A vehicle is an asset for the buyer. It bears both monetary as well as emotional value for the buyer. Any such asset needs protection. This need gave rise to auto insurance market in India.
The Indian government mandates that every vehicle plying on road should be insured. Auto insurance covers all kinds of losses or damage caused to the automobile and/or its parts due to both natural and man made calamities. Cover offered however ranges from individual owner of the vehicle to passengers and third party liability.
Insurance can be taken for private cars, two wheelers and commercial vehicles -both new and used.
Insurance in India is regulated by Insurance Regulatory Authority of India (IRDA).
Car insurance is basically of two types: comprehensive and third party.
Third party insurance: this type of insurance provides cover for death or injury caused by the vehicle to third party. In terms of auto insurance, first party refers to the insured (owner and vehicle), second party refers to the insurer (insurance company) and any other property or people apart from these fall under third party.
In case of third party insurance, no cover is given to the owner and the vehicle.
Comprehensive insurance: this type of insurance provides cover to the insured and the vehicle from natural and man made calamities along with providing third party cover. It covers all risks under Motor Vehicles Act.