Car Insurance Coverage Types – Tips and Ideas


What is the third party liability covered under Private Car package policy?

Third party liability coverage under a private car insurance policy is particularly designed against third party liabilities.

These liabilities are suffered in three cases- i) if any individual is physically injured by the car, ii) if an individual loses his life in a car accident and iii) if the car causes any type of damages to a third party property.

In these cases, the car’s owner bears a financial liability to compensate the third party for the losses caused. The third party cover provides this financial liability and pay compensation to the third party for the incurred losses.

While the overage for physical injury and death is not subjected to any limits, the coverage for property damage is restricted to INR 7.5 lakhs under third party plans.

What is covered under comprehensive?

A comprehensive car insurance policy covers third party legal liabilities which one is likely to incur in case of your car injures or injury or any harm to an individual or his/her property.

Moreover, the policy covers the damages incurred by the car on occurence of natural disasters including flood, earthquakes, road slides, etc. as well as man-made causes such as fire, malicious damages, riots, etc.

When the car is transported by land, air or sea, damages suffered in transit are also covered under the comprehensive car insurance policy. Also, the financial loss incurred due to car theft is covered by the same plan.

Why do I need motor Add–on Covers?

Motor add-ons enable in widening the ambit of coverage of a policy at cost-effective rates of premium. These add-ons ensure better protection and a higher claim payment from your car insurance plan.

For instance, an engine protect add-on covers the damage suffered by the engine due to water seepage which is otherwise not covered under car insurance plans. Similar to this, roadside assistance add-ons offer round the clock assistance in situations of sudden breakdowns.

Zero depreciation add-on ensures that your claim is not reduced due to depreciation and NCB protect add-on preserves your no claim discount even if you make a car insurance claim. Thus, add-ons allow in enhancing the coverage of car insurance policies and help you in securing better benefits from the plan.

They are, therefore, recommended when buying comprehensive car insurance policies. You can opt for motor add-ons on selecting car insurance policies from policystar.

Can I also buy additional covers online?

Yes, additional covers may b purchased online on either renewal or issuance of a new car insurance plan.

You just have to select from the available add-ons, pay the additional premium and buy the add-on online easily. Policystar aprovides a hassle-free easy to opt for car insurance add-ons online.

Before selecting any car insurance policy and add-ons available (on a payment of additional premium), draw a comparison among bevy car insurance policies

Can I change my coverage whenever I want?

There are various cases when a car owner thinks if he can change the coverage of his existing motor insurance policy.

The answer is No, you can change your coverage only at the time of renewing your car insurance policy. At that time you can switch from comprehensive plans to third party plans and vice-versa.

You can also choose or remove add-ons depending on your coverage requirements. However, cancellation of car insurance policies is allowed anytime.

Although there is an option to cancel your policy anytime and avail a premium refund. The refund would depend on the period after which you cancel the plan.

This cancellation of existing car policy is allowed only when you have purchased another third party coverage which is mandatory as per laws.

What is IDV? What are the factors deciding IDV?

By definition, IDV means Insured Declared Value of the car you are insuring. It is basically the value of the vehicle for insurance purposes.

IDV is calculated after deducting the market value of the vehicle with its age based depreciation. IDV represents the sum insured of the car insurance policy and is the maximum claim payable by the insurance company in case of theft or total loss of the vehicle.

IDV more or less depends on the age of the car and their make/model as well. The older the car the lower would be the IDV. The depreciation applicable for calculation of IDV is fixed by the IRDAI. It is 5% if the car is up to 6 months old, 15% if it is more than 6 months old but less than a year old. If the car is more than a year old but less than 2 years old, the depreciation is 20%.

The depreciation increases to 30% if the car is more than 2 years but less than 3 years old. For cars aged more than 3 years but less than 4 years, the depreciation is 40% and for cars more than 4 years but less than 5 years old the rate is 50%.

In case of older cars, the IDV is mutually decided between the insurance company and the policyholder mutually.

What is deductible?

A deductible refers to that portion of the claim which the insurance company does not pay for. It is also called an ‘excess’ as claims up to the deductible limit are not paid/payable.

