Types of Car Insurance: Which one do you really need?

Car insurance is mandatory in India. It is important to be aware of various types of car insurance before deciding on the most suitable plan. Here is a quick guide on the types of car insurance to help you make your decision.

There are mainly 3 types of car insurance:

Zero depreciation policy: Also called ‘zero dep’ insurance or ‘bumper to bumper’ insurance.

Zero depreciation car insurance plan deducts zero depreciation on car parts replaced while offering claim amount in case of an accident. This policy usually does not cover cars that are more than 4-5 years old. The premium for this policy is slightly higher than a normal plan. There might also be a limitation on the number of claims one can make during the policy period which is generally for 1 year and can be renewed annually.

 Who should opt for this policy?

  • This policy is usually available for cars that are less than 4-5 years old.
  • It is more suitable for new car drivers and owners of high end cars who are more prone to accidents or for those cars where the cost of repairs is very high and therefore, need to cover full cost of damages to the car in case of an accident. However, anyone can buy it.
  • You should be prepared to shelve out more premium amount for a Zero Dep plan.

 Comprehensive insurance policy: Also called comprehensive cover or fully comprehensive insurance.

Comprehensive car insurance policy covers the owner and the vehicle. It includes damage caused to the vehicle due to natural calamities like floods and earthquakes, etc. and also due to accidents, riots, loss or theft of vehicle and malicious damage. The policy also covers injuries caused to passengers.

Who should opt for this policy?

  • This is an extensive policy and should be the preferred choice of all seeking maximum cover for their vehicle.

 Third party policy: Also called third party liability cover.

Third party car insurance policy only protects a 3rd party’s loss of Life or Property in case your vehicle causes any damage to the same. While it is a mandatory requirement under the Motor Vehicle Act of India, it does not offer any coverage to the owner of the vehicle. Hence in most cases it is advisable to have a Comprehensive Car Insurance policy.

Once you have an understanding of the basics of insurance, get your car insurance quote online and decide on the best policy for your vehicle.

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