Is Comprehensive Car Insurance Mandatory in India?
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Home / Car Insurance / Is comprehensive car insurance mandatory in India?
No, in India, it is not mandatory to purchase a comprehensive car insurance policy, although it offers extensive protection. With the increasing number of vehicles and accident-prone roads, the risk of damage or injury is high.
As per the Motor Vehicles Act, 1988, only third-party insurance is legally required for all registered vehicles. So, let us take a closer look at what comprehensive car insurance covers, its major benefits, and why it might still be a wise choice for a broader protection
Advantages of Buying A Comprehensive Car Insurance Plan
A comprehensive car insurance policy offers a lot more benefits than basic third-party insurance policies. Here are some benefits of buying a comprehensive car insurance policy that you must know before buying one:
Financial Safety-Accidents can happen anytime and anywhere, no matter how safely a person drives. A comprehensive plan takes care of your financial losses due to an accident while covering the third-party losses too.
Personal Accident Coverage-It is a smart choice to buy Personal Accident Cover, which covers the policyholder against injury, disability, or death in an accident.
Opportunity to Buy Add-On Cover-Buying a comprehensive car insurance plan allows you to buy Add-ons for better coverage. Popular add-ons, such as Zero-Depreciation Cover, Roadside Assistance Cover, Engine Protection Cover, etc., help protect you from major financial losses.
Flexible Coverage Options-Comprehensive car insurance offers customisable coverage to suit your specific needs and budget. You can enhance your policy with useful add-ons like roadside assistance, zero depreciation cover, and more for better protection.
Financial Protection Against Disasters-Natural disasters such as floods, earthquakes, and damage from fires, riots, or theft can cause severe or total damage to your vehicle, resulting in major financial strain.
Comprehensive car insurance provides essential financial support during such events. Insurance companies compensate you for the loss, helping you recover without bearing the entire cost yourself.
What Does a Comprehensive Car Insurance Cover?
In addition to third-party insurance, a comprehensive policy helps you financially shield yourself from any risk you could encounter while driving. Below is the list of risks covered under a comprehensive car insurance policy:
Third-Party Liability
It offers legal and financial obligations that result from injury, death, or damage to the property of a third party due to an accident involving your vehicle.
Accidental Damage to Your Vehicle
The policy pays for repairs or replacement in case your car is damaged due to a collision, no matter who is at fault.
Natural and Man-Made Calamities
Floods, earthquakes, cyclones, riots, acts of vandalism, or fire are the events covered under this policy, safeguarding your car from unforeseen losses.
Mandatory Personal Accident Cover
This cover pays monetary compensation (up to ₹15 lakhs) to the owner-driver in the event of permanent disability, injury, or death due to a road accident.
What Is Not Covered Under Comprehensive Car Insurance?
Comprehensive car insurance provides extensive cover, but it is also important to know what is not covered. Keep in mind the following exclusions under comprehensive car insurance to prevent surprises at the time of claims:
| Drunk Driving | Damages arising out of driving under the influence of alcohol or drugs are not paid. |
| Driving Without a Valid Licence | Claims are rejected if the driver does not hold a valid driving licence. |
| Outside Geographical Limits | Any accident or loss occurring outside the policy's specified geographic area is excluded. |
| Commercial Use | If a private vehicle is used for business or commercial purposes, related damages will not be covered. |
| Wear and Tear | Normal ageing and wear and tear of the vehicle are excluded from coverage. |
| Depreciation | The natural decline in the value of cars over time is not covered under the policy. |
| Mechanical or Electrical Failure | Breakdowns due to mechanical or electrical faults are not eligible for claims. |
Should You Buy a Comprehensive Car Insurance Policy
While only third-party insurance is legally required to drive on Indian roads, many vehicle owners still opt for a comprehensive car insurance policy. Here is why comprehensive insurance may be a smarter choice:
Better Protection-Unlike third-party plans that only cover damage to others, comprehensive policies also cover damage to your own car and protect your health in case of accidents.
Value for Money-Though slightly more expensive, many Indians prefer comprehensive cover for its broader protection, which often proves more economical in the long run.
Peace of Mind-It offers greater peace of mind with features like theft protection, natural calamity cover, and personal accident cover.
However, if you live in a low-risk area with safe driving conditions, third-party insurance might suffice.
Bottom Line
Although not legally required, a comprehensive policy offers superior protection, financial security, and peace of mind beyond what third-party insurance can provide. So, is comprehensive car insurance mandatory in India? No, but it is certainly a wise investment for most vehicle owners.
Whether you drive daily through busy city roads or occasionally in safe zones, comprehensive coverage ensures you're better prepared for unexpected events on the road.
Frequently Asked Questions
Following are a few frequently asked questions and answers about comprehensive car insurance in India:
Is it mandatory to buy car insurance in India?
Yes, the Motor Vehicles Act, 1988 mandates all car and bike owners to have at least a third-party insurance policy. Moreover, a comprehensive insurance policyholder does not need to buy a third-party plan separately.
Is a Comprehensive Insurance Plan better than a Third-party policy?
Yes, a comprehensive insurance plan is better than a third-party policy as it covers both third-party liabilities and own vehicle damages. It offers broader protection, including theft, natural disasters, and personal accident cover, providing greater financial security and peace of mind.
Can I switch from a Third-party Policy to a Comprehensive Policy?
Yes, you can switch from a third-party plan to a comprehensive plan at the time of renewal of your insurance policy. During this process, the insurer might check the condition of your car. Make sure to complete your pending car services and repair existing damages before the inspection.
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