Types of Motor Insurance Policies in India

Motor insurance is essential for all vehicle owners in India, as it provides financial protection against accidents, theft, and other unforeseen events. Knowing about the different types of motor insurance policies in India can help you make an informed decision and ensure proper coverage for your vehicle. 

Motor insurance is just like any other insurance policy, but unlike other insurances, it is ‘mandatory'! And, as the name suggests, motor insurance meaning is a type of insurance that covers all types of motor vehicles – two-wheelers, cars, jeeps, trucks, commercial vehicles, auto rickshaws, electric vehicles, etc.

Motor insurance is mandated by the government for your safety and the safety of others, and the yearly premium you pay is just a meagre sum when compared to the advantages it has to offer you in case of any mishap.

Here’s yet another misconception many people have, motor insurance covers only motor vehicles. Wrong again!

So, let's start with the types of motor insurance policies, and by and large what they cover! Motor insurance can be classified on 2 things:

• The type of vehicle for which you are taking insurance.

• The amount of coverage that you want to cover your vehicle for.

Here’ why you should get a motor insurance policy:

Legal Compliance:

Having at least a third-party car or bike insurance is mandatory by law in India.

Financial Protection:

A motor insurance policy protects you financially by covering the cost of repairs, replacements, and medical bills in case of damage.

Third-Party Liability Coverage:

Having a motor insurance policy also backs you financially in case of damage to third parties caused by your vehicle.

Added Protection:

With comprehensive motor vehicle insurance and own damage insurance plan, you can get enhanced protection by choosing various add-ons as per your needs.

Peace of Mind:

You also get peace of mind as you are financially protected in case of unforeseen events.

In India, vehicle insurance is mandatory for all motor vehicles to protect them against damages and liabilities. So, here are different types of vehicle insurance available in India:

1. Private Car Insurance

This type of motor insurance that needs to be taken for any private car owned by an individual and is mandated by the Government of India. It covers the vehicle for damages against accidents, fire, natural disasters, theft among others and also covers for any injury to the owner. It also covers any damages and injuries caused to the third party.

2. Two-Wheeler Insurance

This insurance policy covers two-wheelers like a scooter or a bike and is mandated by the Government of India. The two-wheeler is covered against damage from accidents, disasters, fire, theft, etc. as well as any damage and injuries to the third party. It also offers a mandatory personal accident cover for the owner rider and can be taken for passengers too.

3. Commercial Vehicle Insurance

This insurance covers all vehicles that are used only for commercial purposes and not for personal use. Trucks, buses, heavy commercial vehicles, light commercial vehicles, multi-utility vehicles, agricultural vehicles, taxi/cab, auto-rickshaw, etc., are some vehicles that are covered under this insurance.

1. Third-party Liability Policy

2. Comprehensive Insurance Policy

Comprehensive motor vehicle insurance is one of the most valuable types of vehicle insurance that covers both third-party liabilities and damage to your own vehicle as well.

As the name suggests, this policy offers extensive coverage, including both third-party liabilities and own damage. You can also purchase various add-ons with it to help enhance your car  or bike insurance coverage.

What’s Covered?

• Damages due to accidents 
• Vehicle thefts 
• Losses to a third-party 
• Damages due to a natural disaster 
• Personal injuries or death in an accident 
• Damages caused in a fire

What’s Not Covered?

• Driving drunk 
• Driving without a license 
• Add-ons not bought 
• Consequential damages 
• Contributory negligence 
• Driving without a valid license holder

3. Standalone Own-Damage Insurance Policy

This policy provides coverage for damage to one's own vehicle due to accidents, theft, fire, natural disasters, and other unforeseen events. It does not cover third-party liabilities; however, it works as an added protection with the third-party car insurance policy.

What’s Covered?

• Damages to your vehicle in an accident 
• Theft of your vehicle 
• Losses caused to your vehicle in a fire 
• Damages to your vehicle due to a natural calamity

What’s Not Covered?

• Third-party liabilities 
• Driving drunk 
• Driving without a licence 
• Add-ons not bought 
• Consequential damages 
• Contributory negligence 
• Driving without a licence holder

Listed below are a few of the ‘add on’ covers that can be availed with comprehensive motor vehicle insurance at a slightly higher premium.

Zero Depreciation

Age comes with its drawbacks. The same applies to your vehicle. The older it gets, the more the value of your car or bike drops or ‘depreciates’. But, not to fret, zero depreciation add-on ensures that the value of your vehicle will remain as valuable as the day you bought it. After all, the insurer will not consider depreciation during final settlement!

You may also like: Zero Depreciation Car Insurance & Zero Depreciation Bike Insurance

Engine Protection Cover

Engine & Gearbox Protection Cover is an ‘add on’ that offers financial protection for damage caused to the engine of the vehicle. Any damage caused, from water entering the engine to leakage of the lubricating oil, is covered under this add-on.

