Whether you have one car or many, each one is going to be extremely close to you. For some it is their passion, for some it is a luxury and then, for some it is sheer necessity. Whatever be the reason for acquiring a car, the bottom line is that it is one of most important assets in our life that involves emotions and a substantial amount of money too. Based on the state of our overall economy and average incomes, owning and maintaining a car is an expensive affair. That’s why buying car insurance is such an important step towards safe-keeping of your vehicle.
It is for this reason that car insurance is made mandatory as per the Motor Vehicles Act, 1988 and no car can be sold without a car policy. However, what one fails to notice or overlooks most of the time is the type of car insurance one is investing in.
There are two primary types of policies: Third Party Car Insurance and Comprehensive Car Insurance (Own Damage). You should analyse your needs and then buy a plan accordingly.
To help you further, let’s explain to you both kinds of insurances in detail:
1) Third Party Car Insurance Policy
This policy covers the losses caused to a third party in case of an accident by the insured vehicle. This will include the injury or death caused to the third party or any damages to the third party property involved in an accident where the insured vehicle is at fault. However, it will not cover any damages or losses incurred by the insured vehicle. In simple words, this kind of insurance is only there to provide cover against legal liability to a third party. For example, if you’re driving the car and meet with an accident with another car, then this policy will take care of any claims in regards to the damage caused to the “third party” car and will cover for medical expenses to the occupants of that car. But, it will not provide any financial assistance to you for damages to your car or any medical help.
The premium for such insurance is considerably less and this is why most people want to invest in such a basic plan. However, the downside of this plan is that in the event of an accident, you end up paying a lot of money from your own pocket for the repairs to your car and also have to pay up the medical cost, if any. This is where the comprehensive policy comes in.
2)Comprehensive Car Insurance
This policy not only provides coverage against third party incidents, but also covers any loss suffered by you or your car during an accident. The benefits of such a policy are:
- Total coverage for the insured vehicle as well as third party losses
- Insurance covers damage caused to own vehicle and third party vehicle
- Provides medical cover to driver of the insured vehicle, driver of third party vehicle and any passengers involved in the accident
- Also provides cover against natural calamities like cyclone, fire, earthquake, floods etc.
- Takes care of losses or damages due to theft, burglary, riots etc.
- There is a personal accident cover also involved for the driver of the insured vehicle
Imagine driving your brand new car and meeting with an accident! With a comprehensive policy in place, you will not have to worry about paying massive amount of money to get the car back in shape. Of course the policy comes at a higher premium compared to third party insurance cover, but it is totally worth it. The cost of auto parts as well as getting it repaired from a reputed garage is rising by the day. Besides that the purpose of an insurance policy is to avoid paying damages from your own pocket. A comprehensive insurance will help you to save money on various fronts and provide you with a peaceful sleep.
What is the best option?
If you’re still having doubts, let’s make it easier for you.
Old Car: If your car is pretty old, then you can select the third part cover since premiums would be low. Premium is calculated based on the insured’s declared value (IDV) of the car. This is the value that you’ll receive in case your car meets with an accident. Older cars have lower IDV’s due to depreciation of the vehicle hence it doesn’t make sense to pay higher premiums when the overall value of the car isn’t much.
New Car: If the car is brand new or just a couple of years old with a higher IDV, it definitely makes a lot of sense to buy a comprehensive cover to safeguard your investment in a car. Also, you’ll be buying a cover to take care of any medical costs for everyone involved in the accident that can be a substantial amount.
Final decision is going to be yours based on your budget and condition of the car, but if you want to be safe and secure financially, a comprehensive car insurance plan is the need of the hour!