3 Types of Car Insurance You Should Know with Add-ons Insurance Types

Owning your car is a luxury, but it doesn’t end there. In India, you have certain legal obligations that you must uphold in terms of owning a car. Under the Motor Vehicles Act, 1988, every vehicle owner (personal + commercial) is mandated to have third-party insurance. This is mandatory because it shows that the vehicle owner is taking responsibility for their actions. Also, the owner can provide proper compensation to the victim without feeling too burdened economically. However, third-party insurance has some other benefits too, and there are other car insurance coverage types that you must be aware of. Having just a pinch of knowledge about what’s mandatory is the bare minimum, and it's never enough. So, here is a breakdown of 3 types of car insurance alongside third-party best international travel insurance India (mandatory) that may help you secure your vehicle more efficiently.

Breakdown: 3 Types of Car Insurance Including Third-Party Insurance Coverage

Before discussing further about the 3 types of car insurance, let’s understand the third-party car insurance. This will help clarify why it is mandatory and the need for other car insurance coverages.   So, let’s begin.

• Third-Party Car Insurance (Mandatory)

As you know that it is a mandatory insurance coverage for all vehicle types, whether personal or commercial. But what does it imply? From a four-wheeler’s perspective, it implies that you must have this initial insurance coverage of your vehicle, which covers:

1. Partial injury or death to the third party
2. Damaging third-party property

• Legal Considerations
  • Section 146 of the Motor Vehicles Act, 1988 defines that all personal and commercial vehicles should have this insurance coverage.
  • The act exempts any vehicle that is used by a central, state or local government authority.
  • The compensation amount is set to be up to 7.5 lakhs, prescribed by the IRDAI (Insurance Regulatory and Development Authority of India).

• Who All Can Opt?
  • Any car owner, whether personal or commercial, seeking basic insurance coverage can opt for it.
  • Commercial vehicles such as buses and trucks can also take this insurance coverage.

• Comprehensive Car Insurance Coverage

While third-party insurance coverage has its social obligation, you need to secure your vehicle, as you have to use it personally. The comprehensive insurance is one of the car insurance coverage types that includes third-party insurance coverage and additional benefits that can help you keep your car safe. This insurance coverage includes:

1. Damage taken on your owned vehicle (theft, fire, vandalism, and mistake)
2. Loss due to natural disasters (fire, flood, cyclones, earthquake)
3. Damage due to man-made calamities (terrorist attacks, riots, strikes)
4. Damage or theft of car parts

• Legal Considerations
  • Unlike third-party insurance, comprehensive car insurance does not hold any legal consideration.
  • This insurance coverage type provides a sense of security for your vehicle against several incidents.

• For Whom It’s Worth
  • Someone with a brand new car.
  • A person living in a risk-prone area or locality with active criminal activities.
  • An individual seeking extensive vehicle security.

• Commercial Car Insurance Coverage

Aside from having personal car insurance, the ones used commercially, such as cabs, taxis, goods transportation, buses, etc., should also be insured. That is why there is commercial car insurance coverage that helps secure your commercial vehicle (car) from an unforeseen event or incident. The commercial car insurance covers:

1. Any third-party liability in case of damage inflicted.
2. Damage taken by the commercial vehicle.
3. Injuries or death to the passenger.
4. Transporting goods can get damaged in an accident or collision
5. Legal charges, towing and downtime losses based on the purchased policy.

• Legal Considerations
  • Section 147 of the Motor Vehicles Act, 1988 states the essentials under several clauses that make it mandatory for all commercial vehicles.

• Insurance Coverage Applicability
  • Since it is specific for commercial purposes, the vehicles used for logistics, transportation, travel, city or state-wide rides, etc., can avail this insurance coverage.

Final Thoughts – Insuremile

The 3 types of car insurance are highly relevant and essential to avoid any monetary burden. With these insurance coverages recommended by Insuremile, you can confidently operate your vehicle without the constant worry about its safety or unforeseen expenses.

However, it's important to understand that having car insurance does not give you the liberty to deliberately damage property and rely on the policy to cover the costs. These insurance plans are designed to ensure fair and sufficient compensation for all parties involved, without financially burdening anyone unnecessarily. Trust Insuremile to help you choose the right coverage for responsible and stress-free driving.