First-Party Car Insurance: Benefits, Inclusions, and Exclusions

What is First-Party Car Insurance?

In addition to the legally required third-party liability coverage, first-party auto insurance covers damage to your own vehicle. This implies that the coverage includes unintentional auto damage, theft, fire, natural disasters such as earthquakes or floods, and even man-made incidents like vandalism or riots.

Additionally, it provides owner-drivers with personal accident insurance, offering financial assistance in the event of an injury, incapacity, or death resulting from a traffic accident. First-party insurance is optional but strongly advised, particularly for new or expensive cars, whereas the Motor Vehicles Act requires third-party insurance.

Key Benefits of First-Party Car Insurance

There are various benefits of first-party car insurance, especially when you care about your prized possession. Let us list them out one by one:

Covers Own Damage

It covers all the damage repair costs of your car arising from an accident or collision.

Meets Third-Party Liability

Like all auto insurance plans, it ensures legal compliance by covering third-party liabilities, such as property damage or bodily injury to third parties.

Personal Accident Cover

It offers the owner-driver up to ₹15 lakh in coverage in the event of an accident-related disability or death. Additionally, some plans provide travelers with optional coverage.

Cashless Claims and Network Garages

First-party insurance often provides access to a wide network of garages where you can obtain cashless repairs, ensuring quicker settlements and less hassle.

Add-On Benefits and Discounts

You can enhance your protection with first-party insurance by selecting add-ons such as engine protection, roadside assistance, zero depreciation coverage, and consumables coverage. If you don't file a claim over time, you can receive a No Claim Bonus (NCB) of up to 50%.

What is Not Covered?

While first-party insurance is comprehensive, it does not cover everything. Key exclusions include:

• If you were driving under the influence of drugs or alcohol
• If you were driving without a valid licence or with an expired policy.
• Normal wear and tear, as well as electrical or mechanical breakdowns unrelated to accidents.
• Damage to consumables, tyres, or tubes unless caused during an accident.
• If the company determines it to be a case of fraudulent or misleading claims, or policy violations.

It is important to read the policy terms carefully to understand all inclusions and exclusions. Many of these exclusions can be covered through optional add-ons.

Who Should Opt for First-Party Insurance?

First-party car insurance is ideal for:

• Owners of new or expensive cars who cannot afford out-of-pocket repair costs.
• Those who regularly drive in areas prone to accidents, floods, or theft.
• Drivers who prefer peace of mind, fast claim settlement, and full protection.

While third-party insurance only fulfills your legal obligation, first-party insurance protects you financially and ensures your car stays in good condition even after an unfortunate event.

Tips to Choose the Right Policy

When buying first-party insurance:

• Compare the Insured Declared Value (IDV) to balance the premium and coverage.
• Check the insurer’s claim settlement ratio and garage network.
• Opt for essential add-ons, such as zero depreciation, roadside assistance, and engine protection.
• Avoid claim rejection by renewing the policy on time and driving responsibly.
• Read the fine print and disclose all details honestly.
• Always use a platform like Upstox to select the best policy tailored to your unique needs.

FAQs

What is first-party car insurance?

It’s a comprehensive policy that covers damages to your own car, third-party liabilities, and personal accident cover.

Is first-party insurance mandatory in India?

No, only third-party insurance is mandatory; first-party is optional but recommended.

Does first-party insurance cover natural disasters?

Yes, it covers damage due to floods, earthquakes, storms, and other natural calamities.

Can I claim for wear and tear under first-party insurance?

No, regular wear and tear or mechanical failures are not covered.

How is the premium of first-party insurance decided?

It depends on your car’s IDV, age, location, type, and any add-ons you choose.