Different Types of Four-wheeler Insurance Policies: A Complete Guide

Finance

Car insurance or auto insurance, or four-wheeler insurance, is a financial coverage offered by car insurance companies in India to car owners against losses arising due to a wide range of reasons. In India, the government has made it mandatory for all cars to have a third-party liability cover.

This means that if the car meets with an accident or mishap, then any loss due to damage to a third person or third-party property is borne by the insurance provider. Apart from the mandatory third-party liability-only policy, there are various other types of four wheeler insurance policies that we will discuss today.

When you buy a car insurance policy, the first thing you need to decide is whether you want to opt for the mandatory third-party liability-only policy or look for a plan that offers protection to your car against losses too. You are required to pay a premium for these policies.

The amount of premium varies based on the coverage sought by you. When you own a car, there are certain risks associated with driving it. This can cause different kinds of damage. Car insurance companies have designed different types of policies to cater to the varying needs of car owners.

Let us get into the types of insurance policies for cars.

Different Types of Car Insurance Policies

Here are some of the different types of car  insurance in India:

  • Third-party liability-only policy

This is the mandatory cover as per the Motor Vehicles Act, India. If your car gets into an accident or mishap and causes damage to a third-party person or property, then you are liable to pay for the costs of undoing the damage. A third-party liability-only policy protects you against these costs and covers the losses.

  • Own-Damage insurance policy

These four wheeler insurance policies cover the costs of damage to you or your car for a range of reasons. The condition is that the damage must be caused by the car owner and not any third party. So, if you cause an accident or collision and damage your car, then this policy takes care of the cost of repair.

It also offers coverage for losses due to the theft of the vehicle or its parts. However, most own-damage policies do not cover losses due to natural or man-made disasters. Therefore, if your car gets damaged in a flood or earthquake, or a man-made riot, then this policy does not cover the cost of repair.

  • Comprehensive insurance policy

As the name suggests, a comprehensive car insurance policy offers complete coverage to you and your car. It offers coverage against losses due to accidents, natural disasters, man-made disasters, and theft. It also offers third-party liability cover. With a comprehensive plan, you can be assured of complete financial protection for any damages to you or your car.

  • Zero Depreciation Car Insurance

This is available as an add-on to your online car insurance policy. When you file a claim for damages to your car, the insurer deducts depreciation of the parts repaired before finalising the amount. Also, in the event of a ‘total loss’ of the car, the insurer calculates the depreciated value and makes some deductions before honouring the claim.

The Zero Depreciation or Nil Depreciation or Bumper to Bumper car insurance policy ensures that the impact of depreciation on your IDV is minimal, and you receive the maximum claim amount.

Add-on Covers

Apart from these insurance types, car insurance providers offer a range of add-on covers to help you customise your online car insurance policy as per your needs. Some popular add-on covers are:

  • No Claim Bonus Protection – This cover allows you to file a certain number of claims in a year while retaining your No Claim Bonus (NCB)
  • Roadside Assistance – With this cover, you receive 24×7 assistance if your car breaks down in the middle of the road with no help nearby. The insurer sends a towing vehicle and fuel and also offers mechanic service at the spot of the breakdown.
  • Key Replacement – Many of us tend to lose or misplace our keys frequently. This cover offers reimbursement for the cost of getting a replacement key.
  • Engine Secure – This cover protects the most valuable part of your car – its engine. Since the comprehensive cover does not include engine protection, this add-on can help you get more comprehensive coverage for your car.
  • Loss of Personal Belongings – This cover reimburses the cost of the loss of specific belongings in your car if you meet with an accident.
  • Return to Invoice – If your car gets damaged beyond repair or is stolen, then the insurer offers a claim amount after deducting depreciation. With this cover, the insurer offers a reimbursement of the original purchase price of the car. In addition, if a new car of the same make and model is available, then the insurer offers reimbursement of the cost of the newly launched car.

Summing Up

As you can see, car insurers offer a range of plans and add-on covers to help you choose a four-wheeler insurance policy that suits your specific requirements. Hence, before you buy a policy, spend some time understanding your usage of the car and the risks it faces. This can help you choose a policy and add-ons to get maximum coverage. Good Luck!

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