5 reasons why car insurance is mandatory in India

Car Insurance is a legal agreement between car Insurance companies and policyholders where the car insurance company assures payment of any financial loss that the policyholder may incur to own a car or to the third party due to an accident, theft, fire, natural calamities or other unfortunate events. The policyholder pays a premium to the car insurance company for this financial security.

This article provides details on why car insurance in India is a mandatory requirement and how to get the best car insurance online.

The car insurance mandate in India

There are three types of car insurance in India:

1. Third-party car insurance :-

This type of car insurance in India covers the damages caused to a third party due to an accident caused by your car. As per the Motor Vehicles Act, 1988, it is mandatory for all vehicles in India to have at least third-party car insurance in India.

2. Standalone own-damage car insurance :-

This type of car insurance in India covers the damages caused to your car due to an accident, natural calamity and man-made calamities like fire,theft, etc.

3. Comprehensive car insurance :-

This type of car insurance in India covers damages or losses to the third party as well as your own car.

4. Personal accident cover:-

As per the General Regulation (`GR`)-6 of India Motor Tariff, 2002[1], it is mandated that every general insurance company provide a personal accident cover for the owner-driver as part of their third-party or comprehensive car insurance policy. This personal accident cover provides a certain monetary compensation to the owner-driver in case of bodily injuries, permanent disability or death caused by being in a car accident. However, as per the Insurance Regulatory and Development Authority, as of January 1, 2019, the owner-driver doesn’t need to get a personal accident cover with their car insurance if they have a standalone personal accident policy of Rs.15,00,000.

If you are wondering why car insurance in India is mandatory? Why driving your car without a valid car insurance can land you a hefty fine or even a jail term? Let’s explore the reasons for it:

Reasons car insurance in India is mandatory

If you own a car then events like road accidents, natural calamities, or theft can occur and result in damages to you, your car, or a third party. Such events may impact you or the third party both financially and mentality. Hence, car insurance in India is mandated by law. Let’s take a more detailed look:

● Ensure medical care for injured third-party:-

In case of a car accident where a third person gets injured, the third party car insurance ensures that the third party gets the care they need. The insurance company is obligated to pay for the medical treatments of the third party for all inquiries caused in the accident as per the policy statement.

● Ensure repair of damaged property:-

Similar to the previous instance, if incase of a car accident, the property of a third party is damaged then the insurance company would be obligated to pay for the damages under the third-party car insurance as per the policy statement.

● Provide a financial safety net to owner-driver:-

While driving a car, if you face an unfortunate event like injuries that lead to a permanent disability, the immediate implication is that you will not be able to earn a livelihood. In such a scenario, the car insurance company provides monetary compensation under its own damage car insurance as per the policy statement.

● Provide financial compensation to next of kin:-

In case of death caused during a car accident, your family suffers immense grief however, the impact of loss of life is extremely painful if you are the sole breadwinner of the family. A personal accident cover ensures that your family gets an adequate monetary compensation upon your death as per the policy statement.

● Provide peace of mind:-

Medical expenses during the treatment of car accidents are costly in India. Such treatments can leave a huge dent on your savings or put a huge financial burden on you and your family. Buying a third-party car insurance ensures medical cost for the treatment of a third party is covered by your car insurance,and the own damage car insurance ensures that you can get the medical treatment for self for inquiries caused during car accidents. Moreover, the personal accident cover ensures that your family gets adequate monetary support if you are permanently disabled or die during an accident. This financial security provides a peace of mind to the policy holder.

Hence we can conclude, making car insurance in India mandatory is for the benefit of the society.

Step by step guide to get a car insurance online -

You can purchase or renew a car insurance policy online at the convenience of your home when you are free to compare various insurance plans, types, coverages, and advantages.

You must always review the necessary information and facts before buying or renewing a car insurance policy online. And keep a note that the amount of premium is determined on the chosen sum assured, the kind of coverage, and any add-ons because buying a policy only takes a few clicks and you do not want to end up making a mistake in purchase.

1. Research and Analysis:

You can help yourself by doing some online research on different car insurance policies available. By doing this, you can decide which one best suits your requirements.

2. Factors you should consider:

Below are the factors you should consider on buying a car insurance policy online:

Pre-purchase:

Compare the insurance premium to the vehicle’s IDV (Insured Declared Value).
Make sure to account for NCB (No claim bonus), if applicable.
The coverages provided by various market-based insurers
The different add-ons that can improve your policy’s coverage
The percentage of claims that insurance companies settle.
The list of network garages that may be helpful if you need to have your vehicle repaired or parts replaced.
Appropriate premium prices.

Post-purchase:

Verify that all the information is accurately stated in the policy paper.
Set a reminder to renew your car insurance policy online for the upcoming year.

3. Select A Suitable Insurer:

After researching the various insurers, you must select the one that best suits your requirements.

4. Choose the Insurance type you would want to purchase:

Once the procedure has begun, you must decide between a comprehensive or third party car insurance plan. To ride your car on the road, having third-party insurance is a mandate while a comprehensive insurance plan is a matter of choice.

5. Specifics and Documents required:

To get a car insurance policy online, no paperwork is needed. This greatly simplifies matters.

However, you will have to offer information such as:

Number of registration
Motor number
Vehicle number
Former policy number (if you have any)
Date of vehicle manufacture (mm/yy)
Date and location of the purchase
Your contact information (address, phone no. and email id)
Additionally, you ought to have a copy of your car’s repair manual. (RC Book)

6. Payment:

You can then complete the transaction online in just a few clicks and get the car insurance policy renewed.