The Basics Of Car Insurance

No vehicle can be put on the road without an insurance policy. Penalties range from a fine to impoundment of the vehicle.

There are three kinds of car insurance policies in India. The most basic one covers the policy holder’s financial liability arising from an accident in which he injures or kills someone. It provides no compensation for damages or injury to the vehicle owner.

A more expensive policy is the Third Party Accident Insurance . Though this does not provide any compensation to policy holders for injuries or damages to their own car, it covers the cost of damages to the property or vehicle of third parties (in addition to the compensation for their injuries or death), for which the policy holder is liable.

The third category is the most expensive option, the Comprehensive Accident Policy . In addition to the protection provided by third party insurance, it also covers the policy holder for injuries or death as well as damages to his own vehicle.

By paying extra, one gets additional protection from:
• Fires, explosions, self ignition or lightning.
• Burglary or theft.
• Riots, strikes, or terrorist activity
• Earthquakes, floods, storms and other natural calamities.
• Transport by rail, road or air.

Moreover, if you don’t claim anything from the car insurance company, the premium will be reduced when you renew the policy. ‘No Claim Bonus’ ranges from 15 percent in the second year to 60 percent in the fifth year.

Always read the policy’s fine print and put down in writing the risks one wants to insure his vehicle against.