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    By Muktha | 30 Sep 2023

    What type of car insurance to buy? What is the coverage I need? Is regular car insurance policy enough?, these questions might be familiar to you as a first time car insurance buyer. Owning a Motor Insurance Policy is compulsory under Motor Vehicle Act 1989. If you are a debutant car buyer, then purchasing insurance must have been your biggest hurdle to drive the car out of that showroom.

    As much research as you do on deciding what car to buy probably weeks, the same amount of time and interest should be invested in purchasing a car insurance as well. Buying a car is a huge investment and a long term investment too. So insuring it with proper car insurance that would protect the car in case of any mishap or accident or any other non-favorable incident, is important and vital. A car insurance will not only protect your car, but will also protect you in case of accidents.

    While you decide to buy a car, the dealer in the showroom will also offer you the car insurance with hopefully decent coverage. But rather than blindly signing on it, it is important that you research about car insurance and its perks and compare various policies. If you are a newbie in the car insurance town then here is all you want to know:

    Types of Car insurance:

    Third-party car insurance: As the name suggests, this policy provides cover only to the third-party. Any damages, bodily injuries, property damages, permanent disability, etc. occurred to the third-party is covered under the policy. This is a minimum and mandatory policy that every car owner must own under the law. The premium for this policy is low as the capacity of the coverage is minimum and limited to third-party only. Please note that this policy does not provide any cover to the owner of the cover.

    Comprehensive car insurance policy: A comprehensive policy provides a wide coverage like third-party liabilities, accidents, property damage, mishaps, natural calamities, theft, robbery, man-made calamities, etc. The premium amount for this type of policy is higher due to its extensive coverage. Unlike third-party policy, you can enhance the comprehensive policy cover with few add-on optional covers.

    Add-on covers for comprehensive car insurance policy:

    • Zero Depreciation cover
    • Key replacement cover
    • Engine protection cover
    • Roadside Assistance cover
    • Anti-theft device cover
    • Return to invoice cover
    • No-claim bonus cover
    • Personal accident cover
    • Loss of personal belongings

    Each of this add-on cover has different benefits, but it is only optional that you chose the one that benefits you and is required.

    What does car insurance cover include?

    • Loss or damage occurred due to accident, theft, robbery, natural calamities like flood, storm, etc. man-made calamities, third-party liability, etc.
    • Body injuries to the owner or third-party in case of accidents or mishaps.
    • Medical treatments that are treated to the owner is also covered in the policy
    • Personal accident cover can be availed up to Rs.2 lakh.
    • Death benefit is paid to the family of the insured, if he/she suffers unfortunate death.
    • Legal liabilities attached to third-party incident is also covered.


    • General wear and tear
    • Loss or damage overseas
    • Accidents caused while driving under the influence of drugs and alcohol
    • Mechanical and electrical breakdown
    • Driving without a valid license and insurance

    Buying car insurance online:

    • It is the most convenient and easiest method of purchasing any insurance.
    • It saves money and time by providing greater discounts as the distribution cost to both company and you is eliminated as there is no presence of middleman or agents.
    • You do not have to travel to the insurer’s office as the office is available online.
    • It only requires few details and information to purchase.
    • You can get quotes from various insurers and compare them to avail the best offer and cover that fits your needs.
    • The documents will be sent to your email ID immediately after the secure mode of payment.

    Factors affecting the car insurance premium:

    Insured Declared Value: The moment you drive your car out of the showroom, depreciation is calculated. Insured Declared Value is also known as the market price of the vehicle. The premium is calculated based on this price.

    IDV=Manufacturers listing price – Depreciation

    Model of the car: The engine capacity, variant, segment, manufacturer, add-on accessories, etc. everything is considered to calculate car insurance premium.

    Location or city of residence: The place you reside also is taken into account while calculating premium. If you are a resident of a metropolitan city, then the premium you pay is higher than a person who resides in a town or a cosmopolitan city.

    Age and driving record: Your age is the most important component to purchase a car insurance policy. If you are an experienced driver and has a good track record, then you can avail some special discounts from the insurer. If you have claimed the policy or have claimed more than once in a policy year, then the premium amount will also be higher.

    Installation of safety equipment: Safety devices like anti-brake system, anti-theft device, gear lock, etc. have been installed in your car, and then you can avail discounts on premium amount.

    Voluntary deductibles: It is a part of the amount that you voluntarily agree to pay in case of claims. It is a standard amount that is already fixed by the IRDA. However, if you want to save on the premium amount, then you can opt for higher deductible amount.

    Do not forget to link your AADHAAR and PAN car to the insurance policy as it has been made compulsory by the government to prevent money laundering and false claims by the impostor. Buying a proper car insurance cover is very important as it will save you from spending personally in case of any mishaps. You can choose the normal annual term for renewal or if you want to save yourselves from yearly hike in premium, then you can choose for long-term policy which you will have to renew once in three years.

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