Vehicle Insurance or Auto Insurance is designed for those who wish to finance a car for personal use. A car loan can give you immediate use of the car of your choice in exchange for regular payments over an agreed period of time. Also known as gap insurance or motor insurance these are purchased for cars, trucks, motorcycles, and other road vehicles. These insurances in the form of first party insurance and third party insurance provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise from those. It provides accident cover for individual owners of the vehicle who may face accidents while driving and also for passengers and third party legal liability which ensures coverage for the person who may be harmed due to the accident caused by the driver. There are certain general insurance companies who also offer online insurance service for the vehicle. In India it is mandatory by law for all the vehicle owners including commercial and domestic purpose vehicles to have insurance for their automobiles.
Factors affecting Auto Insurance
One variable that affects insurance rates is whether the car is a new or used model. Also the accident track record of the driver may be considered for fixing the premium slab of the insurance product. Also as the price of the car rises the premium charges increase considering the higher amount that has to be paid in case of an accident.
Process of filing for Insurance
Once an accident occurs the driver has to file a FIR with a local police station and then submit the documents like duly signed claim form, RC copy of the vehicle, Driving license copy, FIR copy, original estimate and policy copy to be eligible for claim.
Types of Auto Insurance
Coverage paid for the damage caused to other vehicles in an accident where the individual is legally responsible.
Medical and legal defence costs coverage against any accident in which the individual is legally responsible.
Coverage of medical expenses incurred by an individual and the co passengers during an accident regardless of whether or not the individual was at fault.
Coverage is subject to a deductible and covers damages caused to own vehicle in a collision.
Uninsured Motorist Coverage:
Coverage for the damages protecting an individual and the co-passengers in the event of an accident with an uninsured driver
In addition to collision damage, comprehensive coverage will pay for damages, subject to a deductible, from theft, acts of nature, fire, vandalism and collisions with animals.
Different types of Auto Insurance in India:
Private Car Insurance:
Rapidly growing sector as it is a legal requirement that all new cars get indemnified and the amount of premium is determined by the make and value of the car, state where the car is registered and the year of manufacture.
Two Wheeler Insurance:
Covers accident insurance for the drivers of the vehicle and the amount of premium is dependent on the current showroom price multiplied by the depreciation rate fixed by the Tariff Advisory Committee at the time of the beginning of policy period.
Commercial Vehicle Insurance:
Commercial vehicles like HMVs, Trucks etc. are covered under Commercial Vehicle Insurance under the Auto Insurance in India and their premium is calculated based on the showroom price of the vehicle at the commencement of the insurance period, make of the vehicle and the place of registration of the vehicle.
Provisions out of the purview of Auto Insurance:
- Consequential loss, depreciation, mechanical and electrical breakdown, failure or breakage
- Vehicle used outside the geographical area
- War or nuclear perils/ riots and political unrest and drunken driving