Bike and Car Insurance

Every year a humongous amount of money is spent by people on damages by accidents to life or vehicles. If a car is not insured and has undergone an accident a huge sum is lost in repairs or in medical bills. In certain cases where the car is insured the cost is recovered completely and the owner is saved by a massive damage. So what exactly is car insurance? Well, in simple words it protects the proprietor from huge financial loss if the car has undergone any damage.

A definite amount of premium is paid by the proprietor of the car for a given time frame on a monthly basis to the insurance company and in exchange, if the car gets into a mishap, the company helps to pay the damages.

The coverage of a car depends on a certain number of things such as car’s value, ownership of the car and how much potential damages can be paid by the proprietor. The premium for each car varies significantly.

In many countries like Germany, Russia, India it is compulsory to have a car insurance. In all the states of US, it is necessary for cars to be insured except in the states of New Hampshire and Virginia. Even in these two states, it is required for the owner to prove that in case of a wreck, he/she can cover up the entire damage. Hence it becomes extremely important for a person to have their car insured.

 

Insurance
Source: SAGmart

Here are a few important terms

  • First Party- It refers to the owner of the car
  • Second Party- It refers to the insurance company
  • Third Party- It refers to the other person who is affected by the first party in an accident
  • Coverage- It is the money covered as per the insurance policy
  • Deductible- Amount paid by the owner before the second party pays any money

Bike Insurance

Bike Insurance

In many countries the commute on a two wheeler is far more common than a four wheeler. It is proven to be ideal in cases of agility and ease. Due to increased usage of vehicle the maintenance cost of the vehicle will increase and if the insurance is not of the right kind then this cost can be very heavy.

So here are two types of bike insurance

1. Third Party Insurance

Legally it is mandatory to have a third party insurance under the Motor Vehicles Act of 1988. It is a type of insurance which recovers the financial damages caused to the third person who is involved in the on-road mishap. The coverage for car damages and medical claims is given to the third person who is injured and does not serve of any advantage to the first party owner. The coverage given is limited within a scope and premium deposited is not much. However low premium does not indicate less coverage.

What does it cover?

It covers damages by accidents to the third party

What does it not cover?

  • Injuries and Damages of the first party owner
  • Wear and tear of the vehicle
  • Electrical and Mechanical Breakdown of the vehicle
  • Theft
  • Natural Calamities
  • Sabotage
  • Fire
  • Policy is inactive
  • Damage while driving under the influence of alcohol
  • Damage while driving without a valid driving license

2. Comprehensive Bike Insurance

It is an amalgamation of both third party insurance and the safety to the owner. It offers financial aid both to the damages of the first party and third party owner. It is not mandatory by law. The premium deposited here is quite high. The coverage offered is high.

What does it cover?

It covers the damages caused by accidents, sabotage, fire, vandalism and theft, terrorism and malicious acts, civil disturbances like riots, natural calamities like floods, earthquakes to the third party as well as the first party.

What does it not cover?

  • Normal wear and tear
  • Electrical and Mechanical Breakdown of the vehicle
  • Policy is inactive
  • Damage while driving under the influence of alcohol
  • Damage while driving without a valid driving license

Which is better?

The third party insurance is a subset of comprehensive insurance. Hence it is always better to go for comprehensive insurance. If the bike is newly purchased it is highly advisable that a comprehensive insurance should be bought. It will help in saving a lot of money in the long run. If the bike has been used for quite some time and the owner does not want to spend much money on the bike, it is suggested to go for third party insurance.

Car Insurance

Car Insurance

Although car and bike are automobiles, there are different types of insurance for each of them. A car insurance is relatively cheaper than bike insurance. The schemes vary vastly. Hence it is important to know about these insurances separately.

Types of Car Insurance

1. Liability Insurance

Liability coverage provides financial treatment to the third party. It will pay for all the damages caused by the first party to the third party.

What does it cover?

  • Bodily Injury- It provides financial aid to the third party if the first party is involved in an accident that hurts another person. It helps to pay for the other person’s medical bill, compensation for the loss of income and emergency aid in an accident scene. It also pays for the legal bills if the other person sues the owner.
  • Property Damage- It is the damage caused to someone else’s property. It pays for the structural damage and replacement of stationary objects. It also protects the other person’s vehicles. In case of a lawsuit, it keeps the owner’s assets safe.

What does it not cover?

  1. There is a certain amount of limit per accident and per person. If the damage exceeds that amount then the second party is not liable to cover up the additional cost
  2. It does not cover up structural or medical insurance of the first party

Should I buy it?

