As a vehicle owner in India, whether it be of the four-wheeler or two-wheeler kind, there’s no escaping the need for vehicle insurance. It’s not just an option; it’s a mandate by law. And while we all know we need to have one, not everyone fully understands what it entails. So, before you start your engine and hit the road, let’s go on a journey to understand one of the most critical aspects of vehicle insurance – liability coverage.
What is liability coverage?
Liability coverage, often referred to as third-party insurance, is a mandatory component of both car insurance and bike insurance in India. But what does it precisely cover? Picture this situation–you are driving your newly purchased car through the busy streets of Mumbai when suddenly a motorbike crosses your path unexpectedly. Despite hitting the brakes, you couldn’t avoid the collision. Now what? This is where your third-party liability coverage comes into play.
Understanding third-party liability coverage
This type of insurance covers any damage or injury caused to another person (the third party) by your vehicle. From medical expenses, if there are injuries or even fatalities, to compensating for any property damage caused by your vehicle – these are covered under third-party liability.
However, it’s important to note that while it covers costs associated with harm or damage inflicted upon a third party by your vehicle, it doesn’t cover any damage to you or your vehicle. So, if your car sustains damages after that collision with the motorbike in Mumbai, these would not be covered under third-party insurance.
Vehicle insurance is a mandatory requirement as per The Motor Vehicles Act, 1988. Non-compliance can lead to monetary penalties and legal issues. Thus, make sure to buy vehicle insurance and keep the policy active by renewing it before its expiry date. You can buy/renew vehicle insurance easily, quickly, and conveniently via the ACKO website/app for a hassle-free insurance experience.
Comprehensive coverage: The all-rounder
A comprehensive car insurance or bike insurance policy is like a safety net for your vehicle. It comes in handy in scenarios beyond just accidents involving third parties. Imagine you’ve parked your car outside your house, and a heavy branch from a nearby tree falls onto it, causing significant damage. Or maybe you wake up one day to find that your bike has been stolen from outside your apartment. In both these instances, a comprehensive insurance policy can be a lifesaver.
With a comprehensive policy, not only are damages due to accidents covered but also those resulting from natural calamities such as storms, floods, and earthquakes, as well as man-made disasters like thefts or riots.
ACKO’s comprehensive plans offer just this sort of broad coverage at affordable rates. And with the ease of instant online policy purchases and renewals, protecting yourself and your vehicle has never been simpler.
What’s not covered: The exclusions
While both third-party liability and comprehensive vehicle insurance provide substantial protection, there are certain scenarios where claims might not be entertained. Here’s what’s generally excluded:
1. Depreciation: Your insurance will not cover the depreciation of your vehicle over time unless you have zero depreciation cover.
2. Illegal activities: If an accident occurs during illegal activities, such as driving under the influence or without a valid driver’s licence.
3. Mechanical or electrical breakdown: Motor insurance policies do not cover regular wear and tear leading to mechanical or electrical breakdowns.
Understanding these exclusions ensures you’re aware of what may not be covered under your policy and helps in making informed decisions when purchasing add-ons like zero depreciation cover or engine protection.
Five mistakes to avoid when buying a car or bike insurance
Underestimating coverage needs:
Opting for the minimum required coverage without considering individual needs and potential risks. Failing to assess usage patterns, driving habits, and potential liabilities can result in inadequate coverage, exposing the owner to financial risks in an accident.
Overlooking policy exclusions:
Not thoroughly reading and understanding the policy’s terms, conditions, and exclusions. Ignoring the fine print can lead to surprises during a claim, as certain situations or events may be excluded from coverage. It’s crucial to be aware of these exclusions from the beginning.
Neglecting add-on cover consideration: Overlooking the importance of add-on covers that could enhance the insurance policy. Not considering add-ons like zero depreciation cover, roadside assistance, or engine protection may result in missed opportunities to customise coverage according to specific needs and preferences.
