What is Car Insurance?

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What is Car Insurance?​

Car insurance is a type of vehicle insurance that provides financial protection to you & your four-wheeler against any loss or damages resulting from accidents, theft, fire, calamities, and third-party person or property. We offer major types of insurance coverage such as third-party, own damage, comprehensive insurance, and personal accident coverage at affordable prices. A policyholder can also buy a Personal Accident Cover to get compensated in case of accidental death, disability, or bodily injuries to the owner-driver of the insured car. A coverage of Rs. 15 Lakh can be availed under this cover.

Why Do You Need Car Insurance?​

Here are the top 4 benefits of having car insurance:
  1. To Abide by Law - Car insurance helps you to abide by the Motor Vehicles Act, 1988 which requires all four-wheelers in India to have at least third-party insurance to legally drive on public roads and avoid paying a hefty fine.
  2. Safeguard Against Third-Party Liability - Four-wheeler insurance protects you against financial losses that could occur due to damages to third-party property (up to Rs 7.5 Lakh) and offers unlimited coverage for third-party death.
  3. Protection Against Own Damages - It covers damages sustained by the car due to an accident, fire, or natural or man-made calamity. It also pays monetary compensation to the IDV in case your car gets stolen.
  4. Have Personal Accident Cover - It is a mandatory cover in addition to your car insurance policy. It reimburses your medical costs or offers compensation in case of death or disability caused by accidents. Get an affordable personal accident cover of Rs. 15 lakh for the owner-driver of the car.

Key Features of Car Insurance Policy​

CategoriesKey Features
Third-party damagesDeath, injuries & property damages
Own damage coverAvailable under standalone and comprehensive
No Claim BonusUp to 50%
Car insurance premiumStarting at ₹2094*
DiscountsAnti-theft, NCB, Deductibles, AAI Membership, Early Bird discount
Add-on coversMore than 10 add-ons such as Zero dep, NCB protect, Roadside assistance, etc.
Buying/Renewal ProcessOnline
Personal accident coverUp to ₹15 lakh
Cashless Garages/RepairsAvailable

Types of Car Insurance Policies​

In India, there are three types of car insurance policies offered by the general insurance companies i.e. third-party car insurance, comprehensive insurance, and stand-alone insurance. You can choose a car insurance plan according to your budget and needs.

  • Third-Party Car Insurance

    The third-party or liability-only policy is mandatory for all car owners to drive on Indian roads. Compensation is provided for damages/injuries caused to a third-person, and property (up to Rs 7.5 lakh). However, it does not cover damages caused to the insured car. Therefore, it is recommended to buy a comprehensive or standalone car policy.

  • Comprehensive Car Insurance

    A comprehensive car insurance policy covers both third-party liabilities and own damages. Under this plan, the insured person can avail of cashless repair services at the network garages. Furthermore, the policyholder can enhance the policy coverage with add-on benefits or riders such as roadside assistance cover, zero depreciation cover, etc. by paying a nominal amount of extra premium.

  • Standalone Own Damage

    A standalone own-damage car policy financially covers the accidental damages caused to the insured car. It can be purchased with an active third-party insurance policy. In India, as per the Motor Vehicles Act, it is mandatory to hold at least a third-party liability cover for all car owners. However, having stand-alone insurance offers financial help in case of own damage to the insured car and third-party liabilities as well.

Difference Between Third Party, Own Damages, and Comprehensive Car Insurance:​

To help you choose the right four-wheeler policy, here is a table to help you compare features offered under different types of car insurance policies in India:

Coverage OfferedThird-party Car Insurance CoverStandalone OD CoverComprehensive Car Insurance Cover
Third-party property damageYesNoYes
Third-party bodily injuryYesNoYes
Own damages of the carNoYesYes
Car theftNoYesYes
Personal accident coverageYesYesYes
Availability of add-onsNoYesYes
To get an instant quote, It takes a few minutes to buy or renew car insurance online. You need to enter your vehicle details, personal contact information and other details to choose the car policy as per your need on Policybazaar.com.