Irrespective of the car is new or old, it is always advised to have a liability cover. An accident can occur anytime so to ease out on your pocket this is quite beneficiary. Moreover, it also saves you from legal procedures.

2. Collision Insurance

It provides financial aid to the vehicle of the first party in an accident regardless of whoever is at fault. The first party needs to pay a certain amount of deductible and after that, the insurance company will pay up until the cash value of the car.

If the car is on loan or leases it is mandatory to have collision insurance. It is optional if the car is owned outright.

What does it cover?

It provides financial aid to the first party if

  • There is a collision with another car
  • Another object
  • In the cases of the car tripping or falling over

What does it not cover?

  • It does not cover damages which are caused by sabotage, theft or hail
  • Damages caused to the third party
  • Medical bills for the first and the third party
  • Costs incurring after the limit of the vehicle is attained
  • Losses from weather damages are not covered by collision damage

Should I buy it?

Collision car insurance is advised mainly to save the damages incurred to your car. If your car is new it is highly advisable that you buy this insurance. However, for an older car, this can be avoided if the owner of the car does not want to spend much money.

3. Comprehensive Insurance

It is an insurance against losses in which the car has been stolen, damaged in a condition that is not a collision. If there are any lienholders present in the owner’s car then this insurance is mandatory.

What does it cover?

It covers damages incurred by

  • Natural Calamities
  • Civil Disturbances such as a riot
  • Vandalism
  • Theft
  • Falling Objects such as a tree
  • Fire
  • Animal Damages

What does it not cover?

  • Many comprehensive policies do not include losses by freezing even though it is a damage incurred by weather
  • Medical expenses
  • Damage from collision
  • Third party loss from collision

Should I buy it?

It is optional to buy this insurance. Buying this insurance depends a lot on the region you live in. A place where there are continuous disruptions caused by weather, this insurance will help you to save a lot of money. If you lease or finance your vehicle you would be required to have this insurance.

4. Uninsured and Underinsured Insurance

The uninsured insurance policy provides financial aid to the first party if he/she has undergone an accident by an uninsured vehicle. In this case, the first party would not be able to collect money from the third party under liability insurance as they lack one.

Underinsured insurance is when a third party has bare minimum insurance just enough to fulfil state’s legal allegations. It only kicks in when the third party’s insurance policy is limited enough to fulfil the first party’s damage.

What does it cover?

  • It covers all the damage and medical expenses of the owner

What does it not cover?

  • It does not cover damages of the third party owner

Should I buy it?

It has been found that there are millions of drivers who are not insured, so it is really helpful to cover self-medical expenses. It is required in a few places for protection from bodily injury. The term underinsurance has been misinterpreted numerous times by buyers, so it very important for the buyer to check how much coverage he would be getting.

5. Medical Payments Coverage (MPC)

If a car is involved in an accident, this insurance gives medical safety to the owner and family members of the owner no matter who is at fault. It also protects the family of the owner if injured in another car or injured as a pedestrian. Medical insurances cannot provide co-pays and not extend to other passengers.

What does it cover?

  • Hospital Stays
  • Surgery
  • X-Rays
  • Ambulance and other technician fees
  • Other Medical Bills

What does it not cover?

  • It does not cover anything exceeding the limit
  • Other than family members mentioned on the paper, it does not cover expenses of anyone else

Should I buy it?

Since liability coverage is compulsory in some states, the bodily injuries caused to you via some other passenger gets covered. Although the safety of other family members is not paid by the liability coverage. This insurance is optional.

6. Personal Injury Protection Insurance (PIP)

It is also pretty similar to medical payments coverage. It also pays the cost of treating the owner’s injury regardless of the fault. It is available in “no-fault situations” only unlike. PIP provides essential services like childcare which are not provided by MPC.

What does it cover?

  • Covers the deductibles and limits or expenses that exceed the limit of the health insurances
  • Compensates for lost wages in an accident
  • It also provides babysitters for children of the affected
  • Funeral Bill

What does it not cover?

  • It does not cover anything exceeding the limit

Should I buy it?

In a few states it is compulsory to buy PIP while driving so then MPC becomes less important. PIP is generally considered a better option than MPC in states as it offers a better return.

Conclusion

Fake insurance
Source: Insurance Cards

Auto-Insurance is predominantly very essential as it eases the pocket of the owner. While buying an insurance always buy from an authorised company and make sure to read all the terms and conditions. Make sure that you check the all prices and details online and then make a deal. Smart buying of insurances for your automobiles is essential not only on your pocket but also for your safety against frauds.

 

 

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