The underlying principle of an insurance policy is quite simple. You pay a certain amount of money as an insurance premium to protect your assets from any unfortunate circumstances that could result in life or monetary losses. In return for the premium, the insurance provider guarantees to provide financial support in the event of a number of situations detailed in the policy’s terms and conditions. While this is the basic premise of an insurance policy, there are certain specifications that come into play based on the type of policy involved.
While we are all familiar with car insurance and insurance policies for other vehicles, did you know that there is something called driver insurance?
In this article, we will discuss car insurance, and driver insurance and the difference between the two.
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What is a Car Insurance Policy?
A car insurance policy is an official document that protects the policyholder and the insured vehicle against any damages or losses. In the event of a mishap involving the insured vehicle, such as an accident, a car insurance policy safeguards the owner against financial loss. In India, car insurance is a mandatory requirement as directed by the Motor Vehicles Act of 1988.
Failing to own or possess one can lead to hefty fines and serious punishments with up to imprisonment for 3 months and sometimes lead to revoking the license or the vehicle registration certificate.
Types of Car Insurance Policies
A car insurance policy typically is of three different types. It protects the insured and the insured vehicle from the following:
Third-Party Liability Policy
The policy, as the name suggests, protects the policyholder from being held liable for any property damage or bodily injury to a third party. In turn, the insurer pays for the financial, legal and medical expenses that arise from any unfortunate events that involve a third-party – person or property.
Own Damage or Personal Accident Cover
The policy offers coverage for medical costs, including those associated with the treatment of injury, rehabilitation and recovery, etc. The cover also protects the policyholder from any financial losses if the insured car is damaged or stolen.
Comprehensive Insurance Cover
The comprehensive insurance cover, as the name suggests, is exhaustive in terms of its coverage. It provides coverage for both above-mentioned circumstances – third-party liability, own damage and personal accident. Further, the policy also provides coverage for any damages or losses incurred or caused by the insured vehicle due to natural and man-made calamities like theft, fire, earthquakes, floods, etc.
What is a Driver’s Insurance Policy?
The Driver’s insurance protects the driver from any financial loss, in the event of a mishap involving the driver, like an accident. The main intent of the policy is to safeguard the policyholder against financial loss in the event of an accident, particularly from any legal liabilities that arise due to bodily harm or property damage to a third party.
Further, the policy also provides coverage for treating injuries, the cost of rehabilitation, loss of income, etc. The driver is barely known to people and is not a legal requirement to be carried around while driving, unlike a car insurance policy.
Car Insurance Vs. Driver Insurance
Let us take a look at the difference between car insurance and driver insurance by comparing their definitions, purpose and mandate. Car Insurance: In the event of a mishap involving the vehicle, such as an accident, a car insurance safeguards the owner against any financial loss.
Purpose: To shield the policyholder from monetary loss in the event of an accident, including vehicle damage or theft, legal responsibility for the property or bodily harm of others, medical costs, loss of income, etc.
Mandatory: In India, it is mandatory across all states.
Driver Insurance: In the event of an occurrence involving the driver, such as an accident, driver insurance protects the driver from financial damage.
Purpose: To safeguard the policyholder against financial loss in the event of an accident, particularly against legal liability to third parties for bodily harm or property damage, medical costs, rehabilitation costs, loss of income, etc.
Mandatory: Driver insurance is not typically required.
Is Car Insurance a Mandatory Requirement in India?
Car insurance is a legal requirement in India, under the Motor Vehicles Act of 1988. The law mandates that all vehicles be properly insured before they are allowed to operate on Indian public roads. The Motor Vehicles Act of 1988 covers a number of legal requirements, including the registration of the vehicle, possession of a valid driving license and valid insurance policy.
Before a vehicle can be driven on a public road, it must at the very least have third-party legal liability insurance, which is the minimum insurance requirement. If your car is involved in an accident in which a third party is hurt or the property of a third party is damaged, the liability policy will pay for the costs of any potential legal responsibilities.
The Motor Vehicles Act has harsh fines or consequences for breaking the laws, which are as follows.
- Any violation of a Motor Vehicle Act could result in a fine of Rs.1000 and/or up to 3 months of imprisonment for the offender.
- Anyone who is caught breaking the law will risk having their driver’s license suspended.
- A lawbreaker’s vehicle registration certificate may also be revoked after repeated transgressions.
A car insurance policy protects both the car and the owner of the car, which is the primary distinction between car insurance and driver insurance. Regardless of who is driving the car at the time of the accident, it might be the spouse, a child, another relative, or a friend. However, if the driver is involved in an accident, the car insurance policy will only cover the damage to the vehicle and not the driver. And, a driver’s insurance will safeguard the driver, regardless of the vehicle they are driving, at the time of the accident.
Also read: When Should I Renew My Auto Insurance Policy