Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company.
Insurance policies hedge against financial losses resulting from accidents, injury, or property damage. This also helps cover costs associated with liability (legal responsibility) for damage or injury caused to a third party.
Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils.
Why you need Motor Insurance?
Whether you have a two wheeler insurance or car package policy you are protected financially against vehicle damage or bodily injury. Let us have a look at the following key reasons for having a motor insurance plan in place:
A motor insurance policy will never leave you in financial distress. It provides best protection and will act as a financial security in the hours of crisis. .
Death is one of the scariest outcomes after a mishap or accident. It put such a family or immediate dependents in financial worries. So, the pay-out option within a motor insurance plan can enable the family to be financially independent taking care of the day-to-day expenses..
Risk Covers like car package policy is to protect us from unforeseen events and unplanned liabilities. Anyone can get stuck on the road with their car after an accident, car engine failure due to rains or theft of the vehicle. In any of the cases, having a car insurance policy will be a savior.
Many times, we see new drivers who speed up their cars and cause damage beyond one’s imagination resulting in deaths. Such irreversible bruises make us think of the need and importance of Car insurance.
Types of Motor Insurance
- Private Car Insurance Policy
This is motor insurance that is required by the Government of India for any private car owned by an individual. Private Car package policy protects the vehicle against damage caused by accidents, fire, natural disasters, and theft, among other things, and it also protects the owner against personal injury. It also protects the third party from any damages or injuries.
- Two-Wheeler Insurance Policy
A two-wheeler insurance policy, mandated by the Government of India, covers two-wheelers such as scooters and bikes. The two-wheeler is insured against damage caused by accidents, disasters, fire, theft, and so on, as well as third-party damages and injuries. It also includes mandatory personal accident insurance for the owner rider and can be added for passengers.
- Commercial Vehicle Insurance
Commercial Vehicle package policy insures all vehicles that are not used for personal reasons. This protects all vehicles that are used for commercial purposes. Vehicles covered by this insurance include trucks, buses, heavy commercial vehicles, light commercial vehicles, multi-utility vehicles, agricultural vehicles, taxis/cabs, ambulances, auto-rickshaws, and so on.
What is Motor Comprehensive Insurance Policy
Comprehensive car policy is a coverage that helps pay to replace or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision. Comprehensive, sometimes called “other than collision” coverage, typically covers damage from fire, vandalism or falling objects (like a tree or hail). The comprehensive car policy plan is the complete insurance cover that offers coverage for the third party as well as own damage. It also allows policyholders to add a few add-on covers to expand its coverage. It is the costliest plan due to its extensive cover, but still the most recommended policy.
Having comprehensive motor insurance in place gives the assurance of security for not only the own vehicle damage but the liability of a third party involved in a mishap. The insurer can easily settle the claim in the case of demise as compensation.
what comprehensive policy covers, the list includes damages related to:
- Contact with animals, such as hitting a deer
- Natural disasters, including earthquakes, floods, and hurricanes
- Fire
- Riots and vandalism
- Vehicle theft, or theft of certain parts of the vehicle
- Broken windshields
- Fallen objects, including branches, rocks, or hail
What is Motor Act Only Insurance?
Liability Only Policy is mandatory as per the Indian legal system – it is a necessary requirement. This policy will cover the third-party/ individual who has been involved in the accident caused by you. When you take a Liability Only Policy, then the loss or damage to your car will not be insured.
All vehicles that use the public roads in India should have Third Party Liability Cover. This offers coverage for any loss, damage or injury to others that will hold you legally responsible for. Another name for the Liability Only cover is “Act Only cover”.
Liability Only Policy covers any legal liability you may face that occurs out of damage or loss to a third party only – including death, injury, and/or property damage in the event of an accident that involves your insured vehicle. This is following the stipulations laid out by the Motor Vehicles Act, 1988 . Policy can also be extended to cover various other risks like Personal Accident to occupants of vehicle.
Motor Insurance Add-on Covers
Engine Protection Add on Cover:This cover allows the policyholder to get indemnified against expenses for mechanical/electrical breakdown of the engine due to an oil spill or water ingression Any mechanical damage to the vehicle’s engine is not covered under a comprehensive motor policy. This will cover all the damages or loss caused to the engine of the vehicle – because of the issues like water logging, oil spill, electrical or mechanical breakdown of the engine, etc. the engine protector cover is usually available for vehicles that are up to 5 years old.
Zero Depreciation Cover: The Zero Depreciation Cover, also known as bumper-to-bumper cover or Nil Depreciation cover, is an add-on feature designed to provide coverage for the full value of your vehicle without factoring in depreciation. Depreciation is the reduction in the value of your vehicle over time due to wear and tear
Return to Invoice Cover: The Return to Invoice(RTI)add-on cover is designed to provide additional coverage to policyholders in case of total loss or theft of a vehicle. In the event of a total loss or theft, the policyholder can receive compensation up to the insured declared value (IDV) in a regular comprehensive policy, while with RTI add-on, the policy holder is eligible to get full compensation from the company
Consumables Cover: The Consumables cover is an add-on that offers coverage for the cost of replacing consumable items that need to be frequently or periodically replaced, such as engine oil, coolant, brake oil, power steering oil, etc. Replacement of these items are not covered under the standard comprehensive motor policy, and the cost of replacing them can add up to a significant amount.
Tyre protector cover: Tyres are one of the most important components of a vehicle and are susceptible to damage due to wear and tear, punctures, and other related events. A standard comprehensive motor policy offers compensation up to 50% of the depreciated value of the tyres in case of an accidental damage to the policyholder.
Key replacement cover: This cover can be especially useful in situations such as a damaged lock or lost keys. It also covers the cost of replacing locks and keys in the event of attempted theft or break-in.
Conclusion
In conclusion, insurance is an essential part of modern life. It provides financial protection to individuals and businesses, promotes economic growth, and reduces the burden on the government and taxpayers.