Suppose a person having his car insured encounters an accident or any incident that damages the said car. In that case, that person can claim the insurance company to get compensation for the damages caused to the vehicle. Car Insurance is a contract between the owner of the car and the insurance company which ensures financial protection to the owner against losses due to unforeseen risks such as road accidents, theft, earthquakes, floods, and cyclones. In this legal contract, the insurance company is liable to pay the owner with a sum that is roughly equal to the market value of the insured car or a sum to compensate for the damages, whichever is less, in exchange for an amount paid annually by the owner of the car to the insurance company called as premium.
However, different policies cover various aspects of these losses according to the scheme opted by the insurer, and thus, the premium for each type of insurance varies accordingly.
Types of Car Insurances:
- Third-Party Insurance
This type of insurance covers only the cost of damages of life and property caused to the third party, thus saving one from the legal liabilities that arise in case of an accident. But it leaves the owner vulnerable to pay for the damage caused to its car.
- Collision Insurance
This scheme ensures the cost of repairs to the insured vehicle in case of damages in an accident but does not pay for the medical expenses of the driver after the accident.
- Personal Protection Insurance
This scheme covers the medical expenses of the driver after encountering an accident or collision involving the insured car.
- Comprehensive Insurance
This scheme is the most beneficial for insurers as it covers third-party liabilities as well as the cost for repairs of damages to own vehicle and medical expenses required to one’s self. Plus, it has the additional benefit of covering non-collision damages to the vehicle in case of storms, earthquakes, or floods.
- Pay as You Drive Insurance
In this type of insurance, the premium to be paid by the owner is decided by taking into account the distance traveled by the insured car. It is beneficial for those who own multiple cars and want to insure them without having to pay too much of a premium.
Thus, Car Insurance proves beneficial and compulsory to the owners as it not only offers to pay for the damages to the car along with the medical expenses of the driver, it also gives the owner peace of mind and a worry-free driving experience.