Coverage Under Car Insurance Policy:​

  • What is Covered:
  1. Accidents - Damages caused to an insured car during an accident.
  2. Natural Disasters - Car damages due to natural disasters such as floods, landslides, earthquakes, etc.
  3. Third-Party Liabilities - Legal liabilities arising due to bodily injuries, vehicle damages, or property damages to third parties in an accident by the insured car.
  4. Fire - Damages to the insured car caused by fire. Note: third-party insurance does not cover fire damages.
  5. Man-made Calamities - Car damages due to manmade calamities, such as strikes, riots, etc.
  6. Theft - Losses incurred due to the theft of the insured car. However, a car theft loss is covered under OD cover.
  7. In-transit Damages - Any damages sustained while the vehicle was in transit via road, water, rail, and air.

  • What is Not Covered:
  1. Wear and Tear - Wear and tear and depreciation sustained by the insured car
  2. Drunk Driving - Damages caused while driving under the influence of alcohol
  3. Breakdown - Mechanical or electrical breakdown (unless roadside assistance add-on cover is purchased)
  4. Invalid Licence - Damages caused while driving without a valid license
  5. Consequential Loss - Any consequential loss sustained by the insured car
  6. War - Loss or damages due to war or nuclear perils

Add-On Covers in Car Insurance Policy​

Add-ons in motor insurance are covers that can be used to enhance the coverage of your existing policy. You can purchase these add-ons by paying some extra premium. Following are some of the add-on covers offered under car insurance - No Claim Bonus Protection cover, Zero Depreciation cover, Engine Protection cover, Key protection cover, etc.

Let's discuss Car Insurance Add-Ons in more detail:
  • No Claim Bonus Protection Cover​

    For every claim-free year, the policyholder is rewarded with a discount on the renewal premium. This discount is called - No Claim Bonus (NCB). It is cumulative and increases every year. It usually ranges from 10% to 50% and can save a substantial amount of money on the premium payable for your auto insurance.
  • Engine Protection Cover​

    An engine is one of the most important parts of a car but it is not covered under a comprehensive plan. With an engine protection cover, you can get compensated for the cost of fixing the indirect damages that are caused to the engine due to lubricating oil leakage and water ingression. It covers the Gearbox parts, Engine parts, and differential Parts.
  • Pay as You Drive Cover​

    A Pay-as-you-drive car insurance plan is an additional cover available with a comprehensive car insurance policy. This add-on allows a policyholder to save up on their own damage premium based on the number of kilometers driven in a policy year. Currently, few insurers are offering this add-on with a comprehensive car policy. This add-on is very useful for car owners who do not drive their cars regularly or own more than one car.
  • Zero Depreciation Cover​

    This additional feature offers compensation even for the depreciating value of your car. With this feature, you will not have to pay for the depreciation value of your vehicle’s parts. It is mostly valid on private cars and is subjected to a specific number of claims during the policy period. Compulsory and voluntary deductibles (as per the case) will be applicable despite zero depreciation cover.

How to Calculate Car Insurance Premium?​

Car insurance price is decided based on several factors. It is also easy to find out the four-wheeler insurance premium using an online car insurance calculator. However, the insurance provider takes into consideration the following parameters before fixing the car insurance price:
  • Type of Cover - The standard premium of your car policy is decided based on the type of coverage you opt for for your four-wheeler. Basically, third-party insurance carries the lowest premium as it only covers third-party damages. The premium becomes higher if you add your own damages cover to it or purchase comprehensive four-wheeler insurance.
  • Personal Accident Cover - Personal accident cover is provided in both third-party and comprehensive car insurance policies. The coverage limit is up to Rs. 15 lakh and it can be purchased by paying a nominal extra premium.
  • Insured Declared Value - IDV, which is the current market value of the car. It is the maximum amount for which the policyholder can raise a claim during the policy term. The higher the car's value means higher IDV and vice versa.

Tips to Reduce Car Insurance Premiums​

Here are 6 easy tips that a policyholder can follow to reduce car insurance premiums:
  1. Compare Plans​

    Choosing the right car insurance policy is of utmost importance. Few insurers offer policies at cheap rates but with fewer features, and vice versa. Therefore, to get the best car insurance policy at an affordable premium, a policyholder must compare car insurance policies online beforehand.
  2. Install Security Devices​

    Installing security devices like anti-theft devices can be beneficial in two ways. Firstly, getting an anti-theft device installed can protect your four-wheeler from theft and burglary incidents. Secondly, a security device that is approved by ARAI can also get you a discount of 2.5%, thus helping you save on your car insurance premium.
  3. Avoid Unnecessary Modifications​

