A car insurance policy covers the financial liability which arises in case the insured car injures any third party or damages any third party property. Moreover, if the coverage of the policy is comprehensive, coverage is also given for the damages suffered by the car due to accidents or any other calamities. A car insurance policy is mandatory as per the rules of the Motor Vehicles Act, 1988. Only if the car has a valid insurance cover then it is allowed to run on Indian roads. The car owner is the policyholder who is required to pay the premium.