What are the types of Vehicle insurance? | 3 types of Motor Insurance

People try to buy the best car, but they are careless in getting the car insured. Vehicle insurance covers our financial losses and also saves us from many legal troubles. In this article, we will know why vehicle insurance is necessary and what are the benefits of Vehicle insurance? First of all, we will know how many types of vehicle insurance are vehicle insurance?

Vehicle Insurance

Types of Vehicle Insurance

According to the insurance cover we get, there are two types of vehicle insurance-

Third-Party Insurance Policy: Third-Party Insurance Policy compensates for any person or property damaged by our vehicle. In the aftermath of such incidents, it is also the responsibility of the insurance company to deal with the legal procedures that will take place for the determination of compensation.

Along with third-party insurance, we also get Compulsory Personal Accident Insurance of 15 lakhs. It provides compensation of up to Rs 15 lakh in the event of death or permanent disability of the vehicle owner.

But keep in mind that we do not get compensation for damage caused to our vehicle by a third-party insurance policy. For this, we have to take the Own Damage Cover, which is available only after taking a comprehensive motor insurance policy.

Comprehensive Motor Insurance Policy: Comprehensive Motor Insurance Policy is also known as a complete insurance policy. In this, the insurance company not only pays compensation for the damage caused to any other vehicle, person, and property from our vehicle, the insurance company also compensates for the damage caused to our vehicle. That is, we also get the benefit of both Third Party Insurance and Own Damage Cover from a comprehensive motor insurance policy. By taking a comprehensive insurance policy, we get the facility to add several types of Add On Covers (subsidiary insurance policies).

Types of Insurance by Vehicle Category

According to the category of vehicle, there are three types of vehicle insurance.

  1. Car Insurance
  2. Two Wheeler Insurance
  3. Commercial Vehicle Insurance

Now let’s know about all three in a detail-

For You: Everything you need to know about insurance in 2022.

Car Insurance 

With this insurance, we get the facility to compensate for the damage to our car. Car insurance also covers the damage caused to the vehicle in the event of natural calamities or man-made calamities, etc. Many companies have now started providing medical insurance as a part of the same, along with car insurance.

Car insurance is also responsible for settling legal liability on damage caused to another person or property (third party) in the event of an accident caused by our vehicle. The driver of the vehicle is also entitled to the benefit of this third-party liability. Not only this, there is an option to take coverage for the passengers/co-passengers as well. However, the more the coverage increases, the higher the premium of the policy.

Two Wheeler Insurance

Two Wheeler Insurance policy provides the facility of compensation for the damage caused to own vehicle along with third-party. Apart from road accidents, this type of insurance also protects against natural and man-made calamities. Generally, this insurance is for one year.

Insurance Regulatory and Development Authority of India has introduced long-term two-wheeler insurance (LLTW).

In this policy, a person can get vehicle insurance for 3 years in one go.

Insurance companies must give personal accident cover of Rs 1 lakh along with two-wheeler insurance. We can also take insurance for the riders by increasing the premium.

Commercial Vehicle Insurance

All vehicles that are used for commercial purposes, such as buses, trucks, ambulances, loaders, canters, multi-utility vehicles, agricultural vehicles, etc., are insured under commercial vehicle insurance. Commercial vehicle insurance also protects against damage caused in the event of an accident or disaster.

In the event of a road accident, apart from damage to any other person or property (third party), the facility of claims for death or injury is also a part of this type of insurance policy.

While determining the premium for an insurance policy, the make and model of the commercial vehicle, place of registration, year of manufacture, immediate showroom price, etc., are taken into consideration also, whether the insurer is a person or a company.

Why is Motor Insurance Necessary for you?

Even if you drive very efficiently, even if you do not need to take a vehicle on congested roads, getting vehicle insurance is always a profitable deal. Having auto insurance saves you from many of these problems-

  • To compensate for damage to another person, vehicle or property

According to the Motor Vehicle Act applicable in India, it is mandatory to take third-party liability insurance for every vehicle. Third-Party insurance settles the damage caused by your vehicle to another person. The damage can be in the form of permanent injury or even death. The compensation for which can be in lakhs or even crores. The damage caused to the property of another person is also paid under the same third-party liability insurance.

Even under normal circumstances, if you do not have third-party insurance for your vehicle, you can be fined up to Rs 2000 or jail for three months. You can get both the punishments together.

  • For damage caused to own vehicle

In an accident, the cost of repairing the damage caused to your vehicle is covered by First Party Motor Insurance. Due to this, not only you are safe from the sudden financial crisis, but also free from the hassles of repairing. Now, many companies (especially car companies) have started providing the facility of roadside assistance as well. In this, you are helped only by reaching the spot (at the accident site).

  • Settlement for damage caused by natural calamity or other such events

Vehicle insurance also covers the case of loss due to any natural disaster or human calamities etc.

What type of incidents are involved: Such contingencies include road accidents, car fires, natural calamities such as earthquakes, landslides, floods, thunderstorms -Storm-hurricane, lightning, etc. Similarly, man-made disasters include fire, riots, terrorist attacks, explosions, theft, etc.

Looking at all these facts, it can be said that getting motor insurance is a wise deal in every way.

Keep these things in mind while taking vehicle insurance. 

Often people opt for an insurance policy after seeing less amount of premium (paying money) of vehicle insurance. But, cheap plans mean less comfort in terms of coverage. A premium may seem expensive, but it also comes with zero depreciation add-on.

There are three things to keep in mind while choosing an insurance policy.

  1. How is the credit of the insurance company in the market? (Variations on accessibility and speed of service)
  2. What coverage is the company giving you, and how much? (for self and third parties also)
  3. What is the quantum of premium to be paid on your behalf? (Not charging much by giving a little facility)

Keeping all the three facts in mind, you can choose the best option.

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