Spend, Save and Invest Smartly

Importance of Car Insurance

In our last article, we had given information of the Car Insurance as well the types of Car Insurance. This article gives you an idea as to how important Car Insurance is in this present era. No wonder Government has made it a mandatory requirement and it is our duty to ensure that we get car insurance along with the car. Not just the importance, but also the consequences that is likely to be faced in the absence of car insurance is mentioned below.

Car insurance particularly third party liability is a must in India. You also need to take own damages cover as an accident can cost you several thousands in repairs. Try to avail the no claim bonus on your car insurance policy.

Importance of Car Insurance

Third party motor liability insurance is compulsory in India. If your car causes damage and destruction to another’s vehicle or injury to a third party unrelated to you then you have to pay for injury and damages. A comprehensive motor insurance also covers damages to your car and injuries you suffer in an accident. Having a car insurance policy guarantees protection to your vehicle (pays in case of an accident) and medical expenses for injury. If you have not made any claims in the year you have a no claim bonus. You can get a discount of your premiums or a higher coverage.

I will explain the use of a car insurance policy with an example:

Ravi and Suraj both friends purchased hatchback cars on the same day. Ravi took a comprehensive motor insurance policy whereas Suraj took only a third party liability policy.

After heavy rains one night both of them met with an accident. Ravi and Suraj cars were severely damaged in the accident. Ravi had a comprehensive car insurance policy whereas Suraj had only third party liability.

Since both the cars suffered accidents where no third party was injured Suraj third party liability was of no use as own damages were not covered under the policy.

Ravi comprehensive policy also covers damages suffered to his vehicle and he was reimbursed the loss he suffered.

Consequences that might be faced for not having insurance

Let’s have a look at the consequences that might be faced for not having insurance

  • The first thing to be noted is that any car that comes on to road must have insurance. It is a law made by the government and is compulsory for all the citizens of India owning a car. If a person is found to be driving a car without insurance then he can be penalized by the authorities. The penalty again differs like paying fine or a case is booked.
  • Many car insurance companies have a tie up with the showroom owners. So it is not at all a difficult task to get you car insured.
  • Getting the car insured is just not enough. The insurance policies must be paid on time so as to prevent the insurance from getting lapsed. So timely payment of insurance premium is a necessity. If the policy has got lapsed due to non-payment of premium and then an accident takes place, the owner cannot claim for the insurance because the policy has lapsed. The other danger is that you can still be fined by the authorities for not having an insurance ( the policy getting lapsed is equivalent to a situation of not having a policy).
  • The policy won’t be effective in a case where an accident has taken place and the driver is found to be drunk.
  • If Mr. X has a third party insurance and he meets with an accident then no doubt he will be arrested but we will look at some of the other implications. The first one would be the damages whatever his car has suffered he has to pay for that. The damages caused to the other person physical and the property will be covered by the insurance policies. In this case if Mr. X has some money then he can go for out of court settlement. The main point here is that he can save some of money if he has the third party insurance and on the other hand if he doesn’t have any insurance then he has to shell out all the money from his pocket.
  • If the same Mr. X has comprehensive insurance policy then he can save more money because the repair bills will be paid by the insurance policy provided the adjustor or surveyor approves it.
  • We all know that India as a country has been suffering from an activity called terrorism. There have been numeral terrorist attacks which have taken place in India which have caused serious destruction of life and property. Your car can be insured against the terrorist attacks because if you are living in cities like Delhi, in J & K then anything can happen at any time.
  • The floods that happened in northern Karnataka was one of the worst floods which the people living in that part have ever seen. In fact the districts where it happened ( Bellary, Bijapur, Raichur ) are considered to the drought hit. But the natural calamity that happened caused a great destruction which amounts to thousands of crores as per the government census. It cannot be said that the cars were safe and did not have any damage. What would be the fate of the people whose cars were struck in that and they have no insurance.
  • The last advantage of having car insurance is that you can reduce your tax liability. Although it may not be to great extent but still money is money. We believe that you realize the importance of car insurance and preparing to get one in case you do not have. Moneymindz.com has a vertical by name Insurance which will help you to compare the car insurance among various insurance companies. We advise you to compare the products and choose the best according to your needs. For any queries please feel free to contact Moneymindz.com.
Insurance
Term Insurance