Different Types of Car Insurance Policies in India

Taking insurance is necessary from a personal viewpoint and mandatory by law. So the second most obvious question that arises is what the different types of car insurance available are? Let’s just say there are enough options available to cater to all.

From mandatory third-party insurance to comprehensive and own-damage covers, each policy is designed to meet different protection needs and budgets. Whether you're buying insurance for a new car or renewing an existing policy, knowing what each policy covers will help you choose the right policy. Read on to discover the details of these policies in detail.

What are the Different Types of Car Insurance Coverages Available in India?

Here is a detailed overview of the different types of car insurance coverage in India:

Third Party Car Insurance

Third party car insurance is mandatory in India. It offers coverage for damage caused to third parties, their vehicles, and property due to an accident. Also, involves the medical expenses of third parties and legal liabilities.

Are you capable of paying the third-party damage and legal costs from your own pocket during accident? Choose third-party car insurance as it allows you to avoid out-of-pocket expenses due to accident. As it covers the third-party losses, the damage caused to own vehicle is not included.

Coverage Includes:

1. Legal liabilities from accidents

2. Third-party damage to property

3. Injury or death of a third party

Approximate Range of Premium: Starts at ₹2,094

Own Damage Car Insurance

Own damage insurance safeguards your vehicle against damage caused by fire, theft, accidents, flood, storms, vandalism, and other man-made or natural disasters. This policy is available only if there is an existing third-party policy.

Own damage is beneficial to reduce the costs of repairing after an unexpected incident. The total Gross Direct Premium Income for own damage car insurance is recorded at ₹27,173 crores.

Coverage Includes:

1. Damage due to fire and explosion

2. Damage to the vehicle due to accidents

3. Natural calamities such as floods and cyclones

4. Manmade damages such as riots and vandalism

Approximate Premium Range: ₹4,000 to ₹25,000 annually, depending on the age, model, and IDV of the car.

Comprehensive Car Insurance

Comprehensive car insurance is a perfect combination of own damage cover and third-party under a single policy. This is one of the most useful types of car insurance as it covers both the losses of your own vehicle and legal liabilities.

Alongside accidents, it also safeguards your vehicle against cyclones, fire, flood, earthquakes, and other risks. The premium might be higher, but the wider coverage makes it accessible for all car owners.

Coverage Includes:

1. Own vehicle damage

2. Third-party liability

3. Personal accident cover

4. Coverage for fire and natural disaster

5. Theft protection

Approximate Premium Range: ₹8,000 to ₹35,000 annually, considering the current value of the vehicle and add-ons included.

Standalone Own Damage Insurance

A standalone own damage cover is specifically for vehicle owners with a separate third-party insurance policy. Choosing this cover only offers damage to your own vehicle and also allows for flexibility to choose coverage among different insurers.

This policy is ideal for people choosing customised protection at affordable premiums.

Coverage Includes:

1. Theft and damage caused by fire

2. Damage caused to own vehicle

3. Natural and man-made disasters

Approximate Premium Range: Up to ₹20,000 annually, considering the details of the vehicle you own

Pay-As-You-Drive (PAYD) Insurance

Pay-As-You-Drive (PAYD) Insurance is a modern kind of car insurance where the premium amount is determined depending on how much you drive. This plan is suitable for individuals who use vehicles frequently.

Insurance companies determine the premium amount through a telematics device or odometer readings. Driving fewer distances typically results in reduced premiums.

Coverage Includes:

1. Flexible premium amount depending on usage

2. Own damage cover (depending on the plan you choose)

3. Third-party coverage

Approximate Premium Range: ₹2,500 to ₹15,000 based on the vehicle type and kilometres driven.

Personal Accident Policy

This type of car insurance policy is also a mandatory coverage which aims to protect car owners or drivers against accidental death or permanent disability. As per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, you must have a coverage amount of ₹15 lakhs in this policy.

Although you can get this coverage with a comprehensive plan, you can also purchase it as a standalone plan.

