Motor
Insurance

Motor insurance is a vehicle insurance policy that is mandatory for vehicles like trucks, cars, jeeps, bikes, scooters, etc. This policy offers coverage to the vehicle owner/driver against financial losses that may occur due to accidents or other kinds of damages.

Having valid motor insurance is compulsory in India to protect vehicle owners from potential financial risks. It is the best form of security that you can acquire to prevent significant expenses that result after an accident. The Government poses the compulsion for the safety of the individuals who travel via motor vehicles daily.

No one can deny that buying a vehicle is the second most expensive investment in a person’s life after home. Thus, protecting the investment against unforeseen events is crucial. Considering the hike in the vehicle repair charges and the risks involved in driving, an unfortunate accident can put a big hole in your pocket.

The yearly premiums that you pay for the motor insurance policy are meagre as compared to the advantages and protection the coverage will offer you in case of mishaps. Though there are many misconceptions regarding the policy, it will most certainly compensate you against the physical damage that arises under different circumstances.

A vehicle insurance policy comes with several features that can be very beneficial for the policyholder. Here are some of those features that you should know about:

  • You can purchase motor insurance online in a hassle-free manner

  • You can renew the insurance plan online at the comfort of your place.

  • You can add or remove any particular add-on as your requirement. You can do it while purchasing or renewing the insurance plan.

  • Motor insurance not only provides cover for the damages caused by an accident but also covers you from theft, natural calamity, fire damage, vandalism, manmade disasters, etc.

  • You can get the benefits of a cashless claim by providing enough evidence in case of accidents and theft.

  • Motor insurance also provides a No Claim Bonus feature. Under this feature, if you do not raise a claim during the policy tenure then the insurer will provide you with a specified discount either on the premium or on purchasing any other add-on. It varies from insurer to insurer.

  • Insurance companies keep on coming with different plans and add-ons to provide you better coverage as well as provide assistance in case you get stuck during the claiming process.

Features of
Motor Insurance

Motor Insurance can be broadly classified under below heads:

  • Car Insurance

Car Insurance gives coverage against accidental loss or damages to own car or a third party. While choosing a car insurance policy, a person should always compare the premium offered by various insurers to ensure that he got the best deal. The amount of premium would depend on the make & value of the car, state from where it is registered and the manufacturing year.

  • Two Wheeler Insurance

Two Wheeler Insurance or bike insurance provides protection to bikes and scooters. It covers two wheeler vehicles against any own damages as well as any accidental loss caused to third party property or person. Similar to car insurance, the premium of a two-wheeler policy depends on the age of the bike, its make & model, registration year, etc.

  • Commercial Vehicle Insurance

Commercial vehicle insurance helps all commercial vehicle drivers to reduce losses they might incur due to damage to their vehicle. Here commercial vehicles include those that are not used for personal purposes, like goods carrying vehicles, trucks, etc.

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Types of vehicles covered

Motor Insurance coverage can be broadly classified under below heads:

  • Third Party Insurance Cover

It covers a third person who has been injured in an accident involving you and your vehicle, including car, scooters, bikes, trucks, etc. The policy doesn’t provide any direct benefit to the insured. As per the Insurance Regulatory and Development of India (IRDA), no insurer can decline to underwrite third party insurance.

  • Comprehensive Insurance Cover

This cover is an add on to the third party insurance plan and protects the owner of cars, bikes, scooters and trucks from financial losses caused by damage or theft of the insured vehicle. Besides insuring vehicles, it also provides third-party coverage.

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What is Covered

Damages occured due to 

  • Riot & Strike

  • Fire & Burglary

  • Terrorism Act

  • Earthquake

  • Landslide

  • Flood, storm and Cyclone

What is Not Covered

Damages occured due to 

  • If driver is under influence of drugs or alcohol

  • Motor is used for illegal activities or purpose otherwise stated in policy

  • Not having a valid driver license

  • Damage happened outside India

Kinds of Motor Insurance Coverage in India

Things to consider while buying insurance

It is mandatory to get insured with a third-party insurance plan in India. As the name suggests, a third-party plan provides cover for the third-party liability and comes with a specified set of coverage. But when you decide to purchase a comprehensive insurance plan then it is suggested to consider several things to make the most out of that insurance plan. So here are the things that you need to consider while purchasing a motor insurance plan.

  • Coverage: While purchasing motor insurance, check if that particular insurance plan is providing you with the coverage you require.

  • Add-on : If you are not satisfied with the kind of coverage your desired comprehensive insurance plan is providing then you can always consider purchasing an add-on as provided by your insurer.

  • Personal Accident Cover : Make sure that the motor insurance you are planning to purchase comes with the personal accident cover or not.

  • Claim Settlement Ratio : Before purchasing a motor insurance plan, check the claim settlement ratio of your desired insurance provider.

  • Network Garages : Check if your desired insurance provider has a good network when it comes to garages

  • No Claim Bonus : Check if the insurance company provides a good no claim bonus or not.

  • Zero Depreciation : As soon as the car comes out of the showroom, its price drops down to almost half the amount you have bought it for. In order to maintain the monetary value of your vehicle, you are suggested to opt for the zero depreciation add-on to get the best coverage amount after the depreciation

Make sure that you read the terms and conditions properly before signing any documents.

Parameters affecting Insurance premium

Insurance Cover
IRDAI 2018 Regulation
IRDAI 2020 Regulation Update
Standalone Comprehensive Cover (With Mandatory third-party cover)
3 years & 5 years Comprehensive Cover
1-year Comprehensive Own Damage Cover
Third - Party with Comprehensive Cover
3 years and 5 years third-party with Comprehensive cover
3 years and 5 years third-party with 1-year Comprehensive cover
Third - Party Only
3 years third-party insurance for car and 5 years third-party cover
Retained

Here are the parameters that can affect the vehicle insurance premium.

  • Make & Model: The premium amount of your insurance plan depends upon your car’s make and model, meaning its cubic capacity, model as well as its variant. 

  • Age: The depreciation value, as well as the insured declared value, depends upon the age of your car.

  • Engine: The engine type whether it is a petrol engine or a diesel engine will affect the IDV that might increase the premium amount.

  • Location: The premium amount of your vehicle depends upon the location of the car. For instance, if you live in a metro city then the premium amount of the motor insurance would be higher due to the high risk of an accident.

  • Add-on: The insurance plan comes with a particular set of coverage but the insurance companies also provide add-ons so that you can enhance the coverage in case you are not satisfied with the existing coverage.

  • No Claim Bonus : The insurance companies provide a discount on the successive year for not raising a claim during the previous policy tenure.