Claims exceeding the deductible attacts payment for the claim by the insurance company. In such cases, the deductible amount is not paid by the insurer. You have to borne the deductible whereas the insurance company would pay the remaining claim.

Car insurance plans consist of a compulsory deductible which defines the amount mandatorily payable by you in case of each claim.

On the other hand, a voluntary deductible is optional and if you choose it, you are entitled to pay not only the compulsory deductible but also the voluntary deductible while the insurance company would make the remaining payments.

What is Zero depreciation cover or bumper to bumper coverage?

Car insurance policies exclude the depreciation incurred by the car and its parts by virtue of its usage and normal wear and tear.

That is why, when a claim is made and the parts are repaired or replaced, the depreciation cost of the repaired or replaced parts is deducted from the claim and the claim is reduced.

However, the repair bills charge you the full amount and so you are required to pay for the depreciation cost yourself. A zero depreciation cover is a solution to prevent your out-of-pocket expenses.

This cover negates the effect of depreciation on car insurance claims. The zero depreciation cover is an add-on, an optional coverage advantage, which, when chosen, diminishes the depreciation cost to zero.

The insurance company, thus, pays for the total repair cost without deducting depreciation and your out-of-pocket expenses minimize. A car insurance policy with a zero depreciation cover is called a bumper to bumper policy.

What is Depreciation Cover?

Depreciation cover is referred to an add-on cover which wipes out the depreciation cost from the elements of the car during the time of claim.

Thus, the insurance company does not deduct the cost of depreciation from the parts of the car when you make a claim if you have opted for a depreciation cover. This provides you not just a better claim value but also helps in scaling down your personal expenses.

What is Roadside Assistance Cover?

Roadside assistance cover is an add-on cover assured by the insurance company on event relating to sudden car breakdown.

The company provides round clock assistance 24*7 to the insured under such circumstances. Under this coverage, the insurance company offers help in various ways like flat tyre replacement, supply of fuel, lost key replacement, car towing, restoring the car’s battery and more.

What is Personal Accident cover for family/passenger?

Personal accident cover is a mandate in car insurance plans for the car owner or driver. This cover provides a lump sum benefit if the insured suffers accidental death or disablement.

Though the cover is only compulsory for the owner/driver, it does not extend to the co-passengers or family members travelling with him. The personal accident cover for co-passengers or family members is an add-on cover which extends the benefits of the personal accident cover to the co-passengers of the car as well.

In case the co-passengers encounter death or disablement by accident, an additional benefit is payable under this add-on.

What are electrical and non-electrical accessories? How to calculate the value of accessories?

All the electrical accessories which may be fitted in the car by the car dealer like fog lights, music system, ambient lighting, LCD display, etc. ie which are not factory fitted but custom-fitted as per the car owner’s requirements.

Non-electrical fittings, on the other hand, include cladding, leather seats, interiors of the car, mag wheels, etc. which are not factory fitted but custom fitted as per the customer’s choice.

Value of the electrical and non electrical fittings should be indicated by the policyholder by cross checking the invoice of the car.

What is the scope and cover offered in a Car Insurance policy?

The coverage under a car insurance policy is defined on the basis of the type of policy opted. If you buy a third party liability only policy, coverage would be granted for third party liabilities that you face.

These liabilities occur when you injure or kill an individual with the car of if the car damages someone else’s property. Whereas a comprehensive policy has a wider scope of coverage.

It covers the third party liability suffered in case of injury or property damage caused to other party. It also includes the damages incurred by the car itself. These damages can be caused due to natural causes such as flood, earthquakes, storm, typhoon, hurricane, inundation, landslides, road slide, etc.

The damages may also be man-made like fire, theft, malicious acts, riots, strikes, etc. Moreover, the damage suffered by a car on transportation from one place to another through rail, road, air or water also covered under comprehensive car insurance plans.

A personal accident cover is also included under liability only plans and comprehensive plans. This financial grant is mandatory in nature and is liable to pay a lump sum amount in case the owner/driver of the car is prone to accidental death or accidental total and permanent disablement.