Types of Car Insurance - Comprehensive & Third-Party Car Insurance

 Divya Singh
  Jan 30, 2018

Your car can get damaged due to an accident, or natural or man-made calamity. You can buy a car insurance policy to cover the damage to your car. If there is an accident where your car is at fault, the policy helps to cover you, the car, and your third-party liabilities. Car insurance companies provide several types of car insurance. Some of these are comprehensive car insurance, and third-party car insurance. Learn about the different types of car insurance as per the benefits provided.

car insurance

Different car insurance companies offer different types of motor insurance policies. They vary in terms of the coverage provided. Primarily, there are 3 types of motor insurance policies.

Third Party Car Insurance

As per the Motor Vehicles Act, 1988, third party insurance is mandatory. It is a risk cover, where the insurance companies compensate for the legal liabilities claimed by a third party, if the vehicle of the insured is at fault. Third party insurance does not cover the insured or the damage to his/her car.

As per Section 146 of the Motor Vehicles Act 1988, it is an offence to ply an uninsured vehicle. This type of motor insurance policy covers:

  • Damage to the property of the third party

  • Death or bodily injury of the third party

For example, third-party liability coverage of Bharti AXA offers up to Rs. 7.5 lakh.

Collision Coverage

As the name suggests, the coverage is provided to the insured if the vehicle is damaged owing to a collision. It could have collided with another vehicle, person, or object. This car insurance policy does not include loss, and damage due to natural calamity, theft, and others. Collision coverage will pay for the repairs of your car. If you have a new car, you should assure that your car is insured against collisions.

Comprehensive Car Insurance

Comprehensive car insurance covers damage to you, your car, as well as the third-party insurance. It provides coverage against natural and man-made calamity, theft, collision, and others. A comprehensive car insurance policy provides all-round financial protection, and thus, the car insurance cost of this policy is higher. Unlike the third-party insurance, it provides protection for both the third-party, and own damages.

These are the major types of car insurance coverage; however different car insurance companies offer various other benefits.

Most car insurance policies include personal accident cover for the insured. Some of the policies offer add-ons where the co-passenger, driver and others can get personal accident cover. Different polices offer varied coverage for death, permanent total disability, and permanent partial disability.

Most policies provide cashless claim settlement at a wide network of garages across the country. You can renew and buy car insurance online. A few car insurance policies, such as those by Bajaj Allianz and ICICI Lombard, offer roadside assistance including accommodation, minor repairs and more.

The car insurance policy has exceptions, which you need to read thoroughly before buying the policy. Some common exceptions are:

  • Damage due to war

  • Driving under the influence of drugs or liquor

  • Mechanical/ electrical breakdown

  • Normal wear and tear of the car and

  • Others

Most policies offer additional benefits that can be purchased at extra car insurance cost. Some examples of these are personal accident cover for co-passengers, coverage of replace parts, etc.

Telematics is an industry disruptor when it comes to motor insurance. It helps to monitor driving pattern and behaviour so that the premium can be determined accordingly. This will help to bring down the car insurance cost for safe owner-drivers. Bajaj Allianz DriveSmart service is a step in that direction. This unique vehicle tracking system comes with their car insurance policy.

The car insurance premium varies with the car model, engine capacity, location, and the benefits provided. You need to compare the premiums in context of the benefits offered by the car insurance policy.

Check For The Reputation of the Insurer

Before you get car insurance, you need to be sure of the insurer’s reputation. You can peruse reviews for the motor insurance policy as well as the insurer. There are various ratios to consider, some of which are:

- Incurred claim ratio (ICR).

- Persistency ratio

- Solvency ratio

ICR is the total value of all claims paid by the insurance company divided by the total amount of premium collected by them in the same period.

Persistency ratio highlights the volume of business that a life insurance company can retain. Solvency ratio highlights how much of the assets the company must absorb.

For example, the Incurred Claim Ratio of Bajaj Allianz is 72.3% for the year 2015-16. It has been able to maintain a solvency ratio of 261% as on 31st March 2017.

Types of Car Insurance - Comprehensive & Third-Party Car Insurance

Divya Singh

Myself Divya Singh having 5+ years of grand experience in Finance domain currently working as a Financial Analyst with a top notch financial firm in Mumbai. Besides that, I am a part time blogger.

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