All You Need to Know about Car Insurance before You Buy Your First Car

After buying your dream car, the very first step that you need to take is to purchase an insurance policy for the same. Such a plan protects your monetary investment in the vehicle, allowing you to repair any damage that the car sustains as a result of accidents or other incidents.

Another vital aspect of car insurance is that it relieves you from bearing financial liability to any other party involved in the event of accidents with your vehicle.

Is Car Insurance Mandatory in India?

As per the Motor Vehicles Act of 1988, all motorised vehicle plying on Indian roads must possess a valid third party car insurance. Thus, in India, driving your car without proper insurance is not only dangerous but also a criminal offence.

If you still decide to operate the car without an insurance policy, be ready to face the harsh consequences. If you are stopped and found without the necessary insurance paperwork, the police are well within their rights to charge you a penalty of Rs. 2,000 for the first offence.

If you are found flouting the same law a second time, you may need to pay a fine of up to Rs. 4,000. Additional penalties of such a crime in India include the suspension of your driving license. Moreover, vehicle registration may also be declared suspended for repeat offenders.

Thus, it is significantly better to avail a car insurance policy from any reputed provider in the market as soon as you buy the vehicle.

Types of Car Insurance Policies in India

You can pick from three types of car insurance policies in India, which include:

1. Third-party liability car insurance policy – These are car insurance policies that cover the financial liability to the third-party involved in accidents or mishaps with your vehicle. However, you will not receive any financial assistance to repair damages that your car suffers in such an incident.

2. Comprehensive car insurance policy – This is an all-round safeguard for car owners. A comprehensive policy offers not only third-party liability cover but also provides financial help to repair any damage to your own vehicle due to the accidents.

3. Own Damage Cover – This is a particular kind of car insurance that is only applicable to car owners who purchased their vehicle post-September 2018. It allows you to avail comprehensive policy benefits sans the third-party liability portion of the plan. Keep in mind that the Own Damage Insurance Policy is only available to new car owners and not second-hand vehicle owners.

What is Covered under a Comprehensive Car Insurance Policy?

Listed below are certain conditions on incidents where your car insurance policy will prove to be invaluable.

- Own damage due to accidents
- Damage from fire
- Theft
- Personal accident
- Damage due to natural or man-made disasters
- Third-party losses

Add-ons Available for Car Insurance Plans

Following are some of the car insurance riders that can supplement your existing protection -

- Zero-depreciation Cover – Nullify all depreciation charges on your car, availing even greater financial assistance.
- Return to Invoice Cover – With this add-on, you can avail the amount listed on the car’s invoice in case the vehicle is stolen or totalled.
- Engine Protection – Ensures that you can claim the policy against liquid and electrical damage to the car’s engine.
- Breakdown Assistance – Receive assistance whenever your car undergoes breakdown on the road.
- Passenger Cover – Financial aid in case a passenger inside your car suffers injury or bodily harm during accidents.
- Tyre Protection – Regardless of how your car’s tyres undergo damage, with this add-on, you can apply for financial assistance to repair the same.

Exclusions for Car Insurance Policies

Now that you know what such a policy covers, here is a list of circumstances where you cannot claim your insurance.

- Own damage in case of a third-party policy
- Accidents resulting from intoxicated driving by the policyholder
- Damage from intentional negligence
- Damage that does not result directly from accidents
- Accidents where you were driving without possessing a valid driver’s license
- Any add-ons that you did not avail

Should you Buy Car Insurance from Dealers or Company Website?

It is always advisable to avail your car insurance policy from the insurance provider and not through car dealerships. Firstly, dealerships often charge higher sums for a policy than its actual price. When dealing with insurance companies directly, such a thing becomes impossible as you know what you are paying for.

Further, dealerships have tie-ups with a few insurance companies only. They tend to promote these plans and providers, without letting you look at other available options. On the other hand, when you choose to buy such coverage on your own, you are free to research and choose insurance providers.

Regardless of the kind of insurance policy you pick, ensure that your car is covered under such plans at all times.