Do you own a car? If so, you need auto insurance. In this post, we will discuss the importance of auto insurance and the different types of coverage that are available.
Auto insurance is a legal requirement in most US or Indian states, and it’s also a smart financial decision. It can help protect you financially in the event of an accident, and it can also provide coverage for other expenses, such as medical bills and property damage.
What is Auto Insurance?
Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of a theft or accident. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy document.
Auto insurance Policy provides coverage for:
- Property: such as damage to or theft of your vehicle
- Liability: your legal responsibility to others for bodily injury or property damage
- Medical: the cost of treating rehabilitation, injuries and sometimes lost wages and funeral expenses
Basic personal auto insurance is mandated by most indian states, and laws vary. Auto insurance coverages are priced individually to let you customize coverage amounts to suit your exact needs and budget.
Policies are generally issued for 6-month or 1-year timeframes and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.
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Why is Auto Insurance Important?
Auto Insurance is an important part of life for any four-wheeler owner, especially in India. On an Indian road, it is mandatory to have motor insurance for your car. A lot of first-time car buyers often wonder, why is Auto Insurance important; accidents may or may not happen, so, is it really necessary?
The simple answer is yes. It is essential to have Auto Insurance, and not just because it is mandatory to have it according to the regulations. It saves from the financial and emotional burden of covering damages caused by an accident.
If you have just purchased a car, then here is the ‘why’ to this government-mandated rule in India and why you absolutely need Auto Insurance:
Reduces liability
Under any circumstances, if an accident is caused by you on the road, then you need Auto Insurance to manage your liability. This is why, buying a Third-party liability (TPL) Auto Insurance coverage is mandatory in India. For instance, if you cause an accident wherein you damage another person’s car or are responsible for someone else’s injuries, then third-party Auto Insurance will cover the expenses and can save you from the legal ramifications of the situation.
Compensates for damages
You don’t need to be told that cars are quite expensive. It’s quite common for damages to occur when driving. Even if you are driving safely, there can be a collision, bump, or dent due to another driver’s mistake or negligence. So, in the case of any damage, you need a solid cover to compensate for the costs of repairs and fixing. This is where you need Auto Insurance because if you try to pay for the damages on your own, it can cost a bomb and burn a hole through your pocket. Instead, the insurance company can support you through it.
Pays for serious injuries
Not everyone gets away with a few bruises and wounds. At times, even with all the precautions, serious accidents can occur and lead to critical injuries. Some accidents can result in hospitalization, which can not only be emotionally stressful but also end up being a serious financial burden. So, if you are still wondering why is Auto Insurance important – it will help you cover the hospitalization charges without having to pay it from your savings.
Safeguards your family after you pass away
To give you another reason why is Auto Insurance important – it isn’t just for you. You need Auto Insurance because it covers your family if an unfortunate event occurs that leads to your sudden demise. If you are a bread-earning family member who holds the policy, then your Auto Insurance will offer a personal accident cover that can help your family’s expenses.
If you are concerned that buying Auto Insurance and paying the premiums is expensive, don’t let it hold you back. Because Auto Insurance also costs less when done online, and you can research and compare Auto Insurance policies and premiums available in the market. Also, don’t forget to renew your Auto Insurance on time as otherwise, it can lapse.
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Important Things to Check in Your Auto Insurance Policy Document
Your policy is a legal contract, so at first look, it can seem confusing. But, if you know what to look for and where to find it, your policy becomes a lot easier to understand. Each auto and homeowners insurance policy has three standard parts:
- Declarations Page: This is where you’ll find your official name, a statement of the policy period during which you are covered and the amount of premium you pay. The “dec” page also includes a description of the insurance coverage provided and gives the maximum dollar($) or Rupee limit the insurer will pay for a claim under each coverage.
- Insuring Agreement: This is the main part of the policy. It describes what the a max insurance company will do in exchange for the premium you’re paying. The insuring agreement will also say who is covered: The persons named as insureds on the declarations page, residents of the same household and persons using the car with the permission of the insured. Everything is spelled out specifically in an attempt to avoid misunderstanding. Read the definitions section and the list of exclusions that apply to each coverage. It’s vital that you know what you are covered for and what you are not covered for when you need to use your coverage!
- Conditions of the policy: This last section of the policy document describes your responsibilities when you have a claim, for example how much time you have to report it and what documentation you must give to the insurance company at the time of the insurance claim. It also explains the terms for canceling your policy—both for you and the insurer. You can cancel your policy at any time, however your insurance provider may only cancel under certain conditions and with advance notice to you.
Things to Review in Your Car Insurance Policy Document
1. Terms and Conditions
The most important thing to read and understand in your automobile insurance policy is its terms and conditions. For example, while making claims, you might have to pay a deductible amount out of pocket, or in the case of a third-party policy, damages to your own vehicle won’t be covered. Knowing the terms & conditions can be very helpful at the time of making a claim.
2. Coverage of the Policy
Always remember to go through the policy wordings to check what is covered by your auto insurance policy. Different types of car insurance, such as a third-party-only policy, a comprehensive, or an own damage policy, will each have different coverages.
I hope this blog post has been informative and helpful. If you have any further questions about auto insurance, please feel free to leave a comment below. Thanks for reading!”
