Types of Car Insurance

There are two types of Car Insurance Policies available in India:

1. Liability Only Policy:
This cover is mandatory by the Indian law and driving a car without this cover is a criminal offence. The compensation under this cover is decided by the district court of your location.

a. Third Party bodily Injury/Death: This kind of coverage provides legal liability cover for bodily injury/death to a third party in a road accident by your car. The compensation under this cover is decided based on various factors like current earnings /age/future earnings etc., of the third party. If this cover is not in place for your car, all such expenses and compensation, in event of an accident would have to be borne by you.

b. Third Party Property Damage: This provides limited liabilitycover (up to Rs. 7.5 lakhs) on any damages that have occurred to a third party property like another car, boundary walls etc. Third party means that someone else is the owner of the property thatis hit by your car.

The premium for these covers of section (a) and (b), is fixed by IRDAI every year. From 1st April 2016, the premium for Liability cover is revised as give below.
  • Cars not Exceeding 1000 cc- Rs 2055
  • Cars Exceeding 1000 cc but not Exceeding 1500 cc- Rs 2237
  • Cars Exceeding 1500 cc- Rs 6164

c. Legal Liability for Owner/Driver: This is a mandatory cover and covers the legal compensation, which is to be paid in case a third party files a case on the driver for damage or loss during an accident. The premium for this cover is Rs 25.

d. Personal Accident cover for Owner-Driver: This is a mandatory cover. Apersonal accident cover for Rs. 2 lakhs of sum Insured should be covered for owner-driver whilehe/she is driving the car. The premium chargeable for this cover is Rs. 100.

e. Personal Accident Cover for Passengers- This is an optional cover and provides compensation for injury/death to the unnamed passengers, while travelling in your vehicle when it meets with an accident. A common sum Insured (max of Rs. 1 lakh) can be chosen for all passengers. If this cover is opted for, you will need to pay premium based on the seating capacity of the car.

2. Comprehensive Car Insurance Policy:
In addition to Liability cover,a comprehensive car insurance policy will also cover any damages to your car,arising out of other situations such as
  • Fire damage
  • Loss on account of explosion
  • Self-ignition or lightning
  • By burglary
  • Housebreaking or theft
  • By riot and strike
  • By earthquake (fire and shock damage)
  • By flood, typhoon, hurricane, storm, tempest, inundation,
  • Cyclone hailstorm, frost
  • By accidental external means
  • By malicious act
  • By terrorist activity
  • While in transit by road
  • Rail inland-waterway
  • Elevator or air, by landslide rockslide

For this comprehensive car insurance policy Sum Insured/Insured Declared Value (IDV) is arrived at the start of the policy period.

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