Different types of Car Insurance policies and their benefits

Insurance companies offer several different types of policies for cars. Here is what you need to know before making a choice.

Venu Srinivasan is about to buy his first car – a pre-owned one. While negotiating with the dealer on the price, he is confused by the various Car Insurance options available. To understand what would work for him best, he consults one of his friends, who is in the General Insurance sector.

His friend says that there are three kinds of Car Insurance policies offered by all General Insurance companies. Here is what each one of them would cover:

• Third Party Liability Cover
  The third -party Car Insurance is also referred as ‘Third Party Liability Cover, since the beneficiary of the policy is someone other than the two parties involved in the contract (the car owner and the insurance company). As per the motor vehicle act, it is compulsory to have a valid third- party Car Insurance policy while driving the vehicle. It covers damages to the third parties involved in an accident, including the cost of repairs or replacement of the damaged third-party vehicle. Liabilities arising from deaths of such third parties are also covered. All vehicle insurance policies will include personal accident cover worth Rs. 15 lakh in case of the death of the owner while driving or riding. This cover can be waived off, if any other policy is covering the owner/driver for respective sum insured.
• Own Damage to the Insured Vehicle
  Damages caused to the car/vehicle owing to natural and man-made calamities such as storms, earthquake, flood, riots, terror attack etc.
• Comprehensive Car Insurance policy
  This kind of policy will cover the cost of repairs and replacements for Venu’s car if it is involved in an accident. Based on the Insured Declared Value (IDV) of the vehicle, the insurer would decide the amount to be reimbursed.

[Also Read: Drive safely and lower your motor insurance premium]

Comprehensive policy covers Own Damage, Third Party liability and Personal Accident to owner driver as well. Customers can also buy several add-on covers like Depreciation reimbursement, Roadside Assistance, returning back to Your place of residence or the nearest city you are travelling to, Daily Allowance to use alternate means of transport while the car is being damaged by a insured peril mentioned in the policy.

Please be informed that add-on covers can only be purchased with the base product and on payment of an additional premium.

Axis Bank has partnered with TATA AIG General Insurance Company Ltd to offer motor insurance products to meet your needs. Click here to find out which plans work for you.

Disclaimer: This article has been authored by PersonalFN, a Mumbai-based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.