How to Plan and Protect your Dream
Owning a car is always one of the dreams come true in our wish list-which we nurture since childhood. However, what happens if your dream gets shattered due to some unfortunate incident. Your heart will break forever and you will run in a state of shock. Therefore, protecting your car by getting it insured becomes a priority once we own a vehicle. Vehicle insurance is purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.
Car insurance protects your car against financial loss in the event of an accident. It is a contract between you and the insurance company in which you agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Car insurance provides property, liability and medical coverage. The property coverage pays for damage to or theft of your car. The liability coverage pays for your legal responsibility to others for bodily injury or property damage and the medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
When you own a car its likely you tend to go for car insurance. But it is important to have a sound knowledge of policies by you; given the risks that you want to protect against. In India, you need car insurance because it’s mandatory by the law. For any vehicle to drive on Indian roads, it must have a valid insurance policy which at a minimum covers the cost of damage that you might cause to other people or vehicles.
When you have a valid car insurance policy, instead of paying from your own pocket the insurer assumes the liability, as long as the damage is covered under the terms of the insurance contract and there is no case of fraud. Situations where a car insurance policy can cover costs are damages arising from an accident, theft, fire and any natural calamities like flood, earthquake, or cyclone. Car insurance policies generally are valid only for a year and need to be renewed annually.
With the rising lifestyle, economic progress and comfort living lakhs of cars are being sold in India which provides a wide opportunity for growth in this sector. We suggest, it’s always worth spending a few thousand rupees to get car insurance, so that you don’t put yourself under any kind of pocket risk if you are in the unfortunate situation of an accident or injury.
Types of insurance policies in India
- A) Third party insurance
If someone else is injured or their vehicle is damaged as a result of your driving, then this “third party” needs to be compensated for it. So, the law requires that at a minimum you have third party insurance to protect against the risk of damage you might cause to others, so that they are not financially worse off. The premium for this type of policy is calculated on the basis of the engine capacity of your vehicle. Since the cover only includes third party damage, the premium is less compared to a complete coverage policy. Please note that the third party will not cover any damage that you or your car suffers.
- B) Comprehensive insurance
A comprehensive policy offers complete coverage for both third party and own damage liability. Comprehensive insurance can include damage to your own vehicle and the other party's vehicle in case of an accident, medical expenses for the other party, you, and the passengers in your vehicle. In addition to this, the policy also covers any damage to your vehicle due to any natural calamity, loss or damage to your vehicle due to reasons like theft, burglary, terrorist activity, and any repair in transit.
Add-on benefits are like; you can even opt for a cover for your car accessories like music system and air conditioner under this policy. The premium in comprehensive insurance is calculated on the basis of the insurable value of your vehicle.