Auto insurance is mandatory in India. The primary reason is that accidents are outside the domain of human control and everyone needs to be protected against such risks. An accident is more than just an unprepared expenditure, it is a trauma. Auto insurance takes care of the financial hassles following an accident. A pool of funds is provided to meet large scale expenses.
There are two general cases that occur during an accident and all accidents fall within either of these two situations.
- The first is that due to someone’s erratic driving, a third person gets injured. In such cases, it is the duty of the vehicle owner to pay for the medical expenses of the injured person.
- The second is when damage is dealt to the vehicle and also a third person. In this case, it is necessary to pay for both the injured third person and the damaged vehicle as well.
An ideal auto insurance plan is one that gives the necessary provisions for both. As a result of varied demands of the vehicle owners, there are numerous auto insurance companies along with a large number of vehicle insurances giving the vehicle owner lots of choice.
The biggest question of vehicle owners
Many vehicle owners feel that it is unnecessary as they feel their driving is safe enough to avoid causing accidents. So if a person drives safely, he would cause no accidents and hence, does not require an accident. First thing is no one plans to cause an accident. They happen due to an error or a lapse on someone’s part. If the driver is not to be blamed, then the cause of the accident could be the other person involved. The bottom line is a person may take as many precautions as he wants, but it still does not completely eliminate the possibility of an accident.
As a result of auto insurance policies being mandatory in India, whether the driver is included in the insurance plan or not, the vehicle is completely covered against a list of risks. The risks covered vary based on the plan and the company that offers it. Hence, a person needs to know about the policies mandatory in India along with why.
In a broad sense, auto insurance means covering the financial risks that are involved with operating a car. In such cases, the losses to the owner are compensated by the insurance company provided they are covered by the auto insurance policy.
As per the Auto Vehicles Act, vehicles that operate in public places need to possess a car insurance policy and it must cover a ‘third party liability’. This means that during an accident, the vehicle owner must cover the third party, if one is involved. Sometimes, the policy might cover only the damage dealt to the third party without addressing the damages to the owner of the vehicle involved in the accident.
Types of auto insurance policies
Overall, there are two categories of auto insurance policies
- Comprehensive Plan
- Third party liability coverage
Comprehensive plan- A comprehensive plan covers the damages to the car owner along with the third party involved in the accident.
Third party liability insurance coverage
These insurance plans cover the damages of the third party involved. The damage to the owner is not covered in these plans in the case of an accident. Most people do not prefer these plans.
Though the Indian law only states that the third party must be mandatorily insured, people would feel safe if their expenses were also covered by their insurance plan. Hence, a lot of people end up taking a comprehensive insurance plan and this is reciprocated by the insurance companies also. They promote their comprehensive plans in different ‘packages’ to attract more customers.
No two auto insurance policies are the same. There are a few differences in the form of unique points, additional benefits, etc. and these are the most overlooked parts of the agreement as people mistake insurance policies to be a compulsory product. Policies have their own requirements, they need to be seen and only then an owner must decide on which plan would be better suited to his needs. A complete analysis of an insurance policy is recommended before purchasing the same.
Insurancebash isn’t affiliated with any insurance company. We are simply sharing our opinions and review about the said products. We don’t take any responsibility if you buy these insurance policies.