Published: Jan 5, 2022, 8:33pm
A package policy is an insurance cover which in addition to covering third party liabilities, covers the insured against damages caused to their own vehicle such as accidental damage, fire, vandalism, acts of god, natural calamities, etc. A package cover comes at a higher premium compared to a plain third-party (TP) cover simply because it offers wider protection.
A basic third-party insurance protects the vehicle owner against any liability that could arise when a third-party gets injured or dies in case of an accident. Third party insurance is mandatory by law in order to drive on Indian roads, and hence, most people buy it to adhere to regulatory requirements. However, a package motor insurance covers damages to one’s own vehicle in addition to third-party damages and liabilities.
A host of factors influence the premium of package insurance covers. Key factors include:
Motorists can choose the suitable coverage required for their vehicle. In case of only a TP cover, the premiums are regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
Certain events and incidents may not be covered even if you have a package motor policy. One such example is if your vehicle endures damage due to a collision, then a car insurance claim cannot be made. A few other situations that are not covered under the package insurance cover include:
During renewals, one can also upgrade their policy from a third-party cover to a package insurance policy. The process of renewing car insurance has been made simple by new-age Insurtech companies. After choosing the insurer, policy and add-ons of one’s choice, the process can be initiated by filling in the vehicle details like make, model, variant, registration date and previous policy details.
Despite the extensive coverage a package motor policy offers, you may still wonder if you should opt for a package cover or stick to only a third-party cover. It is more effective to have package car insurance for a relatively new vehicle as the market value would be high, and any potential damage can result in a huge financial burden.
Even if one does not choose a package coverage, it is important to bear in mind that in case of any unforeseen damage to the car, the steep bill and potential losses will be borne by the individual alone. Hence, it is necessary to weigh the costs of such potential repairs/ fixes against the premium that one would pay towards a package insurance cover. In most cases, opting for a package policy is a smarter option as it covers the insured against most forms of unforeseen events or damages that can be caused to their vehicle.
Vijay Kumar is the CEO and principal officer of Go Digit General Insurance Limited. Prior to Digit, he has worked with Bajaj Allianz General Insurance. He has 15 years of experience in the insurance industry.
Aashika is the India Editor for Forbes Advisor. Her 15-year business and finance journalism stint has led her to report, write, edit and lead teams covering public investing, private investing and personal investing both in India and overseas. She has previously worked at CNBC-TV18, Thomson Reuters, The Economic Times and Entrepreneur.
Published: Jan 5, 2022, 8:33pm