    Your car’s value increases with every new modification done to your four-wheeler. A higher car value increases the insurer’s liability, thus resulting in a higher insurance price. So, make sure to avoid any unnecessary modification to your car to avoid paying a higher premium.
  4. Opt for Pay-as-You Drive Insurance​

    If you are an occasional driver or drive your car for a certain distance, then purchasing Pay as You Drive insurance can be fruitful for you. With the help of Pay, as you drive car insurance, you will only pay a premium for the kilometers your car will cover. Thus, the less you drive, the lower will be your motor insurance premium.
  5. Select Add-ons Judiciously​

    To get car insurance at a cost-effective premium, select only those add-ons that suit your car type and requirements. Buying unnecessary add-ons will only increase your premium amount.
  6. Renew Before Expiry​

    Renewing your policy after it has expired will result in a policy lapse, increasing your next renewal premium and nullifying your NCB. So, if you don’t want to pay a higher premium on motor insurance premium, make sure to renew your car policy on time.

Documents Required to Avail Car Insurance Online​

When you purchase or renew a car insurance policy online from Policybazaar.com, you do not need any documentation or paperwork. However, there are some details that you will need to have handy with you during the process. These include:
  • RC - Owner name, make-model-variant, engine no, chassis no, car cc, fuel type, vehicle class, during the inspection
  • Previous Year Policy - NCB, insurer name, policy no, the policy period, Add-on info, during the inspection
  • KYC - Pan Card/Aadhar/DL/Voter ID/Form 16/Passport

Should You Buy/Renew Your Car Insurance Online or Offline?​

Undoubtedly, you should renew your car insurance policy online. It is extremely convenient and saves you a lot of time. Neither do you have to get an appointment with the insurance agent, nor do you have to wait at the insurer’s office for your turn. You also do not have to fill out several forms or check the office timings to renew your policy. Just a few clicks, and you can renew your car policy online anytime, anywhere. Moreover, you can make an informed decision by choosing the best car insurance policy for your vehicle online at Policybazaar.com. Doing so will also prevent you from getting influenced by your agent and prevent you from buying an unsuited policy.

CategoriesBuying Car Insurance OnlineBuying Car Insurance Offline
Buying ProcessCan be purchased online from the insurer’s official website or Policybazaar.com using a smartphone or laptop.Requires physical visit to the insurer’s office or by connecting with the agent
Insurance PremiumLower premiums due to the absence of intermediaries.Higher premiums due to higher operational costs and involvement of agents.
ConvenienceMore convenient as it only requires a smartphone and a good internet connection.Less convenient as customers need to meet with the insurance agent.
TransparencyMore transparent as there is no role of an agent or intermediary.There is less transparency as agents play a big role.
Customer SupportEasy to connect with the customer support team 24/7 via emails and calls.Policyholders can connect with the customer support team or the agent during office hours.
PaperworkMinimum to zero paperwork.May require a lot of paperwork.
Renewal ProcessEasy to renew as the policyholder’s details are auto-saved with the insurerThe renewal process is cumbersome and takes time.

Benefits of Car Insurance Renewal Online:​

New car insurance has a validity period after which it needs to be renewed. Thus, to continue receiving coverage from your existing car policy, you need to renew car insurance online before its expiry date. Here are some major benefits of online car insurance renewal-
  1. Easy Comparison​

    When you renew your car insurance online, you can easily compare the plans offered by multiple insurers. This will also help you understand the additional services offered by the plan, such as a free pick-up and drop facility, 3-day repair assistance, cashless assurance, and self-video claims.
  2. Easy Customisation​

    You can easily modify the coverage of your car insurance policy during renewal by adding or removing the add-on covers. However, before tailoring your policy with an add-on cover, remember that your car's premium depends on it.
  3. Easy to Switch the Insurer​

    If you are not satisfied with your current insurer or want to enhance your coverage benefits you can switch car insurer at the time of renewal. Moreover, if you find another insurer offering better features and services at a premium that suits your pocket then you can do that from the comfort of your home.
  4. Secured & Transparent​

    Secured payment gateways make renewing a car insurance policy a secure and transparent process. Premium payment can easily be done using credit cards/debit cards/and UPI.

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