A beginner’s guide to comprehensive car insurance
Indian traffic rules are governed by the Motor Vehicles Act which was passed in the year 1988. The Act lays down the rules which every vehicle should follow. One such rule prescribed by the Act is the requirement of a valid car insurance policy on every car which is running on Indian roads. The Act requires you to have a third party liability coverage which would protect the interests of other individuals if they suffer any loss due to your car. However, the third party cover does not cover the damages that your car might suffer. For such damages you would have to bear the repair costs yourself. But aren’t the repair costs too expensive?
They are and so there is a comprehensive insurance policy for your car which covers the damages suffered by the car itself. Do you know what the policy is all about?
What is comprehensive insurance meaning?
A comprehensive car insurance policy is a policy which covers both third party liabilities as well as the damages which are suffered by the car itself. If the car is involved in an accident and gets damaged, a comprehensive insurance policy would cover the cost of repairs of the car.
Features of comprehensive insurance policies
Comprehensive car insurance policies have the following features –
- Sum insured
The sum insured of the policy is called IDV which stands for Insured Declared Value. IDV is calculated as the market value of the car after deducting relevant depreciation based on the car’s age. The rate of depreciation which is applied and the corresponding IDV are as follows –
|Age of the car||Applicable rate of depreciation||IDV|
|Up to 6 months||5%||95% of the market value|
|More than 6 months but less than 1 year||15%||85% of the market value|
|More than a year but less than 2 years||20%||80% of the market value|
|More than 2 years but less than 3 years||30%||70% of the market value|
|More than 3 years but less than 4 years||40%||60% of the market value|
|More than 4 years but less than 5 years||50%||50% of the market value|
The coverage under comprehensive insurance plans is divided into four sections. These are as follows:
- Mandatory third party cover
- ‘Own damage’ cover which covers the damages suffered by the car
- Personal accident cover which covers the owner/driver against accidental death and disablements
- Add-ons which are additional coverage features which you can choose to increase the scope of coverage of your plan. Each add-on, however, comes with an additional premium
The premiums are calculated differently for each coverage segment:
- The premium for third party liability is fixed by the Insurance Regulatory and Development Authority of India
- Premium for ‘own damage’ cover is calculated by the insurance company and depends on the IDV
- Premium for personal accident cover is also fixed
- Premium for add-ons would depend on the add-ons that you select
The final premium is then calculated by adding up the premiums for the different coverage sections
- No Claim Bonus
There is a no claim discount under the plan if you make no claims in a policy year. This discount is allowed as a discount in renewal premiums. The discount increases with every no claim year and you can claim a maximum discount of up to 50%. Here are the applicable no claim discount rates:
|Claim experience||No claim discount|
|No claims in the first policy year||20%|
|No claims in two successive policy years||25%|
|No claims in three successive policy years||35%|
|No claims in four successive policy years||45%|
|No claims in five successful policy years||50%|
Other policy discounts
There are other types of policy discounts too which you can claim. These discounts include the following:
- Discounts for installing safety devices in your car
- Discount for being a member of an automobile association
- Discount for choosing voluntary deductible
- Discount for modifying the car for a disabled individual, etc.
What is covered under comprehensive car insurance policy?
As stated earlier, coverage under comprehensive insurance policies are divided into four segments. While coverage for third party liability, own damage and personal accident is always inbuilt, add-ons are optional. So, let’s understand the inbuilt coverage benefits of comprehensive insurance policies –
- Third party coverage
This section covers the financial liability that you would face in the following situations:
- When your car kills another individual
- When your car injures or wounds another individual
- When your car damages a property which belongs to another individual
- Own damage cover
Coverage under this segment is offered if the car suffers damages due to the following instances:
- Floods, earthquakes, lightning, storms, cyclones, landslides, rockslides, or any other natural calamity
- Fire, explosion, malicious acts of individuals or any other man-made calamity
- Theft of the car
- Damages when the car is being transported from one place to another
- Personal accident cover
Under this cover, a lump sum benefit is paid is the owner or driver of the car suffers from any of the following contingencies due to an accident:
- Permanent partial disablement
- Permanent total disablement
Add-ons available under comprehensive insurance plans
Comprehensive car insurance plans offer additional coverage benefits besides the above-mentioned ones. These benefits are optional and you can add them to your car insurance plan for a wider coverage. The most popular and commonly available add-ons include the following –
- Roadside assistance add-on
Under this add-on you are assured of round the clock assistance from the insurance company if your car breaks down in the middle of the road. The insurance company provides assistance in the form of tyre replacement, lost key replacement, towing to the nearest garage, fuel, etc.
