In India, all vehicles on the roads should be equipped with a minimum level of motor insurance – this is mandatory as per the Motor Vehicles Act, 1988. In order to stay on the right side of the law, you will need a minimum of third-party liability insurance plan. However, insurance advisors recommend that you have a comprehensive motor insurance policy as it provides additional protection.
But what is the expectation from a car owner who does not use the vehicle any more? Say, you have a car that you intend to sell in the near future. It is parked in the neighbourhood parking lot and will not be moved unless you get a sales deed on your hands. You will not be expected to renew its insurance, right?
Wrong! There are several mishaps that a parked car could be subjected to. This article attempts to throw light on the same and clarify why a vehicle off the road needs adequate insurance.
Types of motor insurance plans
In order to understand the amount of insurance coverage a vehicle off the road needs, you will first have to be clear on the different types of car insurance policies available in India.
1. Third-party liability insurance - This is a standalone insurance plan that offers protection to a third party from accidents involving the insured car. The coverage includes accidental injuries, death, and property damage of the third party. It does not protect the insured vehicle itself.
2. Comprehensive insurance - This is an insurance plan with extensive coverage as opposed to the third-party liability standalone plan. Also referred to as package policy, the comprehensive plan provides financial aid to the car owner in the following events:
a. In-transit damages to the vehicle
b. Damages due to natural calamities such as earthquakes, floods, lightning, etc.
c. Damages from man-made disasters such as riots, strikes, terrorist acts, etc.
d. Theft of the insured vehicle
In addition to the above, the comprehensive car insurance policy also protects the owner/driver of the insured vehicle from accidental injuries and death. This Personal Accident Cover can act as an extension to his/her health insurance policy.
Liabilities to a third party from an accident is also offered coverage under this plan. The car owner can choose to add riders to the base plan to increase the overall coverage.
As evident from the above points, the comprehensive insurance plan offers extended coverage to the insured car. The events covered under the plan could also affect vehicles that are off the roads.
The above classification is applicable to two-wheeler insurance as well. Unlike car insurance, bike insurance policies are available with tenure of three years. This helps the owner to a great extent as he/she is not expected to remember to renew the insurance on an annual basis.
Parked vehicles and risks
You should be aware of the fact that a parked vehicle is subjected to several risks. If your car was parked in the neighbourhood parking lot, it does not mean that it is in a completely safe place. What if the vehicle of an irresponsible neighbour crashes into your car, causing severe damages? Even parked vehicles are exposed to risks of natural calamities such as earthquakes and landslides. The possibility of a wayward cricket ball damaging the windshield of your car during the neighbourhood cricket match can also not be ruled out.
In order to protect yourself from such financial emergencies, it is best to be equipped with adequate motor insurance coverage at all times.
Off-road driving and the risks involved
When looking to insure your car, it is also important to assess the purpose of use of the vehicle. If you have a jeep that you enjoy taking out into the woods, you will have to declare that at the time of policy purchase. There are several car owners who enjoy driving on unexplored off-road tracks. Although this mode of driving has garnered a lot of popularity among young drivers today, it is, more often than not, frowned upon by insurance companies. The main reason for this is the fact that driving on off-beaten paths pose more risk to the driver and the vehicle, increasing the possibility of a claim.
Not all insurance plans offer the same coverage
Attractive car financing options in the market make it easy to buy your dream car. However, you should ensure that your prized possession is protected with adequate insurance as well. When buying a motor insurance plan, declare the purpose of use of the vehicle honestly. This may increase your premium slightly, but it will give you adequate coverage in the long run. Read through your policy documentation exhaustively and be an informed car owner. Knowing your coverage and your rights helps a lot, especially during the distressing time of a car accident.
(This post has been contributed by Bankbazaar.com)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)