An individual proposed to buy a new car for ₹40 lakh. The dealer of the vehicle wants the individual to pay an additional sum of ₹3,40,000 for a comprehensive insurance cover. There is a hesitation on the part of the ind

The concept of motor or vehicle insurance is very well-known and it fact in India, this is the most popular and well known cover available in the market issued by all the general insurance companies. The motor insurance premium in India amount to almost one-third of the general insurance premium earned in the country. A motor policy normally consists of three parts: Section I- called own damage part - is an optional or voluntary cover at the choice of the owner. Section II and III cover third party damages and personal accident injury which are compulsory and ordered to be taken by a vehicles owner under Motor Vehicles Act. Third party cover which often is referred to as Act cover is compulsory since someone other than the insured may be affected by an act of the vehicles owner leading to the payment of compensation for injuries or death or damage to third party properties. The motor policy does not provide any benefit to the insured in the third party cover except that it covers the insured's legal liability for death / damage of third parties. The compensation has been imposed by the Motor Vehicles Act on the ground that third parties affected by the usage of the vehicle should not be left uncared and damage to their cause arise not because of their negligence but due to that of others. A third party cover agrees to indemnify the insured if he is sued or held legally liable for injuries or damages to a third-party. In the instant case, the buyer of a new vehicle is being asked to pay a comprehensive motor insurance premium of ₹3,40,000 which he does not want to pay on the ground that not paying it will be a big saving to him. He can avoid paying a portion of the premium quoted above that relates to "own damages" parts or section I of the policy but will be under compulsion to pay premium relating to section II and III i.e. third party cover and personal accident cover. It is left to the individual to decide whether he would like to save a little sum of money for a vital benefit that will ensure when damage to the vehicle may arise in a situation other than an accident involving a third party. "Fully comprehensive car insurance gives you the highest level of protection from an accident, regardless of whose fault it was. It can cover repairs, personal injury claims and damage to property - usually for you, your vehicle and any other vehicles involved. He may well be advised to have a comprehensive cover for the car, especially when he is buying a costly high-end car, as the cost of repairs in case of any eventuality may rise to be very costly in future.