Not comparing premiums and policies: Settling for the first insurance quote without comparing premiums, coverage, and benefits from multiple providers. Failing to shop around can lead to missed opportunities for cost savings and may result in choosing a policy that does not provide the best value for the owner’s specific requirements.
Ignoring no claim bonus (NCB) benefits: Neglecting the potential benefits of a no claim bonus, leading to higher premiums during policy renewal. Not prioritising safe driving and accumulating NCB may result in missing out on premium discounts. Overlooking these benefits means car or bike owners may pay more for insurance than necessary.
Choosing the right insurance for your bike or car
Selecting the best vehicle insurance policy for your cherished car or bike can be a daunting task, given the multitude of choices available in the market. As a vehicle owner in India, it’s vital to navigate this labyrinth with informed decisions, and we’re here to guide you through.
1. Understanding your requirements:The first step towards selecting the right bike insurance or car insurance is understanding your specific needs. Reflect on questions like how frequently do you use your vehicle? Is it primarily for a daily commute or just occasional long drives? What type of roads do you usually traverse?
For instance, if you take your bike for long cruises on the highways every weekend, a comprehensive plan with additional covers like roadside assistance and engine protection would be suitable. On the other hand, if you drive your car only within city limits and during peak hours, you may want to consider add-ons like zero depreciation cover and personal accident cover.
2. Types of vehicle insurance: In India, there are primarily two types of vehicle insurance– third-party liability insurance and comprehensive insurance. If peace of mind matters more than budget constraints to you, a comprehensive plan might be more suitable as it offers broad coverage, including self-damage repairs. Opting for third-party liability insurance could be a good strategy for those looking for cost-effectiveness with decent coverage.
3. Evaluate the IDV: Insured Declared Value (IDV) is an essential term in vehicle insurance. It refers to the maximum amount that an insurance company will provide you if your vehicle gets stolen or damaged beyond repair. Ideally, the IDV should be close to the market value of your vehicle. A high IDV signifies a higher premium and vice versa.
4. Consider the deductibles: A deductible is the amount that you agree to pay from your pocket during a claim while the insurer pays the rest. Higher deductibles can lower your premiums and vice versa. However, it’s important to ensure that you set a deductible that you can comfortably afford in case of a claim.
5. Assess the insurer’s reputation: The reputation of the insurer matters as much as the policy itself. Look for customer reviews and ratings, claim settlement ratios, and overall customer service quality before deciding on your insurer.
6. Check for add-on features: Add-on features are available at an additional cost, but they enhance your coverage significantly. Some popular add-ons include roadside assistance, zero depreciation cover, engine protection cover, etc.
For instance, ACKO offers tailor-made add-on covers like zero depreciation and engine protection that enable you to pay a little extra premium to reduce substantial out-of-pocket expenses during claims.
7. Analyse premium pricing: While choosing your policy, compare premiums from different insurers for similar coverage. The price should justify the benefits offered by the policy.
ACKO’s direct-to-consumer model eliminates commission costs, resulting in competitive pricing without compromising on comprehensive coverage.
8. Cashless garage network: A wide network of cashless garages allows policyholders to avail themselves of repair services without upfront payments, streamlining the claims process and offering a hassle-free experience during vehicle repairs. It saves time and ensures a smoother and more efficient resolution after an accident.
While it might seem intimidating initially, focusing on these elements can make the process manageable and even empowering. Remember that your vehicle is an asset and a reliable companion on many life journeys. Protecting it prudently with a suitable insurance policy should be a priority.
Getting the right car or bike insurance involves avoiding common mistakes, understanding your needs, and picking a suitable plan. Liability coverage is necessary, but watch out for exclusions like depreciation and illegal activities. Choose between basic liability or comprehensive coverage based on your usage and preferences.
With ACKO, you get the best insurance plans and add-on covers, ensuring that your vehicle is comprehensively protected against risks, making your coverage complete and reliable.
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to it, and does not guarantee, vouch for or necessarily endorse any of the content.