Cheap Car Insurance Myth or Reality

Getting your vehicle insured has been a compulsion in India for quite a few years. In the Motor Vehicle’s Act 1988, this decision was taken to protect people, by providing them with a definite financial cover, from vehicle owners’ faults.

Thereon, insurance policies known as third-party liability policies came into use and is now the cheapest vehicle insurance available to both motorcycle and car owners in India. But, is it a good option at all?

Drawbacks of Cheap Vehicle Insurance

Does 2% of the price of your car per year, qualify as cheap? Answering this question is exactly how you can determine whether you are getting a good deal or not. A third-party insurance costs way less than 2 percent. But, in case of an accident it only saves the owner of the vehicle from legalities by paying for damages to life or property.

The drawback of the third-party liability insurance coverage is that it does not extend to the owner and the owner’s vehicle. All it covers are damages to a third party in case of an accident.

Conflictingly, other than facing danger to life, a vehicle owner can lose alot in an accident. Furthermore, vehicle fixes can burn through an owner’s savings and apart from small damages, theft of a vehicle can be catastrophic. A third-party policy doesn’t cover any of this.

A comprehensive policy is what you need if you require coverage for your own vehicle.

Can We Term a Car’s Comprehensive Insurance as Cheap Car Insurance 

In case of bikes, comprehensive insurance is about 2.5 to 3 percent of the bike price yearly. For a car, the policy costs about 1.5 to 2 percent of your car insurance per year. The added benefits are that a comprehensive policy will cover your life with a sum of INR 15 lakhs and also covers your vehicle for damages for an amount that is a slightly lower than your vehicle’s purchase value.

According to experts, the price of insurance is not cheap, but unquestionably it is adequate. In case of an accident, your car is covered for major damages which could be a lot to bear without an insurance policy. Moreover, an accident isn’t always your mistake and accidents happen in a large number on a daily basis. A comprehensive insurance takes care of all your worries.

Comprehensive Bike and Car Insurance Quotes

The premium prices of a comprehensive insurance is not as cheap as third party coverage. The price of the policy depends on the price of your vehicle. We’ve listed a few vehicles and the approximate price of comprehensive insurance and third party insurance for them below:

Calculated Insurance quotes for a few known cars:

• Hyundai i20 Magna - Car price about INR 6 lakhs
  • Comprehensive insurance - INR 11,553 per year
  • Third party insurance - INR 2,863
• Toyota Innova - Car price about INR 15 lakhs  
  • Comprehensive insurance - INR 29,531 per year
  • Third-party insurance - INR 7,890
• Toyota Fortuner - Car price about INR 30 lakhs  
  • Comprehensive insurance - INR 49,531 per year
  • Third-party insurance - INR 7,890

Calculated insurance quotes for a few known bikes:

• Bajaj Dominar 400 - Bike priced around 2 lakhs
  • Comprehensive insurance - INR 5150 per year
  • Third-party insurance - INR 2,323
• Honda CBR 250 - Bike priced around 2.3 lakhs
  • Comprehensive insurance - INR 2629 per year
  • Third-party insurance - INR 985
• Royal Enfield 500 - Bike priced arund 2 lakhs
  • Comprehensive insurance - INR 5078 per year
  • Third-party insurance - INR 2,323

Riders: The Secret of a High-value Comprehensive Insurance Policy

There are exclusions for coverage under a ‘basic comprehensive policy’ such as damage to tyres, consumables, engine, and theft etc. Coverage for this can be availed with purchase of a few add-ons that cannot cost more than 30% of your base policy, as prescribed by government.  

The following are riders that you should get when you purchase a new policy or during the renewal of your old policy:

1) Zero-Depreciation Cover – This rider guarantees full claim with zero depreciation deduction.

2) Engine Coverage Rider–This rider will cover engine repairs if the engine is damaged due to leakage of water, stalling, oil, and so on. Without this rider, engine damage will cost close to Rs 1 lakh.

3) Return to Invoice–This rider can help you get your car replaced with a new equivalent car in case your car gets damaged beyond repair or is stolen.

Make Your Comprehensive Policy a Low-cost Car Insurance

The premium price of your policy usually stays constant but changes according to your driving habits. Over a few years, the price is bound to increase if you claim for small damages. The way to keep the price of your insurance at bay is by taking care of small damages by yourself and saving your insurance coverage for a really bad day.