All you need to know about your Car Insurance Cover

Posted by Reena More on June 14th, 2019

Currently, the new car owners may invest in long-term care with an insurance policy for a minimum of three or five years. It saves customers from frequent renewals and having uninterrupted services. However, do you wonder whether motorist coverage or bodily injury liability is included in the plan? Or, how does it save you from financial woes?

To know everything about the coverage provided for motor vehicle insurance, read on.

Car Insurance Cover: Overview

The 21st Century India is not fully protected by car insurance and among them, only 40% of Indians are insured. Even now, it is mandated by the law, and vehicle owners do not acknowledge the grave importance of it in mitigating unforeseen incidents. 

Through the paid premium for the insurance, the policymaker reimburses the damage costs. Now, the comprehensive car policy offers coverage for third-party liability insurance along with the medical costs and property damage expenses. Even if you do not have a comprehensive cover, the law demands the third party liability cover for enabling protection.

Importance of Motor Vehicle Insurance Cover

It is hard to figure out what an automobile insurance covers due to the terms and conditions being loaded with jargon.  In order to understand the significance of car insurance in a better way, take a look at the following aspects.

Legal Requirement

Motor Vehicle Act of India implies that every operating vehicle must have car insurance and at least third-party liability insurance coverage. In this situation, if your car is  damaged, causes destruction to a property, or causes death or injury of a third party, you get compensated. Only if you desire to pay today, you can be hopeful for tomorrow because there is always a possibility of car crashes.

Working as Health Insurance

The car insurance cover acts as a supplement to health insurance for your car and fellow passengers. You can invest in the injury protection as an add-on benefit and protect yourself from medical payments. Furthermore, many of the health insurance policies do not pay for the injuries related accidents, funeral costs or dental repairs.

Types of Car Insurance Cover

In a car insurance policy, there are four types of insurance coverage provided,

• Bodily injury cover is for the bodily injury that might have taken place at the time of the accident. In this case, the policy users have to be involved.
• Death cover is for the passenger or driver present in the insurance owner’s car during the accident.
• Damage cover is provided because of the damage that took place due to theft or accident.
• Third party property damage is for the third party car involved in an accident with the policy user's motor vehicle.

If the car is involved in a collision, the car insurance cover takes care of the expenses incurred due to the damage. Again, it can offer coverage for non-collision physical damage when the car parts are damaged due to any natural calamity. For example, the windshield may break because of the storm and the policy owner may get cover against it.

Comprehensive Insurance Cover

This policy safeguards the vehicle against man-made or natural calamities. Here, the owner can get personal accident coverage for the passengers present in the car.

• Man-made Calamities - Theft, burglary, terrorist activity, external malicious act and damage while travelling.
• Natural Calamities - Cyclone, rockslide, hurricane, typhoon, lighting, fire, flood, explosion, hailstorm and inundation.

Third-Party Liability Insurance Cover

The general car policy agreement is between two parties - the insured and the insurer. However, the third-party is not the insured or insurer, and it may be a fare-paying or non-fare paying passenger, pedestrian or another car owner.

Only through this policy, the insurer can cover legal liabilities and compensation caused by the beneficiary’s car. Also, there is no limitation for the coverage because it provides death or injury compensation.

List of Car Insurance Cover Exclusions

Following is the list of things that are not covered by the car insurance cover.

• When the car owner or any other person having the consent of the car owner is driving under the influence of drug, substance or alcohol.
• Engine damage caused by oil leakage.
• Violating the vehicle manufacturer’s guidelines for the utilisation of vehicle and its related breakages or failures.
• Consequential damages resulted by the policyholder or any third-party intentionally. For example, if you park the car in a water-logged area, the hydrostatic loss is a part of the consequential loss.
• Unpaid renewals make the car insurance cover inactive. Generally, the car insurance policy is a yearly affair and it should be renewed within 90 days of the expiration.
• Driving the car without having a valid driving license.

Exclusions to be covered by Additional Premium

There are several risks that are generally included in the car insurance cover; however, many of them can be purchased only by paying extra premium amount.

Limited Liability

In the case of own damage, the policymaker is always liable to provide you with the car’s IDV as mentioned in the policy. IDV defines the present market value of the car and the insured can receive it only for total loss or theft of the car. When the repair cost exceeds 75% of the IDV, the payment for total loss is made.

It is important to note that the feature is available for 24 months of the registration. Also, there is no limit on the coverage, contrasting to the third-party property destruction which is available up to Rs. 7.5 lakhs.

Optional Personal Accident Cover

The personal accident cover is available for the owner and driver and it is necessary to have a driving license while operating the vehicle. On the contrary, if you hire an external driver, he/she is not included under the personal accident insurance. At this time, the personal accident cover takes care of the all the passengers present in the car, along with the hired driver.

Engine Protection Cover

The car insurance cover never takes engine damage into consideration. For instance, if your car is stuck in a waterlogged or submerged area, you may seize the engine while starting it. At this time, the regular insurance does not provide any cover. However, if you can pay extra for premium, you can add engine protector add-on.