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A car, after a house, is the most valued asset of a person. After working hard, saving enough money to be able to purchase a car, receiving enormous suggestion or advices from family, friends and colleague and making a bundle of comparison of various brands and models when one purchases his first car, it becomes mandatory to opt to buy car insurance policy. Because accidents happen which in result damages the car, either a small dent on the body of the car or a substantial damage.
Car insurance is mandatory according to The Motor Vehicles Act, 1988 of India. The act says that any vehicle that runs on the road of the country must have Comprehensive and Third Party Liability car insurance.
Motor Insurance is popular in India. As per IRDA’s 2013 – 2014 report, the premium income for motor insurance was 3,382,357 Lakh, which was a phenomenal increase if compared with previous years data which was 2,962,980 Lakh.
Types of Car Insurance
In India there are two types of car insurance available, which are as below:
1. Third Party Liability Car Insurance
Third party liability car insurance is for the personwhose property gets damage or is injured / killed by the vehicle of the insured person. In such case the respective insurance company pays the compensation to the effected party on the behalf of its client.
2. Comprehensive Car Insurance
Any damage that occurs either due to natural calamities, like flood, earth quick, hurricane, light striking etc., or man-made calamities, like accident, riots, theft, terrorist attack etc.,is compensated through this plan. Furthermore, this type of insurance plan also covers any damage occurred to the driver or the passenger of the insured car.
Protection of one’s car against any unfortunate mishap brings many important benefits to the policy holder.
· In case of any accident, the expanses of repairing the car; hospital bill or death compensation of the driver and passenger; damage cost to the property, medical expenses or death compensation of third party are the liabilities of the insurance companies.
· In case of natural disaster, terrorist attack or theft, when the vehicle is not recoverable, the policy holder is compensated by his respective insurer.
What is not covered?
There are many cases when the insurer is not liable to pay any compensation to the insured. These are as follows:
· Deprecation cost, which occur due to wear and tear as the vehicle is used.
· Mechanical or Electrical Breakdown.
· Car is driven by a person who doesn’t hold a valid driving license.
· If the driver was drunk, used drugs or any intoxicating item.
Premium that one has to pay to purchase a car insurance policy differs from company to company. But the most likely factors which may affect the premium payment for any car insurance could be the followings:
· Sum Insured / Insured’s Declared Value (IDV)
· Type of vehicle
· Age of the vehicle
· Place of Registration
· Fuel type (Petrol / Diesel / CNG / LPG)
Some companies also provide discounts on premium on the basis of age or occupation.
car insurance calculator / calculation formula
- IDV for car valuation (the amount if car theft and accident that can available for car)
- Insurance coverage for driver
- insurance coverage for other passengers in car.
- insurance coverage for third party liability
- Service tax.
Total car insurance cost 5-10 thousand based on Car Showroom price (10% of the car showroom price) +liabiliy insurance
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