A Complete Guide to Car Insurance Policies: Types, Add-Ons, and How to Choose the Best One?

A car has become a necessity for every family today. It helps in comfortable movement from one place to another. You can buy a car considering your need, budget, choice, make, model, company, and other factors. But as a responsible and law-abiding citizen, do not forget to buy car insurance with essential risk coverage.

As a responsible family man, you can consider buying a comprehensive car insurance plan from a reputed service provider. If you are buying a new car or planning to book for the first time, it is better to understand various car insurance policies. I am sure it will make you make better decisions.

In this blog content, we have discussed car insurance types, ways to choose the right Car Insurance, car insurance add-ons, FAQs, and more. Reading it carefully can ease things and aid you in deciding the type of car insurance you need for complete peace of mind.

Why is Car Insurance Important?

Car insurance isn’t just a document you carry around for legal reasons; it’s a safeguard that keeps you financially and emotionally secure in case life takes an unexpected turn on the road. Here’s why it’s essential to have one:

1. Stay on the Right Side of the Law

In India, having at least third-party car insurance is mandatory. Driving without it can land you in legal trouble. This basic policy ensures you comply with the law while staying protected against liabilities arising from damages to others.

2. Financial Security for Unexpected Costs

Accidents, natural disasters, or theft can leave you with hefty repair bills. Car insurance helps cover these expenses so you don’t have to bear the financial burden alone. Comprehensive policies even cover your medical bills if an accident leads to injuries.

3. Protection Against Third-Party Liabilities

If your vehicle damages someone else’s property or causes injury, you’re responsible for compensating them. Third-party car insurance ensures you’re not paying these costs out of pocket.

4. Enhanced Coverage with Add-Ons

With comprehensive car insurance, you can choose from a range of add-ons for extra protection. Whether it’s roadside assistance, key replacement, or consumables coverage, these add-ons offer peace of mind and convenience.

5. Drive Stress-Free

Knowing you’re financially protected in case of accidents, breakdowns, or unforeseen mishaps lets you focus on what really matters - enjoying the drive.

What are the various types of car insurance in India?

Let us learn about the varied car insurance types. This will help you know the coverage these plans include, loss or damage covered, and more.

1. Third-Party Coverage

This type of policy is unavoidable. Third-party (TP) car insurance has been made mandatory for all vehicle owners by the concerned Indian government department considering certain situations and consequences. A third-party liability car insurance covers the liability against third-party loss or damage arising out of any accident. This includes bodily injury, damage to property, or death. Do not forget that this car insurance policy does not compensate for the loss incurred to the car of the insured.

The key coverage includes -

• Expenses to fix or replace someone else’s damaged/third-party vehicle
• Medical bills and treatment costs for injuries to others
• Legal responsibilities if someone loses their life due to an accident

2. Comprehensive car insurance policy

This car policy is known to provide extended risk cover. You also have the option to include add-on covers and enjoy maximum safety. You are free to compare online and choose the company offering you maximum benefits at a comparatively low premium. This can help you save money on the premium you are supposed to pay. The premium to be paid depends on the add-ons you choose, the age of the vehicle, make, model, and other factors.

The key coverage includes -

• Protection against third-party liabilities
• Damage or loss due to natural calamities like floods, earthquakes, etc.
• Cover for the losses that occur because of man-made calamities like riots, strikes, theft, accidents, and more.
• Personal accident cover
• Towing charges
• Treatment costs required in the case of an accident

What are the Key Add-Ons for Car Insurance in India?

Apart from the mandatory risk cover, there are a few add-ons you can opt at an additional premium. It will give you additional protection against varied other types of risks.

• Roadside Assistance Cover: This add-on provides 24/7 support for emergencies like breakdowns, flat tyres, towing, or accidents. It's like having a safety net for the road.
• No Claim Bonus (NCB) Protector: With this, you can retain your No Claim Bonus even after making a claim, helping you save on premiums during renewals.
• Consumables Cover: Covers small but essential items like engine oil, nuts, bolts, and lubricants, which are often excluded from standard policies.
• Key Replacement Cover: Lost or stolen car keys? This add-on covers the cost of replacement without added stress.
• Daily Allowance Benefit: While your car is in the workshop, this benefit provides you with money to arrange alternate transportation.

How to Choose the Right Car Insurance in India?

Selecting the perfect car insurance might seem tricky, but with a little guidance, it’s easier than you think. It is not right to make haste while going for insurance on your privately owned vehicle. There is no doubt in the fact that every driver has different needs, but here’s a step-by-step guide to help you make the best choice:

1. Understand Your Insurance Needs

Start by assessing what kind of coverage you need. Do you want basic protection, or do you prefer a plan with additional features like roadside assistance or engine protection? Also, determine your Insured Declared Value (IDV), which is essentially the current market value of your car. Your premium is directly linked to this value, so it's an important factor to consider.

