What Is Covered In A Car Insurance Policy?

In India, you are not allowed to drive a car without having minimum basic insurance. It is a legal requirement to buy at least a third-partycar insurance. Generally, such policy is offered by the car manufacturer via an insurance company that they have a tie-up with. Alternatively, you can opt to buy an insurance policy with better coverage and features in case you are not satisfied with the policy that the manufacturer is providing.

The coverage depends on the product and the company but there are some basic factors which are covered in the minimum vehicle insurance plan as follows:

Car Insurance Policy

  • Bodily injury liability: The insurance policy covers the bodily injury claims of the people who were involved in the accident. An insurance policy can save you from a major financial loss which may occur due to heavy medical bills.
  • Property damage liability: Most of the insurance policies cover the property damage to the third parties involved in the accident with your vehicle. The cover may vary from just the vehicle to the building as well. It depends on the type of insurance you have applied for.
  • Medical bill cover: The medical bill cover is not only provided for the injuries to the driver but also for the passengers who were present in the car at the time of the accident.
  • Uninsured cover: There are many cases in which an ignorant or a hit-and-run driver who has not opted for insurance causes an accident with your vehicle. There is an option in most of the car insurances which provide special financial support if the person in the other vehicle involved in the accident does not have insurance or is under-insured. This cover is limited to bodily injuries in some states but in the rest of the states, it covers both bodily injuries as well as the damage to the vehicle.
  • Physical damage cover: The policy covers two types of damages. The first is caused by the natural calamities like earth quake, storm, flood etc. The second one is the damage caused by man-made calamities like collision, fire etc.

Now, there are two main types of car insurances. The first one is third party car insurance which comes under minimum insurance plan and is mandatory under law. The second one is comprehensive car insurance which provides much better coverage in comparison to the third party one. Let us discuss each one in detail:

  • The third-party car insurance: Any type of car insurance policy is between two parties i.e. the insurer, which is the insurance company and the insured which is you. The third party is the person who is neither the insurer, nor the insured. These people are mainly pedestrians, paying or non-paying passengers, third-party owner and third-party passengers. The fare-paying passengers are those who are riding a public transport vehicle or a cab. The non-paying passenger can be a family member, a friend or just a colleague whom you have offered to drop in your vehicle.

The third-party insurance covers the liabilities that are forced upon you due to the accident involving your vehicle. The cover is limited to third-partybodily injuries and death only. Any damage to your car is not covered under such policy.However, the damage to the other party’s car or vehicle is covered. It also covers legal liabilities if there are any.

  • Comprehensive car insurance policy: This is a much better option in terms of insurance policy for a car. It covers damage to passengers and driver as well as the vehicle. The range of damages is wide and it covers both natural as well as man-made calamities. The reason of the damage includes accident, flood, storm, earth quake, landslide, rockslide, hail storm, cyclone, burglary, housebreaking, theft, riot, strike, terrorist activity and many others.

The owner of the vehicle can also opt for the cover for the passengers. The third-party cover is also included in this insurance policy. The cover for the legal liabilities as well as the medical bills will also be provided under such insurance policy.

Car insurance policy is mandatory under law but it is also important for the financial security of the owner as well as the passengers. Make sure to check the terms and conditions of the car insurance policy before you buy it.

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