Insurance of Your Car

A Insurance Article Contributed by Deepak Cutting

Car Insurance

Insurance Policy covers risk of any unusual damage or loss in respect of the goods insured. All expensive capital goods should be insured. Your car is one such item. When insured, the Insurance Company takes on certain liabilities and will compensate you monetarily, in respect of unusual damage arising from an accident, theft, fire etc., to your car, during a specified time period, in return for a certain charge, known as the insurance premium.

The Insurance Policy does not cover damages on account of usual wear and tear in the vehicle. There are generally two schemes available for insurance of your car, the comprehensive and the third party insurance.

The Comprehensive Insurance for Your Car;

Under this scheme, the risk of ALL damages or losses to your car is covered. Any loss or damage due to accident, fire, theft or any other accidentally occurring event is to be compensated. The liability of the car insurance company is to replace and repair damages and get the car, as far as possible, to the condition where it was prior to the loss or damage.

The procedure to be adopted in making a valid insurance claim is that the accident or theft etc. is usually reported to the Police, as also to the Insurance Company, as soon as possible. Insurance Companies have approved garages where repair work can be carried out. The car is preferably taken to one such garage. A surveyor or assessor nominated by the Insurance Company inspects the damage. His report on the damage helps process the claim.

The repair and replacement of damaged parts is then undertaken. The Insurance Company pays the cost of labor and cost of spares, to the extent of depreciated value of the replaced part. In some policies, the Insurance Company pays any amount in respect of losses incurred, in excess of an amount that was agreed to, at the time of negotiating the insurance cover.

If the car is damaged beyond repair, this is termed 'total loss'. In that case, the insurance company is liable to pay the depreciated value of the vehicle, taking into account the value declared at the time of negotiating the policy. The damaged vehicle then becomes the property of the Insurance Company.

For any insurance claim to be valid there should not be anything illegal, in respect of the use of that car.

Such a policy not only provides peace of mind to the owner, it is also a necessary provision prescribed by the party who financed the purchase of your car.

Third Party Car Insurance;

Here the liability of the Insurance Company is limited to damages sustained by a third party during the use of the car. Insurance premium here is lower than that in case of Comprehensive Insurance. The owner or insurer of the car is not compensated in this case. The outside party who sustained damages by the insured car is to be compensated. Such insurance is mandatory. Third party insurance is not to be negotiated additionally when a comprehensive insurance policy is opted for since comprehensive insurance includes third party liabilities.