Everything you need to know about Motor Insurance in India

By | 26/11/2016


Motor or vehicle insurance is an insurance policy that protects the owner of the vehicle against any financial loss arising out of damage or theft of vehicle. Motor vehicle coverage also includes damage caused to third party or property. Motor Insurance is mandatory in India.Motor Insurance is available for both cars and two wheelers. Owing to low value of two wheeler vehicles, their premium is very nominal.

Comprehensive Cover and Third Party Cover

A third party cover is base insurance policy which covers only damage caused to third party by the vehicle. Comprehensive car insurance is a complete car protection insurance policy. The generic cover includes damage to vehicle, loss and theft of vehicle as well as third party cover.


The cover with car insurance includes:

  • Damage to vehicle caused due to accident, riots, strikers, malicious acts, earthquake, flood, storm etc
  • Loss or theft of vehicle
  • Liability to third parties
  • Personal Accident Cover available for owner driver

What is not covered?

  • General ageing, wear and tear
  • Mechanical or Electrical Breakdown
  • Damage caused by person under influence of alcohol, drugs and any other intoxicating substance
  • Damage caused by person driving without valid driving license
  • Consequential loss
  • Loss damage outside India

Factors which affect premium

IDV: This is the cover amount of the vehicle. Cover is decided on basis of value of vehicle with depreciation adjusted.

Age: As a person matures, he becomes more responsible and with less tendency to drive rashly. Accordingly, premium discount is provided.

Occupation: Discount on premium is offered to people belonging to certain professions. The professions include medical doctors, chartered accountants etc.

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Claim History: If you make no claim during your policy years, you can get discount which is called no claim bonus and it ranges from 10% to 50%. Conversely, making too many claims can result in increase in premium amount (loading).

How to reduce insurance premium for:

New Car: If you have brand new vehicle, it makes sense to get comprehensive coverage with add-on covers. However you can still save premium amount by comparing car insurance premiums from multiple insurance companies.

Old Car: If you have old vehicle, you can opt for basic comprehensive car insurance plan. If vehicle is too old, you can go for just third party car insurance. It will certainly save a lot of premium amount.


There are many ways to apply for a claim. The first and foremost thing about making a claim is to notify the insurance company as soon as possible. Then register the claim by providing requisitive documents like claim form, vehicle registration copy etc. Some insurers allow registration online.

Cashless Claim: If you take the vehicle to network garage for repairs, the complete claim process can be cashless.

Claim Reimbursement: If you take vehicle to any other garage, you need to pay for claim amount. After repairs, you can apply for claim reimbursement with the insurance company.

How to buy Car Insurance?

Option 1: You can contact agent or broker and buy car insurance.

Option 2: You can insure directly with current insurer by visiting their branch or doing it online.

Option 3: You can make a comparison on portals like Policy Bazaar and buy car insurance online.

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Buying Insurance for brand new Car

Typically, insurance is offered by showroom representatives. But it is not mandatory to buy insurance from them. One can check insurance quotes online and buy insurance. It is preferable to buy insurance online as you can save on premium costs and also opt for better comprehensive cover.

Buying Insurance for Second Hand Car or Pre-Owned Car

If you are buying pre-owned vehicle, you can contact insurance companies and check quotes based on model and value. Vehicle inspection is required in most cases.


Cover note: When you buy car insurance, you are issued a cover note for the vehicle which has limited validity of around 1-2 months. Do get complete policy document as cover note expires soon and has no value after its validity expires.

Add-ons with Car Insurance

One can extend the coverage for car insurance by opting for add-ons. These add-ons will increase the financial coverage but additional premium amount will be added to the base premium amount. Some of popular add-ons available with car insurance are:

Zero Depreciation: There is certain value to part of the vehicle. When a claim is made, depreciation is calculated on these parts and the amount is paid accordingly. By opting for zero depreciation cover, the entire amount of the part is paid as a part of claim.

Engine and Gear Box Protection:  In case damaged is caused to engine parts or gear box of the vehicle due to water ingression, leakage of lubricating oil etc, the costs for repair and replacement will be covered.

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Car Insurance Quotes

Car insurance quotes can be found online directly from insurer’s website. Car insurance quotes can also be checked from online comparison portals which offer comparison of car insurance quotes from different insurance companies.

Car Insurance Calculator

Car insurance premium calculators are available on insurer’s website. One can get the premium amount for the vehicle. Car insurance calculators take into account parameters like no claim bonus etc and then provide the premium amount.

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