Roadside Assistance

How do you fancy your set of wheels breaking down on a lonely dacoit-infested road at the stroke of midnight? Fear not, roadside assistance is there to rescue. All you need to do is give them a call and they’ll come to the spot and repair your vehicle. If not possible, they will tow it to the nearest service station. At least you’ll be dacoit-free!

Consumable Cover

Nowadays, motor insurance companies provide a consumable cover add-on to cover the service costs of your vehicle, from the new engine oil put into your vehicle right to that missing nut on your engine cover. 

You may also like: Consumable Cover in Car Insurance & Consumable Cover in Bike Insurance

Consumable Cover

Nowadays, motor insurance companies provide a consumable cover add-on to cover the service costs of your vehicle, from the new engine oil put into your vehicle right to that missing nut on your engine cover. 

You may also like: Consumable Cover in Car Insurance & Consumable Cover in Bike Insurance

Return to Invoice Cover

In case of theft or damage beyond repair, return to invoice add-on gives you the benefit of getting back the complete amount of your car/bike invoice value, including the cost of registering a new vehicle and its road tax respectively.

You may also like: RTI Cover in Car Insurance & RTI Cover in Bike Insurance 

Key and Lock Protect

The Key and Lock Protect add-on cover helps you repair or replace your key and lock in case you have lost or damaged your vehicle’s keys or lock, and if they are stolen. 

You may also like: Key & Lock Protect in Car Insurance & Key & Lock Protect in CV Insurance

EV Shield Add-on Cover

The EV Shield add-on cover for electric vehicles in India specifically provides enhanced coverage and benefits for your electric and hybrid vehicle. The add-on protects them against any loss or damage to the electrical panel for the vehicle charging point, vehicle charger including charging cable, and to offer roadside assistance services specific to EVs.

You may also like: EV Shield Car Insurance & EV Shield Bike Insurance 

Daily Conveyance Benefit (Available for Car & Bike)

By having a Daily Conveyance Benefit add-on, you get compensated for your travelling expenses in case your insured vehicle is being repaired in a garage. With this add-on you receive compensation in the form of a daily transport allowance or a standby vehicle. 

You may also like: Daily Conveyance Benefit Car Insurance & Daily Conveyance Benefit Bike Insurance

Tyre Protect Cover (Available for Car & Bike)

Generally, damage to an insured vehicle’s tyres isn't covered under standard motor insurance policy unless the damage takes place during an accident. That's why this tyre protect add-on gives you the benefit of safeguarding and covering your car's tyre damage such as tyre bursts, bulges or cuts during all other situations possible.

You may also like: Tyre Protect Car Insurance & Tyre Protect Bike Insurance 

Loss to Personal Belongings (Available for only Car)

This add-on helps you with compensation in case the insured or any immediate family member lost any personal belongings in the insured vehicle.

Pay As You Drive Cover (Available for only Car)

Pay as You Drive helps you reduce your premium by allowing you to pay as per your kilometers covered with the Own Damage cover of the base policy.

Passenger Cover (Available for only Car)

The Passenger cover, available only for car, protects the passengers riding along with the driver in the insured vehicle; however, you need to pay an additional premium for the add-on.

If you’re having trouble choosing the best motor insurance policy, we’ve got you covered. Check below the case which suits you the best and then make your choice!

Case 1: If You Bought a New Luxury Car or Bike

Buying a luxury vehicle is a significant personal investment, making it essential to protect it with comprehensive motor vehicle insurance so that your brand-new vehicle is completely protected from its own damage as well third-party liabilities. 

You can also further enhance your coverage by opting for add-ons tailored for luxury vehicles, such as zero depreciation, return to invoice, engine protection, consumables coverage, etc.

Case 2: If You Own an Old Vehicle That You Drive Daily

If you own an old vehicle, say more than 5 years but which you also drive daily, then you need to protect the vehicle with a third-party motor insurance policy. It will protect you legally as well as financially against repairs or replacements in unfortunate incidents.

Case 3: If You Rarely Go Out for a Ride

If you think that you do not need a motor insurance policy for a vintage vehicle that you do not drive and own only because it is a family heir, then you are absolutely wrong. It still needs to be insured with at least third-party coverage, as required by law.

Alternatively, you can also consider getting a comprehensive motor insurance policy with only a Pay As You Drive add-on, as then you could save on the premium if the vehicle is driven less than 10,000 km a year.

To buy motor insurance online, you need to furnish the following documents:

• Car/Bike Registration Certificate  

• Previous year comprehensive insurance policy, if applicable 

• Any of these documents for KYC verification - PAN/Aadhar/DL/Voter id/Form 16/Passport 

Thus, it makes sense to take third party insurance if you use your vehicle only occasionally and not as your daily commute, so there will be lesser chances of a mishap happening right.

Additionally, the hefty premium that comprehensive insurance demands eventually take its toll on the buyer with a limited budget! That said, it’s still better to go for Comprehensive Insurance over Third Party Insurance, as its benefits are well worth the slight premium you pay.

At the end of the day the good old holds true when it comes to choosing your motor insurance- “NEVER BE PENNY WISE AND POUND FOOLISH😊!”