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A motor insurance policy acts as a safety blanket for your vehicle. In case of a car accident, the repair costs can make a big hole in your pocket. The right kind of cover can save you from taking out a chunk from your savings. It, therefore, becomes imperative that you understand the different aspects of motor insurance, as only then would you be able to see how having motor insurance is not just a compulsion but an absolute necessity.

Motor Vehicles Act, 1988 (MVA)

As per the Motor Vehicles Act, 1988, it is compulsory for every motorised vehicle to have third-party liability insurance. Failing to do so can put you in legal trouble. And as per the amendment bill 2019, you may end up paying a fine of INR 2,000 and/or 3 months in jail and community service. For successive offences, you would be penalised with a fine of INR 4,000.

Motor Insurance Categories for Private Vehicles

Motor Insurance for private vehicles can be classified into two main types:

  1. Car/Four-Wheeler Insurance
  2. Bike/Two-Wheeler Insurance

Types of Motor Insurance Policies

Traditionally there are 2 types of motor insurance policies, however, over the past few years, insurance companies have introduced different insurance plans to suit their customers’ needs as well.

  1. Third-party Liability Motor Insurance
    Under the Motor Vehicles Act, 1988, having third-party insurance for your vehicle is mandatory. In case while driving your car/two-wheeler you accidentally cause damage or injury to a third person, property or vehicle, that financial expenses will be taken care of by your insurance company which otherwise you would have to bear. Third-Party liability insurance covers the minimum and is a compulsory requirement.
  2. Comprehensive Motor Insurance
    Comprehensive insurance, also called package insurance, offers you dual benefits. It not only covers you against third-party liabilities but also helps you in recovering from the damage incurred on to your car. The damages due to the following are covered:
    1. Collisions and accidents
    2. Natural Disasters such as earthquakes, floods, etc
    3. Man-Made Disasters such as strikes, vandalism, riots
    4. Theft of the Vehicle
    5. While transporting the vehicle
  3. Standalone Motor Insurance 
    This kind of insurance can be opted for when you have third-party insurance already. To extend the cover to your own vehicle, you can opt for a standalone policy by paying an extra premium.
  4. Bundled Insurance
    As per the recent guidelines of IRDAI, if you have purchased a car and/or two-wheeler after September 1, 2018, it is compulsory to have third-party insurance for a period of 3 and 5 years respectively. The Own-Damage cover can be for 1 or more years at your convenience.
  5. Pay as You Drive
    Pay as You Drive is a part of comprehensive insurance that can be opted. You will be charged a premium based on the distance that you travel in one year. There are different slabs, you can choose a kilometre slab that suits you the most.

Personal Accident Cover

Whether you opt for just third-party liability cover or comprehensive insurance, it is mandatory to have a personal accident cover, which offers compensation up to INR 15 lakhs in case of death or disability of the owner-driver. The compensation received depends on the severity of the injury or loss:

Cover ForPercentage of Compensation 
Loss of 2 limbs or 2 eyes or 1 limb or 1 eye100%
Loss of sight or 1 eye or 1 limb50%
Permanent Total Disability100%

Benefits of Motor Insurance Policy 

  1. Having insurance for your motorised vehicle is a legal requisite
  2. In the long run, the price you pay for the insurance is going to be much less than the cost of repair after a major accident
  3. You are saved from paying a fine for driving without a valid motor insurance policy
  4. Your insurance policy offers double benefit- covers your own-damages as well as third-party liabilities
  5. You can ride/drive your vehicle with the confidence that even in case of an accident, you will be covered
  6. There are numerous add-on that you can include in your policy to enhance the cover
  7. Buying and renewing insurance for your car/ two-wheeler is a very easy process and takes only a few minutes

What is Covered in Motor Insurance? 

  1. Under third-party liability insurance, the damages caused to a third-party person or property would be covered
  2. Comprehensive insurance would include the damages to your car/ bike as well
  3. Theft of your vehicle will also be compensated
  4. You can opt for add-on covers to customise and increase the coverage

What is not Covered in Motor Insurance? 

Despite wide coverage, there are certain exclusions in Motor Insurance. The damages caused in the following circumstances are not covered:

  1. When the driver/ rider is intoxicated
  2. When the driver/ rider does not have a valid license
  3. When the insurance policy is not valid
  4. When the accident takes place outside the geographical boundaries
  5. When the damage is due regular wear and tear of the vehicle
  6. When the private vehicle is used for the commercial purpose

How to Compare Motor Insurance Plans Online 

If you are planning to buy an insurance plan for your vehicle, you can consider the following points and draw a comparison between the available policies:
1. Insured Declared Value (IDV)
Insured Declared Value, is the maximum compensation that you would receive in case of theft or total loss. Check for IDV also and not just the premium, when comparing the motor policy. 
2. Coverage
Carefully analyse all the features and select an all-inclusive list or the one with the maximum cover. Most companies offer almost similar coverage, however, certain features may give the plan an edge over the others. 
3. Add-on Covers
Add-on covers can improve the coverage of your plan. Most companies offer an array of add-on covers, select the one that suits your requirements.
4. Discounts
Buying insurance online, long-term discounts are some offers that you should look out for.
5. Premium 
The most appropriate insurance plan is the one that grants maximum benefits and the lowest premium. 