Coverage Includes:

1. Compensates 100% of the sum insured during accidental death of the beneficiary.

2. Compensates up to 125% of the sum insured upon the permanent disability of the beneficiary.

3. Pays compensation for partial or temporary disability as per the purchasing terms.

4. During the proposer's accidental death or permanent total disability, their children will receive a one-time payment of ₹5,000.

Approximate Premiums Range: Starts from ₹0.45 per ₹1,000 of the sum insured, varying by coverage option and occupation risk class.

Electric Car Insurance

Designed for electric vehicles, this car insurance policy type has distinct features compared to policies for fuel-powered cars. For instance, only in this policy will you get coverage for EV-specific components such as batteries, charging equipment, and electric motors. Therefore, if you own an EV, get this car insurance policy to manage the high repair and replacement costs of your EV.

Coverage Includes:

1. Third-party liability cover for bodily injury and property damage.

2. Own damage policy to protect it against accidental damages, fire, theft, and natural calamities.

3. Covers theft costs if the EV is damaged while being transported.

4. Compensates for the accidental death or disability of the car owner or driver.

Approximate Premiums Range: Starts from ₹1,780 but can vary based on coverage option and car model.

Also Read: Bundled Insurance for New Cars: Coverage & Benefits

Key Differences between Car Insurance Types in India

The table below highlights the key differences between types of car insurance:

Should you Upgrade to a Comprehensive Insurance Plan?

Upgrading to a Comprehensive Insurance Plan is highly recommended for more extensive protection. While basic Third-Party Motor Insurance only covers damage you cause to others, a Comprehensive Plan extends coverage to include damage to your vehicle.

This could be from collisions, theft, or natural disasters such as floods and earthquakes. It's particularly advisable if you own a newer or more expensive vehicle, where potential repairs or replacement costs could be very high.

Car insurance coverage not only secures your financial responsibility towards third parties but also protects your investment in your vehicle. The added peace of mind knowing that you are covered for almost everything justifies the slightly higher premium.

Moreover, with comprehensive coverage, in the event of a total loss, you receive the full insured declared value (IDV) of your vehicle, not just compensation for damages caused to others. This broader car insurance coverage ensures that significant repairs or the need to replace your car won't financially burden you.

Considering the comprehensive range of protections it offers, upgrading your insurance plan can be a wise decision to safeguard against the unpredictable nature of driving and vehicle ownership.

Are there Exclusions with the Comprehensive Cover?

Comprehensive car insurance provides extensive coverage, but there are certain scenarios where claims might not be covered. Understanding these exclusions is very important to fully know the scope of your policy and the situations under which claims may be denied:

Wear and Tear

Damage resulting from normal wear and tear or ageing, which leads to consequential loss, is not covered. This includes any deterioration that occurs through regular usage over time without any specific incident.

Alcohol Influence

No claim will be entertained if an accident occurs and it is found that the driver was under the influence of alcohol or any other intoxicating substances. Driving under the influence not only voids the claim but is also a breach of road safety laws.

Illegal Driving

Driving without a valid driver's license can nullify your insurance coverage. It's important to make sure that all drivers of the insured vehicle possess valid licenses to avoid invalidation of the policy.

War-Like Situations

Damages or losses due to war-like situations, including nuclear attacks, mutiny, or military uprisings, are generally excluded. These circumstances are considered beyond normal environmental or operational risks.

Also Read: Does Car Insurance Cover Windshield Damage?

Add-on Riders Under the Comprehensive Car Insurance Policy

Enhancing your comprehensive car insurance with the right add-on riders can significantly improve your coverage and tailor it to your specific needs. These riders, while increasing your premium slightly, offer valuable protections that can save high costs in the event of a claim, enhancing the utility of your policy. Some of the most useful add-ons include:

Depreciation Shield Cover: Often referred to as Zero Depreciation Cover, this add-on makes sure that you receive the full cost of replaced parts without any deductions for depreciation, especially useful for newer vehicles where replacement costs can be high.

Engine Protector: Important for protection against damage to your engine from monsoon-related flooding or leakage, the Engine Protector add-on covers the costs of repairs not generally covered under standard policies.