- Zero depreciation add-on
When your car is damaged and undergoes repairs, the damaged parts get repaired or replaced. When determining the cost of repairing or replacing the parts, the insurance company considers depreciation of the parts and then admits the claim. Though the garage charges the full amount, you get a depreciated claim which is low. The remaining amount is then payable from your own pocket. A zero depreciation add-on eliminates this depreciation. If you choose the add-on, no depreciation is deducted by the insurance company and you get coverage for the actual cost charged by the garage
- No claim bonus protect add-on
You get a no-claim discount only until you make a claim on your car insurance plan. Once a claim happens, the accumulated bonus becomes zero. This add-on protects your bonus from becoming nil if you make a claim. Even after a claim you get the full no claim discount
- Engine protect add-on
If the engine of your car damages due to water seepage (which happens in case of water-logged areas), the damages suffered are not covered under your car insurance policy. With this add-on, however, you can get coverage for engine damage due to water seepage
- Consumables cover add-on
The cost of consumables used in repairs of your car like oil, lubricants, nuts, bolts, etc. is not covered under a normal car insurance plan. The add-on, however, allows coverage for such consumables
- Lost key replacement add-on
Through this add-on you get a free replacement of your car keys if you lose them
- Medical expenses add-on
Under this add-on the medical expenses that you incur as a result of an accident involving your car would be covered
- Personal accident add-on for named passenger
This add-on covers a named passenger against accidental deaths and disablements
- Return to invoice add-on
Under this add-on, the invoice price of the car is paid as claim if your car is stolen or if it is damaged beyond repair
What is not covered under comprehensive insurance plans?
Comprehensive car insurance plans have exclusions under which no claims are payable. Common exclusions include the following:
- Normal wear and tear due to usage
- Mechanical or electrical breakdown of the car
- Damages suffered when the car is being driven outside India, under the influence of alcohol, with an intention of committing criminal acts, without a valid driving license, etc.
- Damages suffered when the car is not being used as per its limitations
- Deliberate damages caused to the car, etc.
Benefits of comprehensive insurance
Comprehensive car insurance policies give you the following benefits –
- They provide you an all-round coverage for your car. You get coverage for both third party liabilities as well as the damages suffered by your car itself
- The add-ons available under comprehensive car insurance plans increase the scope of benefits and you can get financial assistance for different contingencies that you face in an accident
- The policy helps you fulfil the legal requirement and escape penalties
- The discounts available under comprehensive insurance plans make the premium affordable
So, choose a comprehensive car insurance plan over third party plans for a better coverage experience.
Difference between comprehensive and third party insurance
Car insurance policies come in two variants – third party policy and comprehensive insurance. Let’s understand how these two policies differ from one another –
|Basis of difference||Third party cover||Comprehensive cover|
|Coverage||Only third party liabilities are covered which you face in case of third party physical injury or property damage||The policy covers both third party liability and the damages suffered by your car|
|Coverage amount||Coverage for third party physical injury and death is unlimited. Property damage coverage, however, is limited to INR 7.5 lakhs||The coverage amount depends on the IDV of the car which is the car’s market value after depreciation|
|Premium||Premiums are very low. They are determined by IRDA and depend on the engine capacity of the car||The premium depends on a lot of factors like car’s age, make, model, fuel variant, add-ons selected, no claim bonus, discounts, registration location, etc.|
|Add-ons||Not available in third party plans||A range of add-ons are available which help in increasing coverage|
|Premium discounts||Not available||Different types of premium discounts are available|
|Legal mandate||This coverage is legally mandatory||This coverage is optional|
Top 5 comprehensive car insurance plans
Here is a list of top 5 comprehensive car insurance plans in India –
TATA AIG Auto Secure Private Car Package Policy
Reasons which make TATA AIG Auto Secure Private Car Package Policy unique:
- A range of 13 add-ons are available under the plan
- The coverage is comprehensive while the premiums are cheap
- Claims are settled on a cashless basis if you get your car repaired at a networked garage
Reliance Car Insurance Policy
Reasons which make Reliance Car Insurance Policy the best:
- The company is tied up with more than 3700 garages in India making cashless claims easy
- Six optional add-on benefits are available with the plan
- Coverage is quite comprehensive in nature
HDFC Ergo Car Insurance Policy
Reasons which make HDFC Ergo Car Insurance Policy awesome:
- Different types of car insurance plans are available with the company
- The company is tied up with more than 6800 garages for cashless claim settlements
- Unlimited claims can be made under the policy
- The company promises overnight car repair services where your car is delivered to your doorstep in the morning itself
Bajaj Allianz Car Insurance
Reasons which make Bajaj Allianz Car Insurance wonderful:
- The company allows on the spot disbursement of claims through videos and images
- 24*7 roadside assistance and claim assistance is provided by the company
- The survey of damages is conducted hassle-free for quick claim settlements
Royal Sundaram Car Shield Policy
Reasons which make Royal Sundaram Car Shield Policy the best:
- The company has a network of 4600+ garages which help in cashless claim settlements
- Free roadside assistance add-on is allowed under the policy
- You can choose an add-on to get 100% of the invoice price of your car in case of theft or total loss
How to buy comprehensive insurance policy for car?
