What Is Car Insurance?Car insurance is basically a contract between a customer and an insurance company. The insurance provider agrees to pay the customer for the losses defined in the policy, in exchange for the premium that the customer pays. Auto insurance offers liability coverage on third-party property and life. This implies that if a third-party incurs a loss in a car accident that was caused by the insured car, the car insurance company will bear the expenses. Some policies also offer medical coverage, either in the form of riders or as a built-in aspect of the insurance cover. Medical coverage pays predominantly for the cost of treatment of injuries, compensation for lost wages, rehabilitation expenses, and funeral costs. Coverage under a car insurance policy includes damage to the vehicle or theft, as well.
Why do you need Car Insurance?
In India, car insurance is mandated by the Motor Vehicles Act, 1998. Any four-wheeler the plying on Indian roads should have a valid motor insurance policy that provides at least a minimum cover of third-party liability. As indicated above, third-party liability refers to the damages caused by the car owner (while using the insured car) to other people or their property.
So, if a vehicle on the road incurs damage in an accident caused by your car, you need not pay the expenses from your pocket. Instead, a valid motor insurance plan equips you with the ability to raise a claim with your insurance company. If the damage is covered under your plan and there is no indication of fraud, the insurer will pay for the damages.
Although the law states that every car should be insured, the reality is that there are lakhs of vehicles in the country that are not insured. It is highly advisable to spend a few thousand rupees on availing auto insurance, so that you are not putting yourself at risk of extra expenses arising from your involvement in an accident.