5 Step Car Insurance Guide to Light up Your Diwali, 2025

What is Car Insurance?

Car insurance policy can be described as a contract between you, a policyholder, and an insurance-providing company where the firm agrees to pay for any damages to your car and any third-party liability due to a  collision or accident in exchange for premium amounts paid by you. In India, it is mandatory to have at least third-party liability insurance coverage while driving.

Car Insurance Policy Guide, 2025

 

1. Compare Policies Before Buying

It is always essential to compare insurance policies before buying one. For this, you have to understand the different types of four-wheeler insurance plans. There are three main divisions. The first one is Standalone Own damage which covers only the damage of the insured vehicle. The second is Third-Party Liability which covers any legal liability you may have to a third person due to an accident or collision. It is mandatory for drivers in India. The final option is Comprehensive Coverage, which covers both own damage and third-party liability protection. It has the highest overall cost while delivering the most coverage.

As part of insurance firms’ Diwali gift hampers, you may be able to obtain one of these plans at a very low discounted price.

2. No Claim Bonus

After a year with no raised claims, most insurance plans offer a slight discount on yearly rates. The NCB rate begins at 20% in the first year and rises to 50% after the fifth consecutive year with no claim. As a result, it is best not to file claims for small sums and instead take advantage of the greater bonus discount rates.

3. Add Riders to Your Basic Plan

Adding riders or car insurance add-ons cover to your standard plan is the best way of increasing coverage by paying a slightly increased premium amount. The most common riders to basic car insurance plans are:

4. Engine Protection Cover

A standard car insurance policy does not include non-accidental damages as a part of its coverage. Since engines are the most important part of your four-wheeled beauty, it is important to get insured. If you are living in an area where water-logging is common, this add-on may be extra useful. However, this rider is usually not offered to vehicles that are more than five years old.

5. Zero Depreciation Cover for Car

Bumper-to-Bumper, Nil Depreciation, or Zero Depreciation Car Cover is a rider that removes the depreciation deduction from your car and helps get a higher insurance claim amount. Most insurance companies offer limitless nil depreciation claims.

6. Understand Exclusions in Car Insurance Policy

There are certain exclusions in car insurance policy terms and conditions. Though this list varies from one insurance company to another, here are some general ones:

• The car’s regular wearing and depreciation.
• Mechanical fault and deterioration of certain elements, such as tires.
• Damage sustained while traveling outside of the nation or during wartime.
• Damage caused due to an intoxicated driver.
• If the driver doesn’t have the correct license.
• If the insured vehicle was used for purposes not covered by the car insurance policy coverage.

7. Check Claim Settlement Ratio of the Car Insurance Company

It is critical to compare insurance companies while looking for a vehicle insurance policy. The simplest method to do so is to look at their claim settlement ratio. The settled claims to raised claims ratio provide insight into the efficacy of certain specific insurers in giving claim payments. The higher the number, the more accountable and trustworthy that firm is.