to choose.

1. Third-party Car Insurance
   Third-party car insurance means a policy that covers the insurer against all losses of third party which was caused by you. It includes legal liabilities also. In simple words, if you are at fault in an accident and third party or his property is damaged then you will be covered by your third-party car insurance policy. It covers medical bills for the other person from resulting injuries.
   Third-party insurance is compulsory in India under the Motor Vehicles Act, 1988.
2. Comprehensive Cover
   As the word suggests, the policy offers comprehensive protection. This type of car insurance covers all types of damages (complete protection) under all unfortunate situations. It covers accidental damages, medical expenses to self and others and also, damages due to weather, natural calamities, car theft, and vandalism, which are not covered in Third Party Insurance.
   
   It is not compulsory by law to have comprehensive coverage, it is customer’s choice.
3. Collision Cover
   This type of insurance is best for expensive cars because if you meet with severe accident and your car is total damaged, this cover helps to bear the repair expenses. And if the repair expenses are exceeding the total value of the car, the collision cover pays the value of the car.
   It is also not compulsory by law to have Collision coverage, it is customer’s choice.

Factors to consider before buying a car insurance policy

It is very surprising that at the time of buying car insurance policy or any vehicle insurance policy, we neither research nor read about this. We are buying that policy which is advised by either our friend or neighbor. As a result, we pay huge amount as a premium for minimum coverage.

Now days there are multiple options available in India. We can search and opt best insurance policy which suits us. Buying the suitable car insurance policy is a big challenge. That’s why it is very important to understand our requirement and what benefits insurance companies provide us.

Here are some factors to consider before buying a car insurance policy:

Company reputation: This is the first and important factor for opt the car insurance policy. We have to see first the market image of that company. If a company has bad track records so obviously we will not select that company even if that company provides lot of coverages. We should see the company repo, record of claim settlement, timings of claim settlement and customers review. These are some factor where we can choose the company.

Customer Service: If a company’s after sale service is not good than that company cannot retain their old customers. So this factor is also very important for us. Spend some time on your preferred insurance provider’s website and social media handles to get a sense of that company. User reviews of the insurance provider will also be helpful.

The most important aspect of insurance is the claiming process. Make sure that the company’s claiming process is hassle free. Customer service is also a key factor.

Add-Ons: This facility is optional not compulsory. First you analysis your risk then choose the appropriate Add-on covers. For example, if you live in terrorist area or where natural calamities happened regularly then you might want to avail the Add-on Cover for more protection of your car. If you want help while you are stuck in the middle of the road, go for Roadside Assistance.

With a Zero Depreciation Add-on, your insurance provider will not deduct the vehicle’s depreciation while settling the claim. No Claim Bonus (NCB) protect Add-on will keep your NCB intact even if you make two claims in a year. It is important to select a suitable Add-on and know about its coverage in detail before purchasing.

Deductibles: This is optional. By going for this option, the cost of repairs during accidents will be shared between you and the insurance provider, thus meaning that you will have to pay a lower premium amount. A higher deductible means the insurer will pay the remainder amount of damages in case of an accident. A higher deductible also leads to a lower premium.

Network garages: Some of the insurance providers have cashless services. They offer such services only if your vehicle repaired in a network garage. Therefore, look for companies with maximum network garages available in their list. It would be best to look for a workshop close to your residence which is in the insurance company's network list.

Policy document: Once you decide insurance provider then please read policy document thoroughly. If you are satisfied with their offer then only sign the paper. There might be many clauses mentioned in the policy which can't be overlooked. In case there is any doubt, ask them now because it is better than an unexpected problem later.

Many insurance companies provide car insurance policies through online as well as offline. Meanwhile, before buying or renewing a car insurance policy, you must keep all these factors in your mind and compare them with your own requirements. As a thumb rule, compare quotes and features from multiple insurance providers before buy an insurance.