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Reasons You Need Auto Insurance :
Your car is a prized possession. You have paid lakhs of rupees for it. Damage to your car in an accident could cost you thousands in repairs. Replacing your car if it is fully destroyed in an accident can be a financial nightmare.
Auto insurance in India is of two types:
- Third party liability insurance
Comprehensive auto insurance
What is a third party liability insurance?
If you own and drive a car, then you must avail this insurance. It is compulsory in India to have a third party liability insurance. If your car meets with an accident causing injury to a third party (person not related to you) ,damages his property or his vehicle causing him a loss (financial loss) then the third party liability insurance pays for the medical treatment and the damages suffered by the third party in the accident.
What about the damages suffered by your car in the accident?
The third party liability insurance does not pay for damages to your car or for injuries suffered by you in an accident. This means you need more out of your auto insurance plan. You need a comprehensive auto insurance policy.
What is a comprehensive auto insurance policy?
You are covered for the damages and injury you cause to a third person and his property if you avail a comprehensive auto insurance policy.
In addition to this
If you suffer injury and your car is damaged in an accident then the comprehensive auto insurance policy pays for your treatment.
You are recompensed (paid money) for the damage to your car.
Your car could be damaged in:
- Fire or an explosion
- Lightning or a thunderstorm
- Riot or a strike
- Flood or a hailstorm
- Terrorism or a malicious act
- Theft and burglary
- Damage to the car while in transit (while being transported).
What is not covered under a comprehensive auto insurance policy?
The natural wear and tear suffered by your car with age is not covered by the comprehensive auto insurance policy. Mechanical and electrical breakdown and failures related to this are not covered by the comprehensive auto insurance policy.
Damage to your car caused by you driving under the influence of alcohol and drugs. These are not covered under a comprehensive auto insurance policy.
How can you reduce the premiums you pay for the comprehensive auto insurance policy?
If you do not make any claims under your comprehensive auto insurance policy for the previous year you are rewarded with a no claim bonus. When you renew the policy you are given a higher coverage for the same premium. You could get a cover (increase in the insured amount) by up to 50% under the no claim bonus.
If your vehicle suffers a small damage (say a scratch) it is best that you get the repair done yourself. The cost is insignificant.
If your vehicle suffers a small damage (say a scratch) it is best that you get the repair done yourself. The cost is insignificant.
If you make a claim on the comprehensive auto insurance policy you would lose the no claim bonus. You must use the comprehensive auto insurance policy only in an emergency (serious damage suffered to your car).Otherwise it is best not to make a claim and avail the no claim bonus.
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