An In-depth Look at Car Insurance Policy

An Indepth Look at Car Insurance Policy

A car insurance policy serves as a financial safeguard for your automobile. With the rise in thefts, accidents, and the normal wear and tear that motor vehicles experience, getting good auto insurance coverage is more necessary than ever.

To get a car insurance policy, you must first understand the many types of plans, the factors that influence premiums, and the various add-ons, limitations, and inclusions.

Types of Automobile Insurance

The quantity of coverage and the type of vehicle for which insurance is sought are the primary factors determining the sort of motor insurance policies available.

The Scope of the Coverage

Liability insurance for third parties: Third-party insurance, also known as liability-only coverage or an act-only policy, is the most basic and widespread sort of automobile insurance, mainly due to the Motor Vehicles Act of 1988, which mandates all vehicle owners to acquire third-party insurance, such that driving a car without this insurance could result in fines.

This insurance covers only damages and losses to a third-party person, vehicle, or property under the policy.

Comprehensive auto insurance: As the name implies, a comprehensive policy covers a wide range of situations, including coverage for third-party liability and damage to your vehicle.

Third-party liability insurance protects you from legal responsibilities arising from unintentional injuries/death or property damage to a third party.

In contrast, in the case of own-damage coverage, the policy will protect the insured vehicle against accidental damage, theft, and natural disaster damage.

Vehicle Classification

A comprehensive car insurance policy: This policy provides complete coverage and protects the owner from costs associated with damages caused by accidents, natural catastrophes, and theft.

All car owners are expected to buy at least third-party insurance coverage, which the law requires. This coverage protects the car owner against third-party damages and injuries.

Two-wheeler insurance coverage: Two-wheeler vehicles are required to obtain two-wheeler insurance coverage, similar to the third-party insurance required for automobile owners.

It protects the owner against personal losses and damages caused by accidents, disasters, fire, theft, and any damages and injuries inflicted on third parties.

Commercial vehicle insurance: As the name implies, this coverage is for automobiles used for non-personal or commercial purposes. Heavy and light commercial vehicles, trucks, buses, multi-utility vehicles, agricultural vehicles, and other commercial vehicles are under its jurisdiction.

Add-on Plans for Automobile Insurance

Everyone has needs and expectations, and a standard auto insurance policy might not cover them. Motor insurance add-ons, commonly known as auto insurance riders, can be used in these situations.

These add-on covers can boost your basic policy by expanding its coverage at a low cost. The following are some of the most common riders: zero depreciation cover, no claim bonus cover, return to invoice cover, engine protection, and so on.

Factors that Influence Automobile Insurance Premiums

The sort of insurance policy you buy and the coverage you choose are determined by the premium you have to pay. As a result, knowing the factors that influence car insurance costs and how you might lower your premiums without sacrificing the policy’s adequacy is essential.

Type of Coverage

A comprehensive automobile insurance policy, which covers the insured vehicle and a third party, will have a higher premium than a third-party policy.

Vehicle Safety Features

An automobile insurance policy provides coverage for damage caused by accidents and other occurrences that could cause harm to your vehicle.

So if your car has additional protection, such as anti-theft devices, airbags, a GPS tracking system, and so on, the damage caused by accidents is likely to be reduced. As a result, automobiles with such safety features are more likely to have cheaper insurance costs.


One of the most critical elements affecting your automobile insurance price is where you live, specifically where your vehicle is parked and utilized. It’s worth noting that insurance firms view metros as being a more significant risk than smaller communities.

This disposition originates from the perception that metros have a more significant risk of vandalism and accidents than smaller cities.


Your age might significantly impact the amount you pay for your auto insurance coverage. It is widely assumed that as you get older, you gain more experience. As a result, rates for younger drivers may be higher than for older and more experienced drivers.

Bottom Line

Finally, it is critical for any decision to be well-informed for it to be correct. Without a doubt, you should obtain an automobile insurance policy to safeguard your valuables and reduce your expenses in the event of damage, accidents, or loss.

The Author

Ajisebutu Doyinsola

Doyinsola Ajisebutu is a journalist and prolific writer who takes a special interest in Finance, Insurance, and the Tech world.