Vehicle Insurance: In the fast-paced world, having a vehicle has become a necessity. It is very important in today’s life for day-to-day chores and activities. The quick-moving life has created a dearth of time in people’s lives, where vehicles are a great time saver when it comes to traveling. India, in the year 2020, had almost 326,299,000 registered motor vehicles . This includes various vehicles such as two-wheelers, goods vehicles, cars, etc.
Source: India Registered Motor Vehicles: Total | Economic Indicators | CEIC (ceicdata.com)
Out of this large number of vehicles, approximately 57% are uninsured in our country. However, with the honor of having a car comes the responsibility and need to insure it.
In this blog post, we will dive into the complexities of car insurance, investigating its significance, types, coverage, and factors affecting premiums.
Fundamentals of Vehicle Insurance
Vehicle insurance, also known as auto insurance or car insurance, is an agreement between an individual and an insurance agency. It provides monetary security and protection in case of a covered misfortune, accident, or mishap, including the insured vehicle. The basic role of vehicle insurance policies is to mitigate the monetary effect and financial impact of unexpected events, like mishaps, burglaries, accidents, or harm to the insured vehicle. These vehicle insurance policies cover the risk for personal/commercial vehicles.
Government schemes such as FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) and PLI (Production-Linked Incentive) schemes have been great contributors to the ever-increasing vehicle insurance industry.
What is the Importance of Vehicle Insurance?
Vehicle insurance policies are important because:
- Legal Requirement:
In countries like India, it is a legal requirement to have vehicle insurance. It is a way of ensuring that vehicle owners and drivers become responsible while taking their wheels out on the road. This way, damages or injuries are caused while operating vehicles are covered. If anyone fails happens, this can result in consequences, such as fines or even license suspension.
- Financial Protection:
It covers medical expenses, repairs and replacement of damaged vehicles, costs for injuries, etc. It helps to have a safety guard for your cars. It covers various aspects like damages due to problems like fire or explosion, losses due to robbery or housebreaking, or harm due to any riot or strike.
What are the Various Types of Vehicle Insurance?
The different types of motor insurance in India are as follows:
- Liability Insurance
Liability Insurance is a basic part of vehicle insurance. It gives you coverage against the cost of damage and injury you may have caused to others in case of an accident. It is necessary to have it in our country. It safeguards you when you are at fault for an casualty. It covers the legal responsibility for physical damage.
- Collision Coverage:
This type of Insurance pays for any repairs to your vehicle in case of an accident. The difference is that this provides coverage regardless of who is at fault. It is more important if you have a newer or more valuable vehicle.
- Comprehensive Coverage:
Comprehensive coverage protects against non-collision events, such as theft, vandalism, natural disasters, or encounters with animals. This coverage is essential for safeguarding the vehicle from many potential risks.
- Personal Injury Protection (PIP):
PIP, ie. Personal Injury Protection covers expenses such as clinical expenses and lost income. This insurance provides insurance against whoever is at fault in the case of an accident.
- Private Car Insurance Policy
This is the type of vehicle insurance policy made mandatory by the government of India under the Motor Act of 1988 .
It is the type of vehicle insurance that should be taken for any private vehicle owned by an individual. It covers the car for harm against mishaps, accidents, fire, unforeseen events, and robbery, among others, and covers for any injury to the owner. It additionally covers any harm and wounds caused to the outsider or the third party.
Two-Wheeler Insurance Policy
This insurance contract covers two-wheelers like a scooter or a bicycle and is mandatory by the Public authority of India. The bike is covered against harm from mishaps, debacles, fire, burglary, and so forth, as well as any harm and wounds to the third party. It likewise offers required personal insurance coverage for the proprietor rider and can also be taken for travelers.
- Commercial Vehicle Insurance
This type of vehicle insurance covers all vehicles not used for personal use. Various types of vehicles include trucks, buses, heavy commercial vehicles, light commercial vehicles, multi-utility vehicles, agricultural vehicles, ambulances, etc.
What are the Factors Influencing Car Insurance Premiums?
The various factors influencing car insurance premium value are as follows:
- Driving Record
A perfect driving record without any mishaps, accidents, or criminal traffic offenses commonly brings about lower insurance premiums. On the other hand, a past filled with mishaps or violations can prompt higher premiums.
- Vehicle Type:
The model of the vehicle and the year of manufacturing of the vehicle can impact insurance premiums. Fresher, more costly, or high-performance vehicles might have higher premiums because of expanded fix or substitution costs.
- Insurance Coverage Limits:
The amount of insurance coverage chosen by the policyholder, including risk cutoff points, liability limits, and deductibles, can impact insurance premiums. Higher coverage limits and lower deductibles frequently result in higher premiums.
- Location:
The insured's topographical area can influence insurance rates. Regions with higher rates of mishaps, accidents, robbery, or defacement might have higher charges.
- Age and Gender:
More youthful drivers, especially teens and male drivers under 25 frequently face higher insurance payments because factual proof proposes a higher gamble of mishaps in this socioeconomics.
Which Car Insurance is Best in India?
Car Insurance is a safeguard for your vehicles. The two important things that an individual should have to own car insurance are a valid driver's license and being a registered owner of the car. In case of certain situations, the car insurance company has the right to deny your car insurance claim. In some situations, they are not liable under the insurance company's coverage. If, in case, the driver drives without a driver's license. It can be a case of when the driver was under the effect of some intoxicating substances.
Some of the best Car Insurance policies in India to take out Insurance for your car are:-
- Reliance General Insurance
- ICICI Lombard Insurance policy
- Bajaj Allianz General Insurance Company
- SBI General Insurance Company
- Magma HD
- Future Generali Car Insurance
- Zuno Car Insurance
- Royal Sundaram Car Insurance
- New India Insurance
Car insurance Claims settlement ratio in India (January 2024)
Source:- India: car insurance claims settlement ratio by insurer 2024 | Statista
Best Two wheeler insurance
India is the largest producer of two-wheelers in the global market. It contributes to about 7% of the country’s manufacturing GDP. Also, the Indian automobile industry is ruled over by two-wheelers. Some of the best two-wheelers in India are:-
- IFFCO Tokio General Insurance
- Royal Sundaram General Insurance
- The Oriental Insurance Company
- Universal Sompo General Insurance
- Tata AIG General Insurance
- Future Generali Indian Insurance
Conclusion
In conclusion, vehicle insurance is an essential part of dependable vehicle ownership. It gives financial security, guarantees legitimate consistency, and offers genuine serenity in the case of unforeseen occasions. Understanding the kinds of coverage accessible and the factors influencing premiums enables people to make informed choices while choosing a vehicle insurance policy. By securing adequate coverage, drivers can explore the streets with certainty, realizing that they are ready for any difficulties that might come their way.
