What cover does your car insurance offer?

Car insurance has two categories - own damage and third party liability (when you cause damage to other person's life or vehicle). Third-party liability insurance is mandatory. However, comprehensive insurance that includes third party cover, theft, personal accident and liability is more popular among car owners.

If you possess a car with authorized fuel system like petrol/diesel or CNG/LPG, you have to get the CNG/LPG kit insured separately. The premium would be nearly 4 percent of the kit value. An additional personal accident cover for your driver would cost you around Rs. 25-30. If you want to cover other passengers to the extent of Rs. 2 lakh, the premium would go up by Rs 500-600.

The IDV and the premium amount

The sum assured or the insured's declared value (IDV) is calculated by subtracting depreciation from the car's price. IDV is used to estimate your vehicle's premium amount.

Other factors that determine the premium amount include the city of registration, the period of coverage, cubic capacity of the vehicle and the claims history. Better the claims history, lesser the premium. The careful drivers are awarded with no-claim bonus, which goes up to a discount of 50% for the fifth claim-free year.