In India, if you are driving a vehicle taking a third-party insurance policy is mandatory according to the Motor Vehicle Act 1988. If you are on the road without a valid insurance policy document, you can be fined or imprisoned for three months.
Besides the necessity of law, vehicle insurance is of utmost significance for you and your vehicle’s safety. A car insurance policy rescues you financially from any mishap, injury, or third-party liability; it even includes natural and man-made calamities.
There are two varieties of insurance policies. A comprehensive insurance policy covers your financial and legal liabilities towards the third party and safeguards you and your vehicle. Some companies like Acko provide 24/7 assistance, offer a free pick-up facility, repair at a network garage, and drop the cars at your doorstep.
If your car meets with an accident with another car and let us suppose the other car is expensive, the damages done to the other car will also be hefty. That is the reason third-party insurance is mandatory in India. Now at least, you are not liable to pay for any damages to the third-party vehicle.
The insurance company covers any legal or financial liability towards the third party.
Third-party insurance doesn’t cover the insured. Any injury to you or damage to your vehicle is not covered by third-party insurance.
Third-party v/s comprehensive insurance policy
Third-party insurance only protects you from below mentioned things
- It covers your financial and legal liabilities towards the third party
- It protects you from getting fined on the road.
It doesn’t safeguard you or your vehicle.
A comprehensive insurance policy, on the other hand, covers the following things.
- Third-party liability
It covers your financial and legal liabilities towards the third party.
- Own damage cover
This cover safeguards you and your vehicle against any damages caused by accidents.
- Theft cover
This cover protects you financially in case your vehicle is stolen.
- Natural calamity cover
It protects your vehicle from damage like earthquakes, tsunamis, landslides, floods, cyclones, storms, etc.
It will also protect you from any injury due to natural calamity.
- Man-made calamity cover
It protects you and your vehicle from unfortunate events such as riots, strikes, vandalism, war, or terrorist activity.
You can choose from the available add-on covers with a comprehensive insurance policy. However, the add-on covers are unavailable if you only buy a third-party insurance policy.
What are the available add-on covers in comprehensive insurance?
- Zero depreciation cover
When you make a claim, you don’t get the actual value of your vehicle; you get the insured depreciated value. Because there are some parts in your vehicles, such as glass, rubber or plastic that get depreciated with time because of wear and tear. With the depreciation cover, the depreciation on these parts is not counted, and you get the actual value when you make a claim.
- Return to invoice cover
With a standard comprehensive policy, if you meet with an accident and make a claim, you will get the market value of your vehicle. But if you return to invoice cover, you have the opportunity to take the actual purchase value from the insurance company.
- Driver/passenger cover
In standard comprehensive insurance, you get a protection cover for the owner and your vehicle. You can get a protection cover for your driver and passengers by giving an extra premium.
- Engine protection cover
Any damages to the engine are not covered in your comprehensive insurance policy. If you reside in a heavy rainfall area where the chances of your vehicle getting submerged in water are higher, the engine protection cover is a boon.
- No claim bonus protection
No claim bonus is a discount on the premium the following year given to the insured for not making a claim.
If the insured makes a claim, he doesn’t benefit from the no-claim bonus. If you want to protect your NCB, you can take a no-claim bonus protection cover.
- Roadside assistance cover
If you take this add-on cover, you get roadside assistance while traveling for troubles such as flat tyres, replacing batteries, etc. For example, companies such as Acko car insurance provide 24/7 support. They offer a free pick-and-drop facility for your vehicle at your doorstep.
- Daily allowance cover
Your daily tasks or important meetings are hampered in case your car goes for repair. Daily allowance cover ensures you get some allowance daily, so your day-to-day tasks are not hindered.
- Key protection cover, consumable cover
If your key is lost, under this cover, you will benefit from another key from the insurance company.
Consumables such as nuts, bolts, and oil are not included in the standard comprehensive insurance. If you want this to be included, you can take this add-on benefit.
The above discussion reveals that third-party insurance is not enough for you or your vehicle. One must take a comprehensive insurance policy to insure themselves, the car, and third-party liability, and get the benefits from add-ons.