Car Insurance in India

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Why is Car Insurance Mandatory in India?

Have you ever boarded the wrong plane and reached a destination with not much money left in your pocket? Or have you tried snorkelling without a guide and proper pieces of equipment? For sure answer to both of these must be a No but, why?

In the two situations mentioned above, you definitely need a savior. Either, you would need a lot of money or a fearless hope that no misfortune will affect you. It can be possible but definitely could be an unreasonable option.

We live in India where general issues like the unruly rise of the population, the number of cars and hence the increase in traffic strike really hard. Due to the unmatched rise in the number of cars and other dynamics, probability of mishaps has also risen.

These accidental mishaps can sometimes be devastating for you, your family and other third parties. It can leave you and the others, involved in the accident, financially strained and distressed. Hence, the government of India made it mandatory for vehicle owners to buy at least a Third-Party Insurance.

Why Car Insurance is Important?

Risk Covers like car insurance is to protect us from unforeseen events and unplanned liabilities. Anyone can get stuck on the road with their car after an accident, car engine failure due to rains or theft of the vehicle. In any of the cases, having a car insurance policy will be a savior.

Many times, we see new drivers who speed up their cars and cause damage beyond one’s imagination resulting in deaths. Such irreversible bruises make us think of the need and importance of Car insurance.

Assume you and your friend go for paragliding. You chose to go without any help, but your friend prefers to have safety and protection with the guide. Suddenly, the air pressure changes and it gets windy due to which your parachute collides with a tree on the mountain as you weren’t aware of the rules of diving. On the contrary, your friend has a damage free landing because he/she preferred safety over everything else.

Benefits of Car Insurance

It is worthy to have car insurance in India considering the number of accidents in the past few years. Considering the scenario, we can look at the benefits of car insurance that includes:

  • The lawsuits, including legal fees if held liable for the damage.
  • Bills of repair due to damage caused in an accident.
  • Damages other than an accident caused by terrorism, earthquake etc.
  • Benefits to the survivors of the deceased.

Types of Car Insurance Offered in India

As per the Motor Vehicle Act-1988, a minimum third-party car insurance policy is mandatory in India. There are two types of car insurance policies available:

  • Comprehensive Package Policy (Own Damage and Third-Party Liability)
  • Third-Party Liability Policy

Car Insurance - Scope of Cover

To Cover the Own Damage - There will be no coverage for the car’s own damage if the owner does not have a comprehensive insurance policy. In case, the car owner bangs in the vehicle due to his fault or accidentally, he will suffer some losses. The car owner will receive the payment for the damages subject to the car insurance cover. Otherwise, in all the cases he will not get any reimbursements. Other than accidental losses, damages of a car may arise due to natural calamities as well. India has witnessed and is prone to many storms, floods, and massive earthquakes, which in turn could result in multiple losses.

To ease off the huge Third-Party Liability - Considering the rise of traffic in nothing flat, there are increased chances of smash and bend. You may overcome your own losses, but what if the third party cannot bear with huge expenses after a loss. Damage caused by your car to the third party is your liability to be paid. It does not matter whether you are able to afford it or not. The third party may suffer from bodily injury or property damage for which you may be held liable. Car Insurance, in this case, will be helpful that will save you from undue liability.

To extend Compensation to the Family of the Deceased - Car insurance is mandatory to help the family of the deceased who might lose their life in a car accident. The compensation under the Motor Tribunals Act was introduced to ease the burden on the families.

What will happen if you Fail to have Car Insurance?

Presume that you abide by the traffic rules but suddenly hit a car parked on the side of the road. It will be a third-party property damage caused by your vehicle. This would be the first time that you’d get into an accident that could leave you debted for the damages. You will be liable to pay for the losses. But if you fail to have car insurance, you might face:

  • Suspension of your driving license
  • Legal Proceedings and punishment
  • Lack of financial protection in case of accident and damage
  • Suspension of the car registration

Mandatory Car Insurancce - A Deeper Insight

Imagine you have called your close relatives at home for dinner and the best of the dish you cooked was burnt to black. The entire meal was prepared but one of the best items on the list got destroyed. For sure, you will lose it, but you would never want your guests to know.

You will be left with a few choices like manage from whatever is cooked or quickly prepare another dish. But now when the world is digital, and food is just a few minutes away, you would definitely keep yourself fool proof with a fantastic dish. That online delivery food will save you. What occupies your mind was to manage the last-minute hassle and not miss a chance for impression.

Similar can be the situation when you blow up your car (not insured) and find out that the expenses to rectify it are too high. Incapacity to bear the expenses for liability or repair due to insufficient savings encircles you with worry and stress.

Life is a precious gift from God. We need to make it beautiful and safe for our families. One car accident can ruin not only yours but also many other lives. Buying a mandatory car insurance policy is wise and not an obligation. Still, many remain doubtful to buy it without considering its scope of operation.