Last Updated on May 24, 2022 by Anjali Chourasiya
If you own a vehicle in India, you need to have a third-party vehicle insurance policy for it. The Motor Vehicles Act, 1988 dictates this rule and mandates insurance on every vehicle before it can run on Indian roads. A third-party policy covers third-party liabilities, i.e., the financial liabilities you suffer if your vehicle causes physical injury or death of an individual or damages someone else’s property. But what about the damages that your vehicle suffers? A third-party plan does not cover it, and this is where comprehensive insurance comes into the picture.
Let’s have a look at the comprehensive insurance meaning and its various aspects.
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What is comprehensive insurance?
A comprehensive insurance policy covers both third-party liabilities as well as the damages that your vehicle suffers. It is a voluntary cover that you can avail of for both cars and two-wheelers. In the case of cars, the comprehensive cover is available on an annual basis. In the case of two-wheelers, however, you can opt for a long-term policy too, which covers your bike for a maximum of 3 consecutive years without the hassle of annual renewals.
What does comprehensive insurance cover?
A comprehensive package plan provides coverage against the financial loss suffered due to any of the following contingencies:
- Third-party liability is incurred if your vehicle physically injures or kills an individual.
- Third-party liability is incurred if your vehicle damages any third-party property.
- Theft of the vehicle
- Damages to the vehicle due to natural calamities like floods, earthquakes, storms, cyclones, lightning, hurricanes, and landslides.
- Damages to the vehicle due to human-made disasters like fire, self-ignition, explosion, riots, malicious acts, strikes, and other instances.
- Damages to the vehicle during its transportation through the land, air, or water.
Thus, if your vehicle is damaged, you don’t have to worry about the expensive repair costs. The comprehensive plan would cover it. In case of theft, too, the policy would pay you a lump sum amount, so you don’t suffer a financial loss.
What does comprehensive insurance not cover?
Everything has exceptions. Similarly, though a comprehensive insurance policy provides almost all-inclusive coverage, there are exclusions too. Here are some instances that a comprehensive plan does not cover:
- Damages suffered if you drive without a valid driving license
- Damages suffered if you drive anywhere outside India
- Any consequential loss
- Regular wear and tear of your vehicle and depreciation because of usage
- Damages that occur when you cause any deliberate accidents
- Damages suffered due to war, mutiny, or nuclear risks
- Damages suffered when you are driving the vehicle under the influence of drugs, alcohol, or any other intoxicants
- Damages suffered when you engage in criminal acts
- Mechanical or electrical breakdown of the vehicle
- Damages are suffered if you use the vehicle against its usage limitations. For example, using a private car for commercial purposes
- Damages that occur if you use the vehicle to engage in hazardous activities
Benefits of comprehensive insurance
Now that you know the comprehensive insurance meaning, inclusions, and exclusions, let’s look at the coverage benefits:
A comprehensive insurance policy not only takes care of the mandatory third-party liability but also provides coverage if your vehicle suffers any damage. Thus, the policy offers all-around protection that gives you complete financial security against possible vehicle-related contingencies that you might face.
Getting your vehicle repaired after it is damaged is not a small expense. You can incur considerable costs, which might put a strain on your finances. Moreover, replacing it with a new one might be challenging if your vehicle is stolen, especially if you have invested all your savings in the first instance. A comprehensive insurance plan provides financial assistance in such cases. It allows you to avail cashless repairs at network garages and compensates you for the financial loss suffered in the theft of your vehicle.
No claim rewards
If you buy a comprehensive insurance plan and do not make a claim in a policy year, you earn a no claim bonus. This bonus allows you a discount at the time of renewals on the premium payable. The bonus starts at 20% and goes up to 50%. So, you can get rewarded for not making claims if you buy a comprehensive plan.
Optional add-on coverage benefits
If the inbuilt coverage of comprehensive plans was not enough, you get the option of additional coverage benefits too. Comprehensive insurance plans offer a range of add-on covers to add to the base policy at an additional premium.
What do these coverages do? They enhance the coverage scope further. A typical example is the no claim protection add-on. Though a comprehensive insurance policy allows no claim bonus, the bonus becomes zero if you make a claim. So, imagine not making claims for 5 yrs and accumulating a 50% bonus only to claim in the 6th yr. You would lose the 50% bonus. But, if you choose the no claim protection add-on, the bonus remains intact even if you make a claim. Interesting, isn’t it?
Attractive premium discounts
The no-claim bonus is not the only discount that you earn in comprehensive plans. You can also earn a discount for:
- Installing safety devices like ABS or anti-theft devices
- Having a membership of a recognized Automobile Association
- Buying the policy online
- Being an existing policyholder of the insurer
- Choosing a voluntary deductible.
These discounts reduce your premium further and make it affordable.
Should you buy comprehensive coverage?
This one is a no-brainer. Given the coverage offered by a comprehensive insurance policy, both inbuilt and through add-ons, it is a wise choice to buy one. If your vehicle suffers damage or theft, you would not have to worry about the financial repercussions if you are insured under a comprehensive plan. Moreover, since the plan also has third-party coverage, your legal liability is also taken care of.
Buy a comprehensive insurance plan for your four-wheeler or two-wheeler and be financially secured against possible contingencies, both big and small. Yes, it has a higher premium outgo than a third-party policy, but the coverage is also comprehensive.