5 Types Of Car Insurance Coverage Explained
Car insurance coverage is an important concept to understand when you buy car insurance. You drive to work or take your family out on chores and fun drives or enjoy time out with friends. As a responsible car owner, you keep your vehicle in good condition, obey the road rules while on the road and practise good driver etiquette. So, you wish driving your car to be a worry-free experience. Despite your precautions, your car could meet with unexpected contingencies on the road, such as major or minor accidents, breakdowns, tyre bursts, natural/man-made disasters and so on.
The best solution to free you of financial worries in such situations is car insurance. Under all types of car insurance, subject to the specific terms and conditions of your policy, protection is offered for financial losses arising from any unfortunate events involving your car.
When your car meets with a mishap, you should be focused on recovering from the trauma and not worry about the financial implications. To get over any such episode with little anxiety, you should always have adequate car insurance and keep it in force.
What are the Five Types of Car Insurance Coverage in India?
Insurance coverage refers to the kinds of protection available. Along with basic coverage under the policy, you can choose a number of add-ons to enhance the protection under the policies. Let us first show you the five types of car insurance coverage available in India:
1. Third-Party Liability Only Cover
Under this type of car insurance coverage, you will get the following benefits:
Cost of repairs/replacement of the damaged vehicle of third parties
Cost of hospitalization and treatment of third parties
Liabilities arising out of death of third parties
According to the Motor Vehicles Act, third-party car insurance coverage is a must to drive on the roads. The sum assured should be according to the driving conditions and sufficiently high to avoid out-of-pocket payments from your side.
2. Collision Damage or Own Damage (OD) Cover
When you opt for collision damage car insurance coverage, the cost of repairs to your vehicle that has been damaged is reimbursed. To determine the cost of collision coverage, its age and Insured Declared Value are taken into account to arrive at the premium. The IDV is based on the market value of the vehicle.
When a claim is lodged under collision coverage policy, the maximum amount payable under the policy is given by the IDV less accumulated depreciation. If you have purchased your vehicle on a loan, you should hold collision cover.
3. Personal Accident Cover:
When you wish to protect yourself, i.e., the owner-driver of the car, by opting for reimbursement of medical expenses after an accident, you are using personal accident car insurance coverage.
4. Zero Depreciation Insurance:
This coverage is generally offered as an add-on to car insurance policies in India. Suppose your vehicle is damaged and you need to replace the parts. The insurer will consider the depreciated value of the parts for claim settlement. A Zero Depreciation Cover will help you get the complete claim amount without accounting for any depreciation in the costs.
5. Comprehensive Car Insurance:
This type of coverage gives the highest level of protection as it includes liability for third parties, damage to own vehicle, personal accident cover, and all non-collision damage such as storms, floods, fire and theft. You can further enhance a comprehensive car insurance policy with a choice of add-ons.