February 23, 2024
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Why is Motor Insurance so Important and What are its Benefits?

The vehicle buying process often involves compliance in the form of registration and insurance. While the registration is handled by your auto dealer, it is insurance that you have to carefully look into. But oftentimes, first-time buyers question the requirement of an insurance cover if they are a safe-driver.

A concerning statistic presented by the Ministry of Road Transport & Highways (MoRTH) states that there were 4,49,002 accidents that were recorded in the year 2019. Now if these are official figures, imagine the ones that went unaccounted.

In a situation of an accident, the vehicle insurance policy provides financial coverage. This can be in the form of liabilities that are payable to a third party or for your own vehicle. In either case, a motor insurance policy comes handy. Other than financial coverage, a motor insurance plan also ensures legal compliance of the Motor Vehicles Act. This law requires all vehicles registered in the country to mandatorily be insured with at least a third-party coverage.

Now that you know that motor insurance plans are important for financial and legal reasons, let’s look at the benefits offered by them.

There are two types of vehicle insurance plans that you can choose from — a third-party cover and a comprehensive cover.

Third-party plans are minimum required insurance plans and hence, provide limited coverage in comparison to comprehensive plans. They offer the following benefits:

  • Compliance with the law

As per the Motor Vehicles Act, all vehicles that are registered in India must mandatorily have a motor insurance plan. Among the available plans, a third-party plan is required as the minimum. When you buy a third-party policy, you are compliant with the law in regards to legally having the minimum required insurance coverage. * Standard T&C Apply

  • Avoiding steep fines

Another benefit of buying a third-party plan is avoiding steep fines. Not having a motor insurance cover, third-party plan to the least, attracts penalties that start at ₹2000 for one time offence and increases to ₹4000 for repeated offences and/or imprisonment for three months.

  • Financial cover for accidents

A personal accident (PA) cover is mandatory (if you don’t own one) in addition to a third-party cover which protects you, the policyholder, in the event of an accident. It pays for compensation up to ₹15 lakhs for injuries, disability and even for death.

While third-party plans do not provide any protection for the damages to your vehicle, a comprehensive plan is what steps in. Unlike third-party plans, comprehensive plans have three components — third-party cover protecting against liabilities due to third persons, own-damage cover for the repairs that are required for your vehicle and a personal accident cover which pays for injuries, disabilities and death of the policyholder. * Standard T&C Apply

Here are some of its benefits

  • Compensation for own damages

The own-damage cover in a comprehensive plan is an essential element that pays for the repair costs of your vehicle. During an accident, it isn’t only a third party that faces damages, it is your vehicle too. Using a comprehensive plan, you can seek compensation for the repairs that are required to your vehicle.

  • Customisation of coverage

Using the add-ons facility, comprehensive plans can include events that are specifically excluded from its coverage. For instance, a zero-depreciation add-on is what covers the depreciation that is calculated at the time of pay out which otherwise lowers the compensation. While there are several add-ons to choose from, remember they impact your premiums. To determine which add-ons are worth the money, you can make use of a motor insurance calculator.

* Standard T&C Apply

  • No-claim bonus

Another benefit of a comprehensive plan is the no-claim bonus feature. In case no claims are made during the previous policy period, the insurance company offers a markdown in the premium at the time of motor insurance renewal. This helps lower the overall premium and offer a reward for being a safe driver. * You can visit the official website of IRDAI for further details.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.