Introduction
Every time you decide to buy something new and expensive, the first thing that passes every buyer’s mind is how long the purchase will last and what happens to your investment if it is damaged or lost? For instances like these, you have ‘Insurance’ coverage which is basically an arrangement by which a company undertakes to provide a guarantee of compensation for predefined damage, loss or death in return for payment of a specified premium. The coverage policy is usually time bound and needs to renewal at a specified period.
All vehicles registered in India are legally bound to hold a valid insurance policy. Motorist who do not hold a valid insurance policy are subjected to penalty in form of monetary fines. Auto insurance is predefined to vehicle sizes and their use. On a wider scope, the auto insurance is classified in three categories – Third-party insurance, Comprehensive insurance and Zero dep. insurance.
Third-Party Insurance
The third-party insurance is the most basic coverage which is legally accepted under motor norms. This form of insurance offers cover against any legal liability to a third party whenever the insured is at fault, thereby covering any damage or injury to another person or property. However, the insured will not be covered for his own vehicle damages or belongings in his vehicle. Vehicle owners are most often seen settling for this as it attracts the lowest premium. Opting for third-party insurance may seem a practical choice to older vehicles which are lower priced and it is cheaper to pay for repairs rather than paying high premium for a comprehensive cover.
Comprehensive Insurance
As the name suggests, a comprehensive insurance basically offers an overall protection against damages to your car. Along with accidental damage coverage, this form of insurance also covers theft and legal liability to third party. The coverage is just not limited to a few risk, but also gives you peace of mind against natural disaster like floods or hurricane, fire, vandalism and even damage caused by animals. Yes, opting for a comprehensive insurance can get a little heavy on your pockets, but then, when you own a new car or drive around in a premium model, you would not want to shell a bomb fixing it in case of an untoward incident. One can opt for comprehensive insurance till a vehicle is 15 year old.
Zero Depreciation Insurance
A Zero Dep. insurance is offered with new cars and a motorist can renew it till the vehicle is five year old. Popularly also known as bumper to bumper insurance, this form offers the maximum benefits in case of an accident or theft. A zero dep. insurance also covers the plastic and fibre components offers a cent per cent coverage for the same. The comprehensive insurance also covers plastic or fibre part damage, but then this is limited to 50 per cent of its actual cost. Speaking about depreciating coverage percentage, as the name suggests the zero dep. insurance remains unaffected and unchanged for a period of five years, while the comprehensive insurance accounts for 95 per cent in first year, 90 per cent in second year, 85 per cent in third year, 75 per cent in fourth year and 65 per cent in five years. Beyond 10 years a comprehensive coverage accounts for 50 per cent in metal and wood components.
Preferable choice
Lately, insurance companies have also been offering add-ons like roadside assistance, engine protection, etc. what is to be seen here is that how much of it is really useful. It is important to read the terms and conditions along with the disclaimer before opting to renew an existing policy or opt for a new one altogether. Also, it is important to consider the vehicle’s insured declared value and benefits pitted against it. If you drive around in an old vehicle, opting for comprehensive insurance and ending up paying higher premium really does not serve your purpose. However, if you have a vehicle which is less than 10 year old, a comprehensive insurance can help save you some additional money in case of an untoward incident. For premium car owners, a comprehensive coverage is can be stretched for another five years and ensure peace of mind for a total period of fifteen years.
