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Hidden Gems & Thorns In Your Car Insurance Policy

Car Insurance covers for any damages that are inflicted on your vehicle due to an unfortunate event, theft of your car, total damage, any damages that you have inflicted on anyone else’s property, vehicle or any injury you may have caused.

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All of us dream of the day when we can afford to purchase our first car. We spend plenty of time researching the different aspects of the car and the do’s and don’ts we need to keep in mind before taking the car on the road. From the moment we buy a new car, it becomes part and parcel of our life. We treat it like the most valuable asset of our life and spend so much on protecting and maintaining the car. So, buying car insurance is like buying a layer of protection for your prized asset.

What is car insurance?

Car insurance is the extra layer of protection to your car that covers you for financial strain in the face of an accident, natural disaster or any other unforeseen incident that can cause damage to the vehicle, property or injury to the driver and passenger. It not only covers a third party for damage and injury but also covers the owner and driver for injury and damage to their own vehicle. In India, having car insurance is mandatory.

It covers for any damages that are inflicted on your vehicle due to an unfortunate event, theft of your car, total damage, any damages that you have inflicted on anyone else’s property, vehicle or any injury you may have caused. It is also applicable in case of death or disability for the owner or driver.

Let’s look at a few Gems and Thorns in a car policy that you should watch out for to protect your most valuable asset.

Hidden Gems

Hidden Gems or benefits are already present in your car insurance policy, but since the awareness of this is low, you may not be able to take advantage of it, when the need arises. This also depends on the kind of insurance you own.

Types of Car Insurance:

There are two kinds of car insurance – Third-Party Cover and a comprehensive cover.

Let’s start with the basic one: Third Party Cover.

Imagine this: You’re on the road, and your boss calls. You know you can’t miss this one, so you scramble to answer. In the flash of a second, boom! You’ve applied the brakes too late and hit the bumper of the car ahead. This is where your third-party motor insurance cover kicks in. As per the Indian law, you can’t take your vehicle out on the road without third-party insurance. This policy protects others involved in a vehicle accident that you’ve caused, covering injuries and in this case, vehicle damage to the third party.

A Third party policy covers damage to the vehicle, life or property of a third party and can also provide legal assistance too if required. But remember that this insurance policy doesn’t take care of damage to your car or injuries borne by you! So, it is better to pick a comprehensive car insurance policy that covers own damage + Third Party + Fire & Theft. Below are a few covers that you should be a part of your comprehensive cover:

Protecting your Car During Natural Disasters: Nobody can control nature’s many furies. But, with a comprehensive car insurance you can at least protect your car from any damages that are caused due to the same. So, whether your car is damaged due to a flood, cyclone or earthquake- your car will be protected through it all.

Compensates you in case of Car Theft: Car thefts are the worst! Within minutes you can lose out on one of your most prized possessions. Thankfully, a comprehensive car insurance can help you in this case by compensating for the loss of the same. And if your IDV value is good, then it can also cover the expense of buying another car.

No-Claim-Bonus (NCB): Comprehensive cover also offers No claim bonus. You can benefit from an NCB (No Claim Bonus) during car insurance renewals for every year you don’t make a claim!

Protection against fire: If you have a comprehensive car insurance, it covers you in the below situation where the car is damaged from fire.

  • If your car catches fire due to an engine failure
  • If your car catches fire due to an accident
  • If your car catches fire due to electrical breakdown
  • If your car catches fire due to someone’s malicious intent
  • If your entire garage catches fire
  • If your car catches fire due to a natural disaster
  • If your car catches fire due to an accident in the parking lot or neighbourhood

Add-ons that act as a safety net

Once you’ve got your policy, you can still incur costs that will leave a hole in your pocket and make you regret not paying a little extra for add-ons. Insurance add-ons make your motor insurance policy infinitely better. If you have the budget for it, choose add-ons that make your insurance watertight.

You should include the following add-ons in your policy:

  • Return to Invoice: Covers you in case of Total Loss or Theft, offering you the ex-showroom price
  • Roadside Assistance- Covers you in case your car breaks down in the middle of the road, away from the city. RSA can cover your back in case of: 
  1. Flat Battery
  2. Spare Keys
  3. Flat Tyre
  4. Minor Repair
  5. Towing Services
  6. Fuel Assistance
  7. Taxi and Accommodation Benefits
  • Engine & Gear Box Protect: Covers you in case your engine, which is not covered gets damaged
  • Zero Depreciation: Covers you in case of parts damage, where depreciation doesn’t reduce the price
  • Consumables cover: Covers you in case of damage to nuts, bolts, brake oil, etc.
  • Tyre Protect: Covers you in case of any damage to your tyres

Hidden Thorns:

Hidden thorns are exclusions in your car insurance policy. Most of the time, due to a jargon-heavy document and complicated insurance processes, you tend to avoid a complete check of your policy. Sometimes, not going through the exclusions can be more damaging at the time of claims. The following exclusions should be kept in mind before buying a policy:

  • Any damages to your car due to war, radiation, rebellion, hostilities, terror attacks or invasion.

  • At the time of the accident, if you or anyone driving with your consent is found under the influence of alcohol or any other intoxicants.
  • Any consequential damage. For instance, your car’s engine gear oil leaks. Yet you drive, and the gearbox fails, which is consequential damage.
  • Any damage due to contributory negligence, for instance, you forget to lock your car, and your car gets stolen.
  • Any damage due to a deliberate accident attempt, for instance, if you intentionally go and hit your car against a pole.
  • Any activity not guided by the rule of law; For instance, underage drivers driving without a valid license or on the wrong side of the road.
  • The engine is not usually covered in a standard package policy. However, there is an add-on offered by most insurers where you can cover the engine by paying a little extra premium.
  • The tyre is not usually covered in a standard package policy. However, there is a Tyre Protect add-on offered by most insurers where you can cover the tyre by paying a little extra premium.

While driving your own car is one of the most important milestones in your life, making an informed decision about protecting it is even more critical. So, do check policies for their inclusions and exclusions before purchasing. Buy a policy that is simple to understand and simple to use!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Vivek Chaturvedi

The author is Head of Marketing, Digit Insurance

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