What is Car Insurance & How It Works?

Owning a vehicle comes with responsibility and protection. Car insurance is a legal and financial safety net that shields you against accidents, theft, or third-party damages. With increasing road risks and repair costs, having a valid policy is more than a formality; it's a necessity for every car owner in India.

What is Car Insurance?

Car insurance is a contract between the car owner and the insurer, where the insurance company covers financial losses due to accidents, theft, or third-party liability. In return, you pay a premium. In India, having at least a third-party car insurance policy is mandatory under the Motor Vehicles Act. Comprehensive plans offer even broader protection.

Why is Car Insurance Important?

Car insurance ensures financial safety in case of road accidents, theft, fire, or legal liabilities. Without it, even minor incidents can result in significant expenses. Moreover, third-party insurance is legally required to drive on Indian roads. Bajaj General Insurance offers extensive protection and access to 7,200+ cashless garages, making repairs and claims seamless.

How Does Car Insurance Work?

When you buy a policy, you select coverage (third-party or comprehensive) and pay a premium. If an insured event occurs, like an accident, you notify the insurer and file a claim. After assessment and verification, the insurer either reimburses the cost or directly pays the repair shop (in case of cashless claims). Comprehensive policies can be enhanced with add-ons such as zero depreciation or engine cover.

Types of Car Insurance Policies

Third-Party Liability Insurance

• Mandatory by law. Covers injury, death, or property damage caused to a third party.

Comprehensive Car Insurance

• Covers third-party liabilities plus damage to your own car due to accidents, fire, natural disasters, or theft.

Standalone Own Damage (OD) Insurance

• Covers damage to your own car, but not third-party liabilities. Available only if you already have third-party coverage.

Pay-as-You-Drive Plans

• Premiums based on your driving behaviour and distance travelled—ideal for low-usage car owners.

What Does Car Insurance Cover?

• Damage to your vehicle from accidents
• Theft or total loss of the vehicle
• Natural calamities like floods, earthquakes, etc.
• Fire, explosions, or riots
• Third-party injury or property damage
• Personal accident cover for the owner-driver

Also Read: Roadside Assistance in Car Insurance – 24×7 RSA Cover Benefits

What is Not Covered Under Car Insurance?

• Driving under the influence of alcohol or drugs
• Damage due to illegal activities or racing
• Normal wear and tear or mechanical breakdown
• Driving without a valid license
• Using the vehicle beyond its declared usage (e.g., commercial use for a personal vehicle)

Add-on Covers in Car Insurance

• Zero Depreciation Cover: Full compensation for replaced parts without depreciation deduction.
• Return to Invoice Cover: Get the original invoice value in case of theft or total loss.
• Engine Protection Cover: Covers engine damage due to flooding or oil leaks.
• Roadside Assistance: 24x7 help for breakdowns, flat tyres, or emergency towing.
• NCB Protection: Keeps your No Claim Bonus intact even after making a claim.
• Consumables Cover: Covers costs of items like engine oil, nuts, and bolts.
• Passenger Cover: Additional coverage for co-passengers in case of accidents.

Factors to Consider While Selecting Car Insurance Policy

• Coverage Type: Choose between third-party, standalone OD, or comprehensive.
• Claim Process: Look for insurers with hassle-free digital claims.
• Garage Network: Wider networks mean easier repairs. Bajaj General Insurance offers 7,200+ cashless garages.
• Add-ons Available: Add only what’s relevant to your usage.
• Premium vs Benefits: A Low premium may mean low coverage. Find the right balance.
• Customer Support: Reliable 24x7 support can be critical during emergencies.
• Insurer’s Reputation: Choose trusted names like Bajaj General Insurance for reliability.
• Renewal Flexibility: Auto-renewals or grace periods are useful features.

Also Read: Everything About Bundled Plan for Brand New Car

How to Choose the Right Car Insurance Policy?

Evaluate your driving frequency, car model, and usage conditions. Compare policy benefits, exclusions, and claim procedures across insurers. Look for a reliable brand like Bajaj General Insurance, offering digital convenience, helpful add-ons, and vast garage access.

How to Get Car Insurance Online?

Visit the insurer’s website, input vehicle and personal details, choose your coverage, and add optional riders. Once the premium is calculated, proceed with payment. You’ll receive the policy instantly in your email. Bajaj General Insurance makes the entire process digital and simple.

Conclusion

Car insurance is essential not only for legal compliance but also for financial protection. It secures you from unexpected damages, third-party claims, and repair expenses. For total peace of mind and access to 7,200+ cashless garages, choosing a trusted provider like Bajaj General Insurance is a smart move.

FAQs

Q1. Is car insurance mandatory in India?

Yes, at least third-party liability insurance is mandatory for all vehicles under the Motor Vehicles Act.

Q2. What is zero-depreciation car insurance?

Zero depreciation insurance means the insurer covers the full cost of replaced parts during repairs without accounting for depreciation.

Q3. Can I change my car insurance policy?

Yes, you can switch to a new policy or insurer at the time of renewal or even mid-term with proper documentation.

Q4. How to renew car insurance online?

Visit the insurer’s website, enter your policy and car details, choose add-ons if any, and pay. The renewed policy is sent via email instantly.

Q5. What is a standalone own damage policy?

A standalone own damage policy covers only the damage to your vehicle. You must also have a third-party policy for complete legal compliance.

*Standard T&C apply

**Claims are subject to terms and conditions set forth under the motor insurance policy.

***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 changes. Please consult an expert before making any related decisions.