Different Types Of Car Insurance Explained For New Car Owners

Buying your first new car comes with plenty to think about. There is the model, the features, the loan, and then the insurance. If you are seeing terms such as third-party, own damage, and comprehensive cover for the first time, knowing what each one means can make the comparison easier. Your car insurance policy can cover different risks depending on the type you choose, so it helps to know where each type of cover fits.

What Types of Car Insurance Policies are Available In India?

You will generally come across three main types of motor insurance cover. They differ mainly in whether they cover your liability towards others, damage to your own car, or both.

What Does Third-Party Car Insurance Cover?

Third-party insurance covers your legal liability towards a third party for injury or death and damage to third-party property, subject to the applicable terms and limits. It does not cover damage to your own car. Third-party liability insurance is a mandatory requirement for vehicles used on public roads in India.

What Is a Standalone Own-Damage Cover?

Standalone own-damage cover relates to loss or damage to your insured car. Depending on the policy, it can cover events such as accidents, theft, fire, and certain natural events.

This type of cover is separate from third-party liability insurance. If you already have separate third-party cover, a standalone own-damage policy can provide cover for your own vehicle, subject to its terms and conditions.

What Does Comprehensive Car Insurance Include?

With comprehensive car insurance, you get third-party liability cover along with cover for damage to your own car under the same policy. The own-damage cover may apply to events such as an accident, theft, fire, or certain natural events, depending on the policy.

What is covered, what is excluded, and how deductibles work can vary between policies. It is worth checking the policy wording for these details before you buy.

How Do Add-Ons Change Your Car Insurance Cover?

Once you understand the main types of car insurance policies, you may come across add-ons. These are optional covers that can extend the protection available under certain policies for specific situations.

Some commonly available options include:

• Zero depreciation: This can reduce depreciation deductions on eligible parts when a covered claim is settled, subject to the add-on terms and applicable limits.

• Engine protection: Depending on the product, this may cover specified engine-related losses that are not covered under the base policy.

• Roadside assistance: This may provide services such as breakdown support, towing, or minor on-road assistance, depending on the cover selected.

What Should You Check Before Choosing a Policy for Your New Car?

Rather than looking only at the premium, check what the policy actually includes and the conditions attached to it.

• Type of cover: Know whether you are looking at third-party, standalone own-damage, or comprehensive cover.

• Insured declared value: Check the Insured Declared Value, or IDV, shown in the policy. It is the insured value of the vehicle for the policy period and is relevant to total loss or theft claims, subject to the policy terms.

• Deductible: Check the amount you may need to bear when a claim is payable.

• Add-ons: Read the terms of any optional cover before adding it to the policy.

• Exclusions: Check which situations, losses, or expenses are excluded.

Conclusion

With a new car, the insurance decision is not only about choosing between third-party and comprehensive cover. You also need to see what sits behind that label. Check the IDV, deductible, exclusions, and add-ons, because these can change the cover available under the policy. Reading those details before finalising the policy leaves fewer unanswered questions about the cover attached to your new car.

Disclaimer: This is a sponsored article. All possible measures have been taken to ensure accuracy, reliability, timeliness and authenticity of the information; however OutlookBusiness.com does not take any liability for the same. Using of any information provided in the article is solely at the viewers’ discretion.