car insurance

Car Insurance 101: Understanding the Basics

Getting a car? Well, most of your time will be spent researching the best model, the most stunning shade, some over the top safety features, and many such things. However, the most ignored aspect of buying a car comes in the form of auto insurance.

Most of us have little to no knowledge about car insurance and why it is so important. So here’s a comprehensive guide about car insurance and all that you need to know about it.

The basics of car insurance

All car insurances work only when you purchase them. For insurance, you have to pay yearly premiums. The key factors that determine your auto insurance plans are based on several factors. The value of your policy is based on the Insured Declared Value (IDV) of your vehicle. This is the maximum insurance amount that your insurer can pay you. Whenever you are buying insurance for your new vehicle, the IDV is the maximum amount your insurer can pay. The IDV of your new car is typically calculated on the basis of the showroom’s listed prices. Keep in mind, that the IDV amount of your car will not remain constant. Every time you renew your car insurance (mostly after a year), your IDV will decrease because the depreciation cost gets applied once the vehicle becomes over one year old.

What does your motor insurance cover?

A comprehensive auto insurance plan typically covers the following things:

1. Loss and damage due to natural calamities

All the events that occur outside of your control, such as floods, landslides, earthquake, typhoon, storm, cyclone, etc. will get covered by your car insurance plan. For instance, if a tree falls onto your car, rest assured that the damages will get paid by your car insurance company.

2. Loss and damage due to artificial calamities

Your car insurance plan will be valid in the case of man-made calamities. Examples of these include theft, riots, burglary, terrorist activities, etc. In fact, any damage that occurred to your car during transit on road, rail, or water will also be covered in your auto insurance plan.

3. Third-party legal liability

This has been made mandatory by law. This cover will protect you against any legal liability involved with accidental damages. Third-party legal liability is applicable if the accident has resulted in any kind of permanent injury or the death of a third-party individual. Your insurance claim will also be covered in case any damage is caused due to any surrounding property.

4. Personal accident cover

Your car insurance can also secure your family’s future in case of permanent disablement or an ill-fated circumstance of your death. In such a case, you are eligible to get coverage up to a certain amount for any damage caused to the driver while traveling or mounting and dismounting from the car. In fact, some insurance companies can also offer optional accidental covers for passengers traveling in the car.

What things are not covered by your car insurance

Car insurances do not cover each and everything under the shade of the sun. Auto insurances do not cover the following:

  1. The insurance won’t cover if you injure yourself by driving someone else’s car.
  2. Your car won’t be covered under insurance when someone uninsured is driving it.
  3. The insurance won’t cover a deliberate loss of damage.
  4. The normal wear and tear of the vehicle are not covered by the insurance.
  5. Electrical and mechanical breakdowns are not covered in insurance.
  6. If the damage is caused by a driver with an invalid license, then you can’t claim insurance for it.
  7. Any damage caused to the vehicle due to war, mutiny, or nuclear activity is not covered in insurance.

Getting yourself an auto insurance

You can easily shop for car insurance online. You can also utilize the cashless garage facility in case your vehicle needs repairing. This means you don’t have to pay for the repair if you are using the garage services your insurance company is partnered with.

In conclusion

All things aside, car insurance is important for your well-being and the maintenance of your vehicle in case of any damages. But make sure you know what you are signing up for. Ask as many questions as you want to your insurance provider and only then move forward with the deal.

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