CAR INSURANCE – 101 FOR DUMMIES
How much do you really know about car insurance? Insurance is an expensive must-have with a car but do you really understand what it is and how it can help you? In this series of blog posts, we would like to equipÂ our fans and clients with the basics of car insurance in order to make educated decisions while signing up with an insurer.
Insurance premiums are a big percentage of the cost of owning a car. It is a necessary expensive in order to protect the car owner from the following events:
- Damage to the car in an accident
- Financial liability to a third party involved in a car accident
- Medical expenses in the event of injury in an accident
- Theft of the car
Even scratches and dents to a car from minor incidents could be a big financial burden to the car owner and hence it is imperative to have a car insured to safeguard the owner from unforeseen expenses.
What kinds of Insurance?
There are basically three types of insurance covers available to car owners:
- Third-party liability Cover
- Collision Cover
- Comprehensive Cover
Third Party Liability Cover
The first type of car insurance involves the financial liability for the owner to an affected party in the event of an accident that is the fault of the driver. This cover is a must-have for car owners, according to the law. Motor Vehicles Act of India mandates that every car owner purchase at least the third-party liability cover.
Collision cover protects the car owner from damage to the car, in the event of a collision. If the car is damaged or destroyed in an accident,Â collision insurance coverage will pay to fix or replace it. Types of covered accidents include hitting another car or hitting a stationary object, like a bridge or a tree. This is not mandatory but not having this means the car owner runs a huge risk of not being able to fix the car after an accident.
The third kind Â of car insurance – Comprehensive Cover – is the most popular type of insurance as it covers both third-party liability and collision coverage.Â One can also buy optional insurance covers, termed as add-ons to cover various other liabilities. Some of the more popular add-ons are Engine Protection (covers engine repairs for owners of high-end cars), zero depreciation cover and road-side assistance.
All of this sounds too good? Of course there is always a fine-print.Â Loss or damage is not covered by car insurance under the following conditions –
- when the policy is not in force
- ifÂ the person driving does not hold a valid driving licence
- ifÂ the driver has been under the influence of alcohol/drugs
- when driving in violation of manufacturer’s guidelines
- as a result of oil leakage
- gradual wear and tear of the car and the parts
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