What are the types of car insurance coverage?
You may have heard countless times that car insurance is mandatory in India to drive a car. However, if you ask any person that has a decent amount of experience in the insurance sector, they will tell you that it is only the third-party coverage that is mandatory. For this reason, other types of policy offer third-party coverage as well. This makes choosing the right type of plan even trickier.
There is a difference between car insurance plans and car insurance coverage. To understand it better. Coverage is the specific situation covered by a benefit in your car insurance plan. On the other hand, a policy is an accumulation of different coverages. Hence, before you simply buy a third-party policy because that is the only part that is mandatory, you should know the different kind of car insurance policies and coverage.
Types of car insurance
Third-party car insurance
In case you get into an accident, it is not just your car that takes damage but also the car of the other individual involved in the accident known as the third-party. Hence, you are liable to compensate the third-party for any property damage or physical harm. A third-party car insurance policy will cover these costs for you. The third-party will receive their compensation and you will be free of the liability.
Firstly, a comprehensive insurance has all the benefits of a third-party car insurance. In addition to that, it also provides coverage for damages to your own vehicle. Moreover, it covers various causes of damage to your car both natural and man-made along with coverage for total loss or theft of vehicle.
Types of car insurance coverage
Liability coverage means covering you for a situation where you owe another person something. In the case of car insurance, liability coverage involves financial and legal coverage that arise out of an accident.
For example, if you end up in an accident and the both cars involved take damage. In such a situation, you owe the other individual involved a compensation for the damages caused to his/her car by your car. Moreover, in a road accident, there is also a likelihood of physical injuries. Some of these injuries, if any, would have to be treated urgently. Since you are the cause of these injuries, you are liable to pay for their treatment.
Liability coverage involves covering the cost of repairing any damaged property of the third-party and medical bills of the injuries that may have occurred.
As the name suggests, a collision coverage is the benefit that a car insurance policy offers in the case of an accident towards you. If your car has some damages that can be repaired, collision coverage will pay for those repairs. However, in the case of extensive damage, the money required to repair the car can sometimes go above the market value of the car. In such a case, your car is considered totaled and you get the car’s market value.
Personal injury coverage
Personal Injury coverage is an important part of car insurance. In addition to the vehicle damage, there is also a high chance of going through major physical harm in an accident. These injuries can sometimes cost a lot to treat. With costs adding up, you just go from one bad situation to another. Personal injury coverage takes care of those costs. It involves paying your medical bills from all kinds of treatment that are needed.
Uninsured/underinsured motorist protection
While it is mandatory for every vehicle to have an insurance policy, that may not always be the case. If you end up in an accident with a driver that does not have car insurance, you may not get the proper compensation for your vehicle damage or physical injuries. In some other cases, the other person involved in the accident does have car insurance. However, the cost of your medical bills and the cost of repairing vehicle damage could be too high for his third-party policy to bear. Hence, you may receive incomplete compensation. In such a case your uninsured or under insured motorist coverage will cover the rest of the cost.