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How Much Car Insurance Coverage Does Your Vehicle Need

Posted by : Siddharth Jalan on | May 26,2022

We often stress about getting adequate cover for our life and health insurance policies, but have you ever given the same importance to your car insurance coverage? According to Indian law, one cannot drive their vehicle on the roads if uninsured. Neglecting this law will lead to heavy penalties and fines from the concerned authorities. While the law mandates car owners only to take insured vehicles on roads, it doesn’t specify the ideal coverage amount one should take for a smooth experience.

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If you’ve just purchased a car and looking to buy the best car insurance with decent coverage, this article is for you. After talking to various motor insurance professionals, we’ve curated this resource to help you determine the right insurance coverage for your four-wheeler. Keep reading till the very end to get all your questions answered.

How Much Coverage Is Needed For Your Vehicle?
It may sound absurd but deciding on the coverage amount is not exactly in our hands. When you reach out to a car insurer, the maximum coverage amount you can get is the current market value of your vehicle. Insured Declared Value (IDV) is also a concept wherein the coverage amount or maximum sum insured is the vehicle value minus depreciation. If you have a slightly older vehicle, the depreciation will impact the coverage value, and you’ll be quoted the sum insured after adjusting the same.

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For brand new cars, it is generally the ex-showroom price. Insurers consider various factors while deciding the sum insured or coverage to offer, and you don’t have any control over those factors. The vehicle model, vehicle age, driver’s age, vehicle brand, etc., are some of the factors that go into consideration while determining the sum insured value. Although you cannot choose the coverage amount, you can undoubtedly select the insurance plan that offers you financial protection against maximum unfortunate events, like third-party road accident damages, own damages, etc.

Types of Insurance Plans Available for Indian Vehicles
Since the only control you have over car insurance is choosing the ideal insurance type, we have listed down the two most popular car insurance plans you can pick.

● Comprehensive Car Insurance
Comprehensive car insurance is an all-around motor insurance policy that covers the insured for financial damages arising from third-party damages due to road accidents. It also covers its own damages, which third-party insurance doesn’t cover. You can consider it a standard policy offering decent coverage, with the scope to upgrade the protection cover.

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When buying comprehensive insurance, you can upgrade the coverage by buying add-ons or riders. For example, zero dep car insurance is an add-on you can separately purchase if you want to pass the replacement and depreciation costs of spare parts post-accident to the insurer. There are various other add-ons serving different purposes you can select and purchase to enhance your coverage.

● Third-Party Car Insurance
It is the most basic car insurance the Indian law wants every vehicle owner to have. Third-party insurance only covers financial liabilities toward third-party individuals and properties. Those with high budgets can invest in comprehensive plans and enjoy better coverage. Though the third-party insurance is slightly cheaper than the comprehensive plan, the less-priced premium means insufficient coverage.

Which Insurance to Take?
Now that you’re aware of the maximum coverage you can have and the different types of car insurance plans available, you can pick the one that best matches your requirements. If good coverage is all you want for your four-wheeler, you should choose comprehensive insurance over third-party car insurance. But if you’re short on budget and are satisfied with limited coverage, third-party car insurance is apt for you.

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