You can buy a comprehensive insurance cover for your car online or offline. The online mode of buying is simple and convenient and lets you buy the policy from any place. To buy online you can choose Turtlemint which allows easy purchase of comprehensive car insurance plans. On Turtlemint’s website you can compare and buy the best comprehensive insurance policy for your car. You also get personalised assistance from Turtlemint’s team when you are buying your policy. This helps you in getting the solution to any queries that you have.
The process of buying is also simple. Here’s how you can buy comprehensive car insurance policy through Turtlemint –
- Visit Turtlemint’s car insurance page at https://www.turtlemint.com/car-insurance
- Enter your car’s registration number to see the plans available. In case you don’t have the registration number, you can proceed without it also. Just click ‘Continue without car number’ to continue where you would have to provide the registration location of your car
- Mention the make and model of your car, fuel variant and its manufacturing year
- Mention the details of your last policy (if you have) and its type
- Also mention if you have made any claims in the last year and the previous insurance company
- Enter your contact details for Turtlemint’s team to contact you for any queries
- Once all the details are entered, you would be taken to a new page where all the plans would be listed
- You can compare them and choose one plan as per your needs
- Pay the premium for the policy online and the policy would be issued instantly
Things to remember before buying
Though buying a comprehensive insurance plan is simple through the online medium, here are a few things which you should remember –
- Always compare before buying. More than twenty insurance companies offer comprehensive car insurance policies with various benefits. When you compare you can find the best plan
- When comparing, compare the coverage vis-à-vis the premium and not the premium alone
- Don’t skimp on the coverage value for lower premiums. A high IDV is advised as it allows a wider coverage in case of theft or total loss
- Your comprehensive policy would have a compulsory deductible. This would be the portion of the claim which you would have to pay compulsorily.
- Voluntary deductible is the claim which you choose to pay yourself over and above the compulsory deductible. If you choose voluntary deductible, you can earn a premium discount
- Choose those add-ons which are necessary
A comprehensive car insurance policy proves to be a financial blessing when you suffer any accident and your car is damaged. The policy covers the repair costs and helps you shoulder the loss that you have suffered. Though third party plans fulfil the legal mandate, a comprehensive insurance policy provides better coverage and should be preferred over third party plans.
Frequently Asked Questions
- What is the rate of depreciation applicable on the parts of the car?
The rate of depreciation is different for different parts of the car. The applicable rates are as follows –
|Types of parts of the car||Rate of depreciation applicable|
|Rubber, plastic or nylon parts||50%|
|Tyres and tubes||50%|
|Metal parts||As per the depreciation of the Insured Declared Value of the car|
- Would compulsory deductible be covered under zero depreciation claims?
No, even if you opt for zero depreciation claims, you would have to pay the compulsory deductible portion of the claim.
- What is the coverage level for personal accident cover?
Personal accident cover in comprehensive car insurance plans is allowed for INR 15 lakhs. In case of accidental death and permanent total disablement, 100% of the sum insured is paid. In case of permanent partial disablement, however, a part of the sum insured is paid depending on the severity of the disablement.
- What is the premium for personal accident cover?
The premium for personal accident cover is fixed at INR 750
- What are third party premium rates?
The third party premium rates are as follows –
|Engine capacity||Premium rate|
|Up to 1000 cc||INR 2072|
|1001 cc to 1500 cc||INR 3221|
|More than 1500 cc||INR 7890|
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Courtesy Article: Supramind / October 10, 2019 mintpro.in