Understanding the Different Types of Car Insurance in India

However, the booming numbers of options make it very hard to choose the best kind of car insurance. This article on various car insurance policies provided in India is going to help you decide what the best coverage for your vehicle is.

Understanding the Various Types of Car Insurance in India

Car insurance comes in different variations, depending on the damages it can cover. In India, there are mainly 3 types of car insurance available, and two other car insurance which are relatively new and uncommon. A mixture of these car insurance types is called a hybrid car insurance policy. Here are the 3 main types of car insurance online in India:

1. Third-Party Liability Insurance

This is the most basic form of car insurance and is legally compulsory for all vehicles in India. It covers:

• Damages to the property of a third party.

• Injuries or death of a third party who is involved in an accident.

It fulfils the legal requirement but does not safeguard the vehicle that you own. It is a very cheap option, however it offers protection for a little portion. To check out low cost third party insurance options, refer to Coverfox third party car insurance.

2. Comprehensive Car Insurance

Comprehensive car insurance covers damages caused to your own vehicle and any liabilities towards a third party (individual or property). It covers damages caused in an accident, theft, natural disaster or man-made hazard. It can be customised using add-ons to further enhance the coverage.

• Comprehensive cover provides complete cover which consists of risks on your own car from accidents, theft, fire, or any natural conditions

• Risk to third-party.

This type of insurance is appropriate for those looking for complete security. Even if it attracts a higher premium compared to others, this insurance offers greater benefits, especially if it is for a new or expensive car. To customize plans, refer to Coverfox comprehensive car insurance.

3. Own-Damage Car Insurance

Own Damage Car insurance is offered by the IRDAI, especially for damages to your automobile. This policy becomes useful in case you already have third-party insurance and want to add more to it.

Benefits include:

• Accidental, theft, fire, and natural calamity coverage

• Add-on flexibility, such as zero depreciation or roadside assistance

4. Pay-As-You-Drive Insurance

This is an emerging version of car insurance that has been gaining high acceptance in India. Coverage is provided on a distance-travelled basis thereby it becomes an inexpensive source of insurance for users who rarely drive around in their cars. Features:

• Lower rates for less frequently used cars.
• Real-time recording of kilometers covered.

Read more about Pay-As-You-Drive Car Insurance on Coverfox.

5. Usage-Based Insurance (UBI)

UBI is just the same as pay-as-you-drive, but the focus here is on the driving behaviour instead. The latter monitors parameters like speed, acceleration, and braking patterns. Such safer driving habits shall often result in reduced premiums. Usage-based insurance is also known as telematics car insurance. In this, a telematics device is installed in the car to monitor the parameters. This type of car insurance is excellent for drivers with good driving skills.

Features:

• A telematics device is installed to monitor parameters ike speed, brake usage, acceleration, etc.
• Good drivers can fetch lower premium rates.
• Promotes safe driving

Private Car Insurance and Commercial Car Insurance

Car insurance can be separated according to the vehicle’s intended use. Here are both types of car insurance based on intention of use:

Private Car Insurance

Private car insurance covers vehicles used for personal or domestic purposes only. It protects the insured vehicle against damage, theft, third-party liabilities, and more, but strictly for non-commercial use.

Features:

• Covers personal use of the car (commuting, family trips, etc.)
• Includes third-party liability and own-damage cover
• Add-ons like zero depreciation, roadside assistance, and engine protection are available
• Lower premium compared to commercial vehicle insurance
• Claims may be denied if used for commercial activity

Commercial Car Insurance

Commercial car insurance covers cars used for business or profit-making purposes. This includes taxis, fleet vehicles, goods carriers, and app-based cabs.

Features:

• Designed for vehicles used in work-related operations or transporting goods or passengers
• Covers driver, passengers, and third-party liability
• Includes protection against damage or loss due to accidents, theft, fire, etc.
• Mandatory for vehicles under commercial permits
• Premium is typically higher due to increased risk exposure

Add-Ons Available with Comprehensive Car Insurance

Add-ons enhance your comprehensive car insurance coverage. These are the available add-ons in India for your car insurance:

1. Zero Depreciation Cover

Covers the full cost of replacing damaged parts without depreciation. Ideal for new or luxury cars.

2. Engine Protection Cover

Covers repair or replacement costs of the engine due to water ingression or oil leakage.

3. Return to Invoice Cover

In case of total loss or theft, you receive the full invoice value of the car, including road tax and registration, not just the IDV.

4. Roadside Assistance

Provides help in case of breakdowns, flat tyres, fuel shortage, or towing 24x7, wherever you are.

5. Consumables Cover

Covers the cost of consumables like engine oil, brake fluid, nuts, bolts, and more during repairs.

6. No Claim Bonus (NCB) Protection

Lets you retain your No Claim Bonus discount even after making a claim, preserving your premium benefit.

7. Tyre Protection Cover

Pays for accidental damage to tyres and tubes, which are not typically covered under standard own-damage policies.

8. Personal Accident Cover

In an accident, if the policyholder is injured or deceased, a personal accident cover of up to ₹15 lakhs is granted.

Which Car Insurance is Best in India?

The best car insurance for you largely depends on what you are looking for:

• Minimum Legal Requirement: Third Party Car Insurance

• Best Comprehensive Protection: Full Comprehensive Car Insurance

• Affordable and Cheap: Pay-As-You-Drive Car Insurance

Your car's age, usage, and pocket size while choosing a policy will help you. For more information about the policies and their benefits check Coverfox Car Insurance

How to Buy the Right Car Insurance and Compare Policies

The best car insurance is well-structured car insurance. There are several factors you should look out for while purchasing car insurance online. Use these tips to find the right car insurance for your prized possession:

• Compare car insurance premiums through Coverfox
• Check the coverage scope of the selected car insurance policy (What is covered and what is not covered)
• Select the add-ons you will need. Do not opt for everything, it will just increase your premium price.
• Check the Claim Settlement Ratio of the chosen insurer, and optimally select a 90% CSR or higher insurer.
• Check the network garages of the insurer, if it is feasible and accessible to you
• Check customer reviews of the insurer

Things to Keep in Mind for Car Owners:

Car insurance is a wide approach. You need to have clarity before you buy car insurance. Understand these if you are a car owner looking to buy four-wheeler insurance:

• Get a valid Pollution Under Control Certificate for your car before you buy insurance.
• Weigh your options; there are many car insurance providers in India.
• Understand the different types of car insurance available in India.
• Understand the different types of add-ons to enhance your coverage.
• Always carry the insurance document with you, physically or digitally.
• Do not forget to renew car insurance; set reminders.
• Do not forget to get car insurance from Coverfox; we provide the most competitive car insurance prices in the market.

Summary

There are many types of car insurance available in India. These car insurance types focus on coverage or usage, each catering to a specific need as per budget. In India, you should have at least a third-party car insurance policy to be able to legally drive on public roads as per the law under the Motor Vehicle Act 1988. Coverfox provides one of the best car insurance quotes in the country, make sure you check it out.

Frequently Asked Questions