2. Check the Insurer’s Legitimacy

Ensure that the insurance provider is approved by IRDAI (Insurance Regulatory and Development Authority of India). This guarantees that the company is legitimate and follows industry regulations. Always verify the company’s credentials before making a purchase.

3. Look at the Claim Settlement Ratio (CSR)

The Claim Settlement Ratio shows how efficiently an insurer processes and settles claims. A CSR above 90% is ideal as it means the insurer is reliable when it comes to payouts. For instance, Tata AIG boasts a 99% CSR, ensuring quick and hassle-free claim processing.

4. Consider Claim Settlement Speed

Quick claim settlement means you’ll get your car back on the road faster. Check reviews and customer feedback on social media or review platforms to see how quickly the insurer resolves claims. A smooth process can save you a lot of frustration during emergencies.

5. Verify the Cashless Garage Network

Top insurers collaborate with a network of repair garages to provide cashless repairs. Before you choose, make sure the insurer has garages conveniently located near you. Tata AIG, for example, offers access to over 6,900 cashless garages across India, ensuring easy and speedy repairs.

6. Explore Add-on Covers

Want more than basic insurance? Add-on covers like Zero Depreciation Cover, Engine Protect Cover, or Roadside Assistance Cover can give you extra peace of mind. Customise your policy to fit your unique needs.

7. Assess Customer Service Quality

Good customer service is vital. Look for insurers who offer 24/7 support. Tata AIG provides round-the-clock assistance, so help is just a call away. Ask friends or read reviews to understand the service experience better.

8. Check Financial Stability

A financially sound insurance company is more likely to honour claims promptly. Look into the company’s solvency ratio and annual financial reports to gauge its reliability.

9. Compare Plans Online

Use online tools to compare car insurance plans. With Tata AIG’s online calculator, you can easily find policies that match your budget and requirements. Comparing ensures you get maximum value for your money without compromising coverage.

Final Thought

To conclude, car insurance isn't just about fulfilling a legal requirement; it’s about protecting yourself and others while driving. Whether you choose third-party or comprehensive coverage, having the right policy ensures peace of mind every time you hit the road.

By understanding the various types of car insurance, exploring essential add-ons, and following the tips shared in this guide, you’ll be better equipped to make an informed decision that fits your needs and budget.

Further Reading: Everything You Need to Know About Car Insurance: Coverage, Claims, and Premiums

At InvestKraft, we provide reliable insights and simplified solutions for insurance, loans, and more. Whether you’re renewing an existing policy or purchasing a new one, trust InvestKraft to connect you with top insurance providers and make the process seamless.

Frequently Asked Questions (FAQs)

Q1. Why is the Claim Settlement Ratio (CSR) important?

- CSR shows how reliable an insurer is in processing claims. A higher CSR means better chances of your claim being settled without hassles.

Q2. What is IDV in car insurance?

- Insured Declared Value is your car’s current market value, which determines your premium and the maximum amount you can claim in case of total loss or theft.

Q3. Can I customise my car insurance plan?

- Yes, you can add covers like Zero Depreciation, Roadside Assistance, or Engine Protect to enhance your plan and get comprehensive coverage.

Q4. What is a cashless garage network?

- It’s a network of repair shops partnered with your insurer, where you can get repairs done without paying upfront. The insurer settles the bill directly with the garage.

Q5. How do I check if an insurance company is IRDAI-approved?

- Visit the IRDAI website or check the insurer’s official website for licensing details to ensure it’s legitimate.

Q6. Is third-party insurance enough for my car?

- Third-party insurance is the bare minimum required by law. However, it doesn’t cover damages to your own vehicle or personal injuries. A comprehensive policy is recommended for better protection.

Q7. How do I know which add-ons are right for me?

- It depends on your needs. If you frequently travel long distances, roadside assistance is helpful. If you’re worried about theft or accidents, consumables and key replacement covers are good options.

Q8. What is the difference between third-party and comprehensive car insurance?

- Third-party insurance covers damages or injuries caused to others, while comprehensive insurance includes coverage for your vehicle, personal injuries, and optional add-ons.

Q9. Will my insurance cover natural disasters like floods or earthquakes?

- Yes, if you have comprehensive car insurance. Natural disasters, theft, and vandalism are typically covered under such policies.

Q10. Can I transfer my No Claim Bonus (NCB) if I switch insurers?

- Absolutely! Your NCB is tied to you, not your insurer. When you switch providers, you can transfer your NCB to the new policy for a discount.