Many of us have insurance: for our cars, our houses, or even our lives. Yet we don't really think about what insurance is or how it works.
It is a contract between an insurance company and its clients, represented by a policy, whereby the company provides financial protection or reimbursement against losses.
First things first, car insurance and health insurance are two very different kinds of insurance. If you are unwell and require hospitalisation, your car insurance would not cover your medical expenses. However, under the Motor vehicle Act, 1988, your car insurance comes with a compulsory Personal Accident Cover of INR 2 lakhs, irrespective of being a third-party liability or a comprehensive policy. This cover is available for the driver-owner of the vehicle, however, you have the option of extending the cover to the co-passenger as well by paying a little extra.
The Personal Accident Cover pays compensation in case there is injury, permanent disability or death that is caused due to a motor accident. The upper limit of the coverage as defined by the IRDAI is INR 15 lakhs. The compensation is paid out in the following way:
- Accidental Death - In case of death of the insured in a road accident, the entire sum insured (100%) will be paid out to the nominee
- Permanent Total Disability - In case there is a permanent total disability, the compensation is as follows:
- Loss of 2 limbs/ 2 eyes/ 1 limb/ 1 eye - 100% compensation
- Loss of sight of 1 eye/ 1 limb - 50% compensation
- Permanent Total disability - 100% compensation
Note: In case you already have a car or a bike in your name, you do not need another cover when buying a new vehicle. There is no need to purchase a separate cover for each cover. If you are planning to buy/ renew your insurance, you can visit Paybima and select the best car insurance policy.