What Does Car Insurance Cover?

Understanding what car insurance covers can help you choose the right type of policy as per your needs & budget. It ensures adequate protection against legal or financial liabilities and reduces out-of-pocket expenses during claims. While the coverage depends on the type of policy you choose, let's understand what is included in car insurance and how you can make the most out of it.Read more

General Inclusions Under Car Insurance

The following are the typical inclusions in a standard car insurance policy:

• Bodily Injury Liability- It covers bodily injury claims of people who get injured in an accident involving the insured car.
• 3rd Party Property Damages- It covers property damages to third parties such as another person's car or assets.
• Medical Expenses- Covers medical expenses for the policyholder and passengers traveling in the insured car.
• Uninsured & Under Insured Motorist- This coverage protects you when the negligent driver has no insurance or insufficient insurance. In most states, this covers only bodily injury losses, though some states do include property damage losses.
• Physical Damages to the Insured Car: Covers losses or damages to your car involved in an accident and even a non-collision, including natural or man made disasters, fire, windshield breaks, theft, and vandalism.

Coverage Under Different Types of Car Insurance

Here is an overview of what coverage benefits you can expect from each type of car insurance policy:

1. Comprehensive Car Insurance Policy

   A Comprehensive car insurance policy protects against any loss or damage caused to the vehicle and its insured accessories as a result of natural and man-made calamities. These calamities can be broadly classified as 'Natural Calamities' and 'Man Made Calamities'. Natural calamities include fire, explosion, lightning, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorms, frost, landslides, rockslides, fire, and shock damage due to earthquakes.

   Man-made calamities include burglary, housebreaking, theft, riot or strike, accident by external means, malicious act, terrorist activity, and damage during travel by road, rail, inland waterway, or air. This policy also includes personal accident cover, which provides accident cover for the driver of the vehicle while driving.

   The owner can avail of personal accident cover for passengers in the vehicle. Another mandatory feature is the third party legal liability cover. It protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any damage to the property. It also covers for fire and theft provided the vehicles are laid up in a garage and not in active use.

2. Third Party Car Insurance Policy

   Car insurance is between two parties, the insurer and the insured. Therefore, a third party is any person who is neither the insured nor the insurer. Third parties are mainly pedestrians, fare-paying and non fare paying passengers in a vehicle. People in the vehicles like the driver, owner or passengers, are also third parties. Fare-paying passengers are individuals who travel in public transportation, such as taxis, auto-rickshaws, and buses.

   Non-fare-paying passengers are individuals who are allowed to travel in a vehicle for free. The Third Party car insurance policy covers your legal liability for any compensation to be paid arising from an accident caused by your vehicle. It includes liability for death or injury to third parties like pedestrians, occupants of other vehicles, and outsiders other than passengers.

   Passengers of private vehicles and pillion riders are also considered to be covered. As an owner of the vehicle, you are insured against death or injury caused to passengers carried in the vehicle for hire. The liability covered is unlimited in case of death or injury. Damage to a third party's property is usually covered by the insurance policy.

Enhance Your Car Insurance Coverage with Add-On Covers

Add-ons in car insurance are optional covers that enhance the coverage of your standard policy. Some of the most chosen car insurance add ons include:

1. Zero Depreciation Cover: Also known as bumper to bumper protection, zero dep add on covers the entire repair cost without factoring in depreciation charges on car components during claims.
2. Return to Invoice Cover: Under this add-on, the insurer provides you with the original invoice amount of your car if it gets stolen or totalled, which is when it is damaged beyond repair.
3. Roadside Assistance Cover: Another crucial add on in motor insurance is 24X7 roadside assistance, which comes to the rescue in case of a car breakdown by covering emergency services, such as towing, a flat tyre, empty fuel, etc.
4. No Claim Bonus (NCB) Protection: No claim bonus in car insurance is a discount ranging between 20%-50% on your own damage premium at the time of car insurance renewal if you do not make any claim during the policy term. With the NCB protection add on, you can keep your NCB benefits with you even if you make a claim.
5. Consumables Cover: It provides coverage for the replacement cost of small items, such as nuts, bolts, oils, grease, AC gas, etc., during a claim, which is not included in a standard car insurance policy.
6. Key Replacement Cover: The replacement cost of car's keys or lockset is compensated in case they get lost or are damaged.

What Does Car Insurance Not Cover?

While it is important to understand what car insurance covers, it is also crucial to know its exclusions. It will help you avoid any surprises at the time of making a claim.

A car insurance policy does not cover any damage or loss under the following situations:

• Driving without a valid licence at the time of the accident
• Driving under the influence of alcohol or drugs
• Mechanical or electrical breakdown and usual wear & tear of the insured car.
• Using a private car for commercial purposes or vice versa
• Losses/damages happening outside the area of coverage as specified in the policy

Also Read: Inclusions and Exclusions Under Car Insurance

Over to You,

Knowing what car insurance covers allows you to make a well-informed decision regarding policy purchase. It helps you get the most out of your car insurance coverage and keeps you protected against unforeseen risks while driving. Also, do not forget to renew your car insurance policy before its expiry to keep your coverage active against various road risks.