How Does Car Insurance Work: Expectations v/s Reality

Imagine you are driving your car to your workplace. You are stuck in traffic and suddenly another car crashes into your car from behind. This leaves considerable damage to your car. If you do not own car insurance, the cost of repairs would have to be paid by you, which may set you back financially in case of severe damages. However, having insurance helps in covering that cost. This is just one of the functions of this insurance policy. If you want to know more about the functionality and features of this insurance policy, keep reading.

What are the types of car insurance plans available to buy?

Before you know about the various types of car insurance plans, let’s understand what car insurance is: Car insurance is a type of general insurance policy that is designed to financially protect your car from accidents and other perils. As mentioned earlier, the policy helps in covering the cost of repair after the accident has taken place. There are more benefits and features in this insurance policy. Now, let’s look at the different types of policies.

1. Third-party insurance

This type of insurance is designed to cover only third-party liabilities. Third-party insurance is mandatory for every vehicle owner in India under the Motor Vehicles Act of 1988. If you are found to be driving without third-party coverage, you attract fines and penalties. Do remember that no own damage cover is provided in this policy. *

2. Own damage insurance

As the name suggests, this insurance is designed to only cover the damages to your insured vehicle. If your car gets damaged in an accident, the policy will compensate you for the repairs. However, it would not compensate you for third-party damages, which you would be required to pay out of pocket. *

3. Comprehensive insurance

Comprehensive car insurance provides financial coverage for own damages and third-party damages under the same policy. Including the above coverage, you also get the benefits of various add-ons that can be included in the policy to enhance its overall coverage. As this policy offers coverage for both types of damages, this negates the requirement of purchasing a separate policy. *

 How does car insurance works?

If your car gets damaged in an accident, you are required to file a claim to get compensation for the damages. Here is how you can file a claim:

1. Inform your car insurance provider once the accident has taken place. You can connect with them through the claims helpline number or file a claim through their website.
2. File an FIR as this is required by the insurer for the legal process of settling the claim.
3. Document the damages caused by taking photos and videos.
4. Submit all the details along with the evidence to your insurer.
5. The insurer will send a surveyor to assess the damages mentioned in the claim form. This helps them verify the authenticity of the claim filed by you
6. The details are submitted to the insurer by the surveyor basis which the insurer will decide if your claim is legitimate or not.
7. Depending on the type of policy you own, the claim is disbursed in the following ways:
8. If you own third-party car insurance, the insurer will pay the third party for their damages and not for the damages to your vehicle.
9. If you have own-damage insurance, either you or the garage owner would be compensated for the repairs based on how you get it repaired.
10. If you own comprehensive car insurance, both you and the third party would be compensated for the damages by the insurer.

*Standard T&C apply

 Additional benefits

If you own either own-damage or comprehensive car insurance, you get the following benefits:

1. Damages caused in an accident.
2. Damages caused by natural calamities such as floods and earthquakes.
3. Damages due to manmade calamities such as riots.
4. Damages caused due to a fire.
5. Damages caused to/Loss of car due to theft.

With a comprehensive car insurance policy, you get to include add-ons to your policy. The following add-ons can be included to enhance your policy’s coverage. Listed below are a few of them:

1. Zero-depreciation cover

When you file a claim, your insurer considers the depreciated value of your car when deciding the compensation amount. This coverage ensures the depreciated value is not considered and you have maximum compensation at the time of repairs/replacement. *

2. No-claim bonus cover

If you do not file a claim during the policy year, you get a no-claim bonus (NCB) which generally allows you to enjoy a concession at the time of policy renewal. However, this bonus is lost if a claim is filed. The NCB cover protects your bonus when a claim is filed a specified number of times, subject to policy terms. *

3. Emergency roadside assistance

Using this add-on, you can avail of roadside assistance from your insurer if your car stops functioning while you are on the road. *

4. Key replacement cover

If your car key gets damaged or gets misplaced by accident, you would be provided with a temporary key for usage till you make an arrangement for the original key with your car dealer/manufacturer.* *Standard T&C apply

Conclusion

If you are planning to purchase a car insurance policy, this information can help you understand its function and benefits. Similarly, you can use the car insurance premium to get a quote before you purchase it.   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.