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How Types of Coverages affect your Car Insurance Quote

Car Insurance as a concept is mandatory by law. But when it comes to paying premium for this mandatory stuff, we find it an unnecessary expense.

Most of us hesitate to buy car insurance and risk our own as well as other’s lives. And those who buy, either is under-insured or over-insured. We lag in understanding the premium components of the car insurance. This then becomes a major issue. We simply look at the cheapest premium and settle down on an unwanted plan.

Insurance companies do not charge a premium as per their will and wish. The premium is calculated using different factors, which is why it becomes important to understand these factors.

Let’s Now Understand How Types of Coverages Affect the Car Insurance Quote

As per the Motor Vehicles Act, 1988 all vehicles running on the Indian roads is mandatory to be insured. Car insurance companies allow you to choose the type of coverage you want to opt for. This affects car insurance quotes. That’s why you need to know what coverage you are opting for.

Understanding the difference

  1. Third-Party Car Insurance

Third-party car insurance is nothing but the coverage guaranteed to the third party only .i.e. damage to another person’s vehicle or property, bodily injuries and permanent disability during an accident by your bike and is mandatory by law.

We wouldn’t recommend you buy this basic third-party insurance if you really love your car from the bottom of your heart. This type of coverage is best for people who think car insurance is mandatory and buy this type just for the heck for it.

The car insurance quote that you get for Third-party coverage depends on the below factors:

  • The basic third-party premium
  • The premium for personal accident owner-driver cover- Rs.100
  • Service tax- 15%

The basic premium depends upon the cubic capacity of your car. The below chart will give you a fair idea about the premium being calculated as per the cubic capacity of the car.

Condition Relating to Engine Capacity Applicable Premium Rate
Not exceeding 1000cc Rs.2,055
Above 1000cc but lower than 1500cc Rs.3,132
Exceeding 1500cc Rs.8,630


The above premium rates are as on 1st April, 2020 and are revised by the IRDA every year.

The third-party car insurance premium is very low and thus most of us prefer to buy this coverage simply because we find it cheaper.

By the time you realize your mistake of opting for a basic insurance policy, it becomes too late.

  1. Comprehensive Car Insurance

Comprehensive car insurance is optional coverage and thus is not mandatory. This type of car insurance provides coverage to third-party, to you as well as your car. It is best for those who want to cover the losses due to the accidents and also to recover losses due to theft and natural disasters, and not for those who take car insurance merely as a mandatory clause.

The below components forms the car insurance quote for the comprehensive coverage:

  • Third-party premium
  • The premium for personal accident owner-driver cover- Rs.100
  • Own Damage
  • Charges for additional cover (Add-ons)
  • Service tax-15%

Remember, you need to declare your Insured Declared Value (IDV) correctly. Simply because your own damage cover depends upon your IDV. IDV is nothing but the value of your car based on its ex-showroom price.

You can buy different add-ons as engine protects, zero depreciation, no-claim bonus protector, key replacement compensation, consumables cover etc. Again, these add-ons are variables and therefore become a part of your choice for the type of add-on you want to opt for.  The most recommended and useful add-on is Zero Depreciation add-on.

The service tax would be charged on the OD premium.

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Bryony Jones
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