What are the different types of Car Insurance Coverages?

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As Indians, we have a knack for using protection shields whenever we bring home something new, for example a brand newcar. We believe in safeguarding our car by using kitchen ingredients like lemons and chillies to ward off the evil eye. But this protection does not work unless you take the actual steps to ensure your car is covered from road accidents, thefts and other unforeseeable circumstances. As such, the best protection you can provide to your car is a car insurance policy. However, for a new car owner, choosing an insurance policy can be quite tricky. So we’ve listed out the various coverages you can get when you insure your car.

Different types of insurance coverages for cars

Broadly speaking, there are 4 different types of insurance coverages for cars. They are as under:

Limited Liability Coverage: Liability coverage is the kind of car insurance coverage that provides protection when one is involved in a car accident. This coverage proves especially useful when you are found guilty of negligent driving or at fault. This insurance plan comes with a host of benefits. It covers the repair or replacement cost of a third-party’s vehicle or property. It also covers the hospitalisation and medical treatment bills of the third party injured in the accident. This is a basic insurance policy with lower amount of sum insured and low premiums but you can increase the sum insured by increasing your premium amount.

Comprehensive coverage:Car insurance companies also provide a second type of coverage known as comprehensive coverage. This is the kind of coverage that protects you from several types of incidents and risk factors associated with your car – be it the driver, the passengers, third-party drivers, their vehicles and their property. You also get protection against natural calamities like floods, earthquakes, cyclones, fire etc. as well as man-made disasters like thefts and vehicle damage caused due to riots and strikes. As such, this policy is not limited to car accidents and it’s after effects. Also, you can choose this coverage based on your budget and the amount of sum assured you prefer.

Personal injury coverage: While the limited liability coverage typically covers the third party individual in an accident, it is also recommended that you ask your insurance provider for personal injury coverage. Car insurance companies in India offer personal injury protection that covers you against all costs linked to an accident in which you are injured. It covers yours as well as your passengers’ medical bills irrespective of who caused the accident; you or third party. This insurance cover protects all members in your car, injured in the accident.

Collision coverage: If you look for car insurance online, you will find one more kind of coverage offered by insurance providers i.e. collision coverage. This cover pays for some or all expenses related to damage endured by your car in the case of a collision or an accident. If the cost of repairs exceeds the current market value of your car, you will be paid a sum equivalent to your car’s current market value.

According to the Motor Vehicle Act of 1988, the Government of India has mandated that all car owners must invest in a limited liability coverage insurance policy at the very least. Also, remember that car insurance renewal, year after year is just as important. Only when you renew your insurance policy on time can you benefit from no-claims bonus.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and is an expert in helping people save Taxes legally. He can be reached by booking an appointment for Tax Advisory Service.