All You Need to Know About Car Insurance and Car Spare Parts Protection

11 Aug 2021

Car and insurance go hand in hand. The more you love your car, the more care you will take of it. And what better way to show love than buying adequate insurance for any eventuality involving your car.

Car insurance protects you against financial loss or legal liability in the event of an accident or theft. It is a contract between the insurer (the car insurance company you purchase the policy from) and the insured (the policyholder). Once the contract is signed, you pay the premium, and the insurance company agrees to pay your losses as defined in your policy.

In India, while every car owner has basic or third-party insurance, as it is a legal requirement, not all opt for a comprehensive insurance policy or add-on covers or riders. The add-ons come in handy when you need compensation for specific reasons, such as replacing worn-out parts. Usually, these particular requirements are not covered in the standard or comprehensive plans, or you do not get the total value of the parts. It's essential to pick the suitable add-on covers in car insurance. Before we learn about add-on covers, we must know what basic or third-party and comprehensive policies offer policyholders.

Third-party insurance

Third-party insurance is the most basic cover and the legal minimum in India. It only covers damage to a third party involved in the accident, whether it is another vehicle or a person. It does not cover the cost of repairing or replacing your car.

The Motor Vehicles Act of 1988 makes it mandatory for all vehicles plying on Indian roads to have a third-party motor insurance policy. If you don't have valid car insurance, you may be prosecuted, or your driving licence may be suspended till the time you renew your policy or purchase a new one.

Depending upon how much you are willing to pay, a comprehensive policy may cover vandalism, theft, fires, rains, hails, natural disasters such as earthquake, floods and storms, and falling objects such as tree branches or debris.

What is comprehensive car insurance?

Besides providing the same cover as third-party insurance, comprehensive car insurance protects the vehicle owner from losses should their vehicle be damaged in an accident or due to a natural calamity.

Most car owners believe that a comprehensive car insurance plan is enough to deal with eventualities such as accidents or natural calamities and don't need add-on covers. Although car insurance is a personal choice, experience shows being pennywise and pound foolish does not help. For those who own new and expensive cars and where the car owners have run out of warranty, it is all the more prudent to go for adequate coverage, even if it means paying a little more. Let us understand how add-on covers in motor insurance will give you value for your money.

comprehensive insurance plan may miss out on several crucial liabilities and may not provide the complete insurance coverage that your vehicle may need. It usually does not include damages caused by ageing and wear and tear of your car. The plan also does not protect your vehicle from a depreciation of its value over the insurance period. Here, a zero-depreciation cover in your comprehensive car insurance will help.

Car spare parts insurance

The comprehensive car policy often does not include replacing parts, even if it may include servicing. Most car parts have a definite lifespan, or car spare parts expiry, and need replacement regularly after they wear out or start malfunctioning.

In a car accident, most insurers provide for the cost of, what they call, reasonable repairs, leaving out the spare parts if it is a comprehensive plan. If some plans offer replacement of components, you may never get the original parts. The original spare parts of any vehicle could cost you a bomb, and the more sophisticated a car is, the more expensive its spare parts will be. This is where the spare parts add-on comes to a car owner's rescue. You get the value for your money, i.e., premiums paid for add-ons.

Car spare parts cover is not the only add-on that you should go for if you want to be ahead of times and protect yourself from an unwanted burden on your pocket. The best way to find out what add-ons you need is to see the exclusions in your policy and then assess if you need insurance for the missing liabilities.

Here are some of the add-ons you should consider to enhance your car insurance:

Zero depreciation or nil depreciation cover

When settling your claim, the insurer only covers the current market value of your car, not the price you bought it for. The gap between the car's original price and what the insurer offers you as an insurance claim is a depreciation. If you purchase the zero depreciation or nil depreciation add-on, the insurance company, and not you, will pay for the depreciated parts of your car. Considering the condition of Indian roads and weather, a car owner must not take the risk of ignoring this valuable add-on in car insurance.

Engine protection

The engine is the most crucial part of a vehicle and the most expensive one at that. It is your car's head and brain combined. So, it deserves special protection. Unfortunately, comprehensive car insurance does not cover damage to the engine or its parts except those occurring during accidents. The triggers for engine damage or failure are many, so it would be a bad idea to miss out on this valuable add-on.

Additional accident cover

The owner-driver must get the basic personal accident cover while purchasing insurance for the car, but if you want to insure the hired driver or passengers of the vehicle, you need to opt for the add-on personal accident cover.

No claims bonus protection

It's a good idea to pay an extra premium to protect your no-claims bonus. The no-claims bonus is usually is a substantial amount. By purchasing a no claims add-on, you can file for insurance claim and at the same time keep the non-claims bonus untouched.

Car insurance needs your full attention

We spend so much time, energy, and resources researching the models, sturdiness, colours, and safety features before picking the ideal car. But we don't show even a fraction of the same enthusiasm for choosing car insurance.

Try to get the best possible coverage for the cheapest premium, but remember, the cheapest may not necessarily be the best.

Get in touch with Liberty General Insurance for a ready-made solution to all your car insurance needs.

Disclaimer: For more details on risk factors, terms & conditions please read sales brochure carefully before concluding a sale. *The discount amount will vary subject to vehicle specification and place of registration