A car insurance policy is a part of motor insurance which you can buy for insuring your car against theft, damages etc. Any car insurance policy provides coverage for any financial liability faced by the owner of the car if the car causes any injury or damage to a third person or his/her property.
Car Insurance is of 2 types:
- Third Party Insurance – Covers damages incurred to third person’s car. It is mandatory to purchase at least a third party car insurance as per the Motor Vehicles Act, 1988 if you wish to drive your car on Indian roads.
- Comprehensive Car Insurance – here the damages suffered by your car are also covered along with third party.
Car Insurance FAQs
⭐ Is car insurance policy mandatory?
Yes, the Motor Vehicles Act, 1988 mandates that every car running on Indian roads should have a valid car insurance cover on it. However, as per the prescibed laws of the Act, only third party car insurance coverage is mandatory for the car. Comprehensive policies are voluntary in nature.
⭐ What is a premium?
Premium is the consideration payable or paid to the insurance company for the coverage that the company allows under its car insurance policy. The insurance company covers specific financial risks and in lieu of which, you have to pay a premium on the policy.
⭐ What is the period of the policy?
Period of the policy refers to the time duration during which the car insurance coverage is active. Usually car insurance policies have a coverage period of a year after which they must be renewed. However, if the car has been bought on or after 1st September 2018, the period for third party cover would be 3 years whereas the period for comprehensive cover can vary from 3 years or one year.
⭐ What is a Certificate of Insurance under Motor Vehicle Act?
A certificate or document which shows the proof of insurance cover of the vehicle is knows as Certificate of Insurance under Motor Vehicle Act. This document is issued by the insurance company and it contains the coverage details of the policy, the add ons opted, IDV and premium charged from the care owner.
⭐ What is the difference between Comprehensive and Third-Party Fire and Theft car insurance?
Under motor insurance guidelines, a third party fire and theft insurance policy covers third party liabilities, damages suffered by the car due to fire and theft of the car. It would not cover damages suffered by the car due to other natural or man-made causes or when the car is being transported.
Where as a comprehensive policy, on the other hand, would cover third party liabilities, damages to the car due to man-made and natural causes including fire, damages suffered when the car is being transported and theft of the car. Hence, this means that the comprehensive policy provides a larger scope of coverage than the third party fire and theft insurance. This affects their premiums also.
The premiums of both the policies are of course different. Third party plans will have a lower premium comparatively due to restricted coverage while comprehensive plans would have a higher amount of premium.