Roadside Assistance: This rider is invaluable in the event of breakdowns, providing services like towing, minor repairs on-site, and even accommodation benefits if the breakdown occurs far from home.

Consumables Expenses: Cover the cost of consumables such as engine oil, lubricants, nuts and bolts, which are not usually covered under a standard policy.

Conveyance Benefit: Compensates for the inconvenience caused when your car is under repair, providing a daily allowance for alternative transportation costs.

Return to Invoice Cover: This cover reimburses your car's purchase price in case of total loss, even if the actual market value is lower.

No Claim Bonus Protection: Protects your No Claim Bonus (NCB) even if you make a claim.

Still searching for reliable and trustworthy car insurance coverage? Opt for the Private Car Package Policy offered by Bajaj General Insurance, designed specifically to safeguard you and your vehicle against unexpected risks.

Also Read: Coverage For Vandalism Under Car Insurance

How to Choose the Right Type of Car Insurance Plan?

To get an adequate type of car insurance policy, you must keep the following factors in mind.

Assess Your Coverage Needs

To choose the best policy, evaluate your vehicle’s age, usage, location, and value. For instance, if you own a high-end car model, like the Rolls-Royce, comprehensive coverage will be more convenient as these cars have extremely high repair costs.

Check the IDV

Review the Insured Declared Value (IDV) of your car insurance policy carefully. Since the IDV of a car showcases its current market value, the IDV that your insurer shows must be equivalent to the actual market value of the car.

Evaluate Available Add-Ons

If you choose add-on covers such as Zero Depreciation cover and Consumables Cover, you can enhance your policy’s protection in return for an additional premium. However, choose these coverage wisely to avoid unnecessarily high premiums.

Review Claim Settlement Support

During emergencies, sudden claim rejection or delay in claim settlement can create huge distress for policyholders. This is why you should always review the claim settlement ratio and customer support of your insurer to get hassle-free emergency assistance.

Compare Premiums Wisely

While purchasing a car insurance policy, do not select a policy based solely on the cheap premium, as it often leads to coverage gaps. In fact, you can use online tools to compare car insurance quotes and benefits to ensure comprehensive security at the best value.

Understand Policy Exclusions

Understanding exclusions will help you avoid surprises during claims. Therefore, while purchasing any type of car insurance policy, read your policy documents to understand the policy limits, deductibles, and renewal features to ensure continuous protection on the road.

Check No Claim Bonus Benefits

You should always choose policies that reward safe driving with No Claim Bonus benefits. With this benefit, you can save up to 50% on your own-damage premiums, which will help you get long-term savings without any coverage gaps.

Verify No of Network Garages

While selecting a comprehensive policy, ensure your car insurance providers are associated with a wide number of network garages to help you get cashless services. Since at these garages, your insurer will directly settle the claim costs with the service providers, your out-of-pocket expenses will significantly reduce.

Conclusion

Understanding the different types of car insurance can be complex, but comprehending your needs and choosing the right coverage from Bajaj General Insurance Limited is crucial to protecting your valuable investment.

Comprehensive coverage, enhanced with suitable add-ons, provides broad protection against a wide range of risks so that both you and your car are adequately covered. Consider your specific needs, the value of your vehicle, and the conditions you typically encounter to decide which coverage and add-ons are right for you.

Also Read: How Car Insurance Works in India

Frequently Asked Questions

Can I Switch My Car Insurance Policy Mid-Year After Buying a Third-Party Policy?

No, you cannot switch to another type of car insurance policy in the middle of the year. You can do that at the time of renewal of the policy.

Is it possible to choose add-ons in a comprehensive policy? Does it have any effect on the premium?

Yes, you can opt for add-ons of your choice in a comprehensive policy. The premium amount is decided based on the add-ons opted for.

Is it possible to add the add-ons during the policy tenure if the policy year has already started?

No, you will have to wait till your policy renewal to add the add-ons to your policy coverage.

*Standard T&C apply

**Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

***Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to change. Please consult an expert before making any related decisions.