Motor Insurance Premium Calculator 

Most motor insurance companies offer an online motor insurance premium calculator to help customers get an estimate of the premium amount. To calculate the premium, you need to follow these steps:

  • Step 1 - An Insurance Calculator
    You can either visit an insurance company or use the calculator on an insurance broker's or aggregator's website.
  • Step 2 - Vehicle Details
    Enter the required vehicle details such as make, model, variant, registration etc.
  • Step 3- Type of Insurance
    Select the kind of insurance that you are looking for. You can also pick add-on.
  • Step 4- History of Claims
    If you have any No-Claim Bonus, make the entry.
  • Step 5- Check the Premium
    You would now be able to see the premium amount. If you want, you can change the variable to increase or decrease the premium.

Motor Insurance Claim Process

When making a claim, if you follow all the company-laid guidelines, it can be an easy and smooth procedure. Remember to:

  1. Inform the company about the accident as soon as possible, or within 24 hours of the accident
  2. As per the instructions take the vehicle for repair
  3. At a network garage, after the survey, the company would settle the bill directly. However at a non-network garage, after the survey, you can get the repair done and pay the bill from your own pocket. You can later request reimbursement.

Best Motor Insurance Companies in India 2020

Name of the CompanyHighlighting Features
HDFC ERGO Motor Insurance
  • Incurred Claim Ratio-81.78%
  • Over 6,800 network-garages
  • 24x7 customer service
Bajaj Allianz Motor Insurance
  • Incurred Claim Ratio-62.36%
  • Quick Claim Settlement (Within 20 minutes when using Motor OTS Service)
  • Many of the add-on features
Universal Sompo Motor Insurance
  • Incurred Claim Ratio-88%
  • Over 3500 garages
  • A long list of add-on covers available
Bharti AXA Insurance
  • Incurred Claim Ratio-75.47%
  • Over 5,200 network-garages
  • 24x7 customer service
Go Digit Motor Insurance 
  • Quick and Easy Digital procedures
  • Doorstep Pickup and Repair
  • Smartphone enabled Self Inspection
Reliance Motor Insurance 
  • Incurred Claim Ratio of 84.94%
  • 4450+ cashless garages
  • Instant Claim services
Oriental Motor Insurance 
  • Incurred Claim Ratio-112.62%
  • Multiple Add-on benefits
  • 24x7 customer service
  • Attractive discounts

Renew Your Lapsed/Expired Motor Insurance Policy Online 

Renewing your insurance policy is crucial. Not renewing timely, will not only put you at financial risk but can also put you in legal trouble. If you could not renew the policy on time, you can do it now. You would have to get in touch with the customer care of your insurance company and request a surveyor who would assess your vehicle. After his approval, you can pay the required premium and renew your policy.

At the time of renewal you may be asked to submit:

  • Previous Year's Policy
  • Driver’s License
  • Government Authorised ID Proof
  • RC of the Vehicle

List of Cashless Garages

The insurance companies have a collaboration with various garages so that their customers can get their car/ two-wheeler repaired using the cashless facility. The company settles the bills directly and you end up paying only a nominal charge of the compulsory deduction and uncovered expenses. It is recommended that you keep a regular check on the list of garages, which is available on all company websites, as the list is updated regularly.

Motor Insurance Policy FAQs

  • 1. What are add-on covers in Motor insurance?

    Different companies offer different add-on covers with their motor insurance plans. However, the most common ones are-Zero Depreciation, Roadside Assistance, Return to Invoice, NCB Protect.

  • 2. Is a multi-year motor insurance policy better than a single year policy?

    Buying a single-year policy would not burden your pocket at once, whereas you may get discounts when you opt for a multi-year policy. It also saves you from the annual premium hike which is often the case with TP policy. A multi-year policy also saves you from the hassle of regular renewals. You must decide on what suits you best.

  • 3. What is the difference between a Third-Party and a Comprehensive Motor insurance policy?

    A third-party insurance policy covers the damage caused to a third party by your insured vehicle. Whereas, a comprehensive policy not only covers the third-party liabilities but also vehicle own-damages.

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