How Much Car Insurance do you Really Need?

You spend a considerable time deciding which health or LIC policy is best for you. That’s not a bad thing. In fact, you should choose the one that suits you best. But this should be the same for your car insurance.

Many people pay a lot of attention to their LIC but not to their car insurance. Again, yes you should be paying attention to the quality of the LIC insurance, but if you have a car, you owe it to yourself to have a good policy as well.

What’ll happen when your car is damaged in an accident and it may or may not be your fault? Will you still have enough funds to do a legal battle with the culprit and end up messing with your finances? 

It does not matter what the model of your car is. It is essential that you get insurance cover. That way, both the car and your life remains protected. That’s why it is also important to know about the various types of car insurance plans you can get, how they work, and how much insurance is more than enough.

Types of car insurance covers

In India, there are two types of car insurance plans. These are:

Third-party liability insurance plans

These are plans which offer protection from all legal liabilities coming out of events like third-party injury, death and property damages. The plan protects you from all legal issues in case you are responsible for the accident, leading to damages above. If you drive in India, it is the minimum level of cover that you need. If you are apprehended without this type of insurance cover, you will see heavy penalties, possibly even jail time.

This insurance cover does not give coverage to the vehicle. That means if your car is damaged, you can’t make any claims with this insurance. Some insurance companies to provide a Personal Accident cover for the car’s owner or driver, along with third-party liability insurance plan. It is cheaper than other types of motor insurance.

Comprehensive Car Insurance Plan

This again has 3 main types of coverage:
1. Owner-damage cover: It protects the car from damages like floods, lightening, landslides etc, man-made disasters like strikes, thefts, riots, etc, and in-transit damages.
2. Third-party liability insurance: It covers the same as above.
3. Personal accident cover: This protects the owner or the driver of the insured car. The protection is for accidental injuries and death. The downside is that this policy does not protect the passengers

You can enhance the comprehensive policy through add-ons. These add-ons can be obtained separately from the insurance companies. For instance, you can get add-on insurance cover on your engine damage cover.

Which plan do you really need?

This depends on several factors like your budget, driving skills, the area where you live, how far you drive, and more. There is no cookie-cutter solution. To choose the most suitable one, you’ll need to assess the insurance needs which are specific to you. To pick the ideal one, take into account:

1. The chances of accidents, car thefts and such instances where you life

2. Your confidence in your own driving skills

3. How much you use the car. If not much, then limit your insurance cover

4. Your budget- If you won’t have a lot to spare, just get a third party liability-only cover

5. Your need for add-on covers: If you really need them, get the ones necessary

Compare plans to pick the most cost-effective one. You can compare car insurance plans on all neutral financial websites like mymoneykarma. This eases your efforts in getting the right car insurance for yourself, and also in saving your money in the long run.