Bundled or standalone: Which vehicle insurance policy should you buy?

If you are buying a car or two-wheeler now, you will need to buy long-term insurance compulsorily, as per a recent Supreme Court order

The Supreme Court has made it compulsory to buy third-party insurance with at least three years' cover for those buying a car after September 1. For those buying two-wheelers, the minimum third-party insurance period has been set at five years.

Vehicle insurance has two components -- third-party cover and own damage cover. While the third-party cover serves to protect the insurer from claims made by an an accident victim, the own damage policy covers loss or damage to the insured vehicle.

At present, there are three different types of insurance covers that one can choose from. Here are some facts about all the three that will help you arrive at the one that suits you the best:

1. Third party cover for three years (no cover for own damage): This cover offers protection only from claims arising from the third party for three years.

While this policy meets the new Supreme Court directive at the minimum possible cost, your car will be left without any insurance cover in case of accidental damage or theft.

2. Bundled cover (covers third-party claims for three years and own damage for one year): If you want cover for own damage along with that for the third-party, then you can go for this option.

Experts consider this variant as the best among those on offer at present.

“Regulations are still evolving around long-term auto insurance. The regulator, for example, has not yet talked about how the no-claim bonus (NCB) will be passed on to the customers. Most insurance companies are not considering the NCBs for now. Until there’s clarity, the bundled product offering would be a better option,” Sajja Praveen Chowdary, head – motor insurance, Policybazaar.com told Business Standard.

3. Comprehensive cover (three years cover for both third-party claims and own damage): One can choose this cover if he or she wishes to pay in one go. However, this is the most expensive among all three options.

Another disadvantage of this cover is that it doesn't allows you to switch to another insurer in the next year.