Motor Insurance in India, also known as Vehicle Insurance, is an insurance plan that provides financial cover to private and commercial vehicles from any loss or damages on account of accidents, thefts, natural or human-made disasters, etc.
According to the Motor Vehicles Act of 1988, all vehicle owners need to have a Motor Insurance policy. It is essential for all vehicles like cars, trucks, motorcycles, scooters, tractors, and other vehicles running on roads to have at least third-party liability insurance cover.
It also offers protection against accidental bodily injuries, death, or physical damages caused to the owner-driver or a third party. It provides personal accident cover too.
Importance of Motor Insurance
Motor Insurance in India proves to be a credible investment for the policyholder when it comes to their vehicles:
- Motor Insurance provides a financial shield to vehicle owners in case of an unfortunate incident. It covers damages incurred to the insured vehicle due to natural or man-made calamities.
- It offers to cover financial liabilities, which may arise due to the damages incurred to the third party property or vehicle following an accident.
- It also provides liability coverage for bodily injuries or accidental death of a third party or passengers travelling in the other vehicle, etc.
- It provides coverage against theft of the insured vehicle.
- Motor Insurance also helps in covering the liability arising due to death or bodily injury of a paid driver of the insured vehicle, conductor, or ticket examiner, workers, carried in a goods vehicle.
Types of Motor Insurance Plans
There are two types of motor insurance plans that you can consider. Third-party liability is mandatory and a comprehensive four-wheeler policy provides extensive cover:
- Comprehensive Motor Insurance- Comprehensive car insurance is considered to be the most sought-after car insurance on account of the coverage it offers. It not only protects the policyholder financially against any loss or damages caused to a third- party’s property but also covers the expenses due to accidental damages to their vehicle. It also provides extensive coverage against theft, fire, vandalism activities, and natural disasters. Any damage to the car caused by falling objects like branches of trees is also covered.
- Third-party liability Motor Insurance
Every car owner is mandated by law to have third-party car insurance. This protects the policyholder against any third- party legal liabilities due to an accident. In case of any accidental injuries or damages to the third-party or their property, this insurance policy will come to the rescue.
Classification of Motor Insurance in India
Vehicle Insurance in India can be divided into two categories. The premium amount related to the same also varies according to the categories. The categories are:
- Private Car Insurance– Car insurance is a safety net that secures the car owners against financial losses related to the vehicle following an accident, natural or man-made calamities. Insurance providers offer car insurance for a maximum of 1 year, following which the policyholder will have to renew it again.
- Commercial Vehicles Insurance– Commercial vehicle insurance offers protection to vehicles being used for commercial purposes, against damages incurred due to accidents or any other unforeseen event.
Features and Benefits of Motor Insurance Plans
Check out the features and benefits that you can avail in motor insurance plans:
- 4-wheeler insurance policies can be easily purchased online in a quick and hassle-free manner
- The policies can be easily be renewed online
- These vehicle insurance plans offer to cover financial losses that the vehicle owner might have incurred due to theft, fire, accident, etc.
- The insurance companies have a huge network of cashless garages where the policyholder can get his or her car repaired. The insurance company directly settles the cost of repair with the workshop
- Motor insurance plans also give flexibility to vehicle owners to get their vehicle repaired in their preferred garages and reimburse the claim later
- No Claim Bonus advantage is provided as well, which if required can be easily transferred from one insurance provider to another
- Motor plans also offer 24×7 road assistance for the insured vehicles
Things to keep in Mind before Purchasing Motor Insurance in India
Here are certain things that you need to keep into your mind:
- The insured needs to understand the coverage provided in the health plans. While accidental damage or theft is covered under a standard policy, there might be certain factors that may not find a place in the coverage benefits
- Don’t forget to understand the add-on riders offered by the insurance companies that may be beneficial to the vehicle insurance policy
- It is important to inform the insurance company about any customization done to the vehicle as the policy may stand nullified if it is not disclosed before
- It is also essential to compare the policies of different insurance providers before settling down on one
- The policyholder should look for a plan that has a good network of cashless garages as the quality of service given at these facilities is usually high, and they are easily accessible
- As far as renewal of the Motor Insurance policy is concerned, the Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for the policyholder to have a Pollution Under Control Certificate (PUC) at the time of renewing the policy
Personal Accidental Cover in Motor Insurance
The vehicle owner must have a personal accidental cover under Motor Insurance in India. In case the driver-owner of the car suffers permanent disability or loses his or her life following an accident, the insurance company will have to pay the compensation under the provisions of the motor vehicle policy.
Moreover, a policyholder can secure the life and any loss caused to the co-passengers by covering them under the Motor Insurance plan as well. There are various optional personal covers for passengers too. They are explained below:
- Personal Accident Cover for Private Cars
- The compulsory personal accident cover for owner-driver comes with the coverage of Rs 15 lakh
- The policyholder can get an optional personal accident cover for passengers at an additional cost
- The policyholder can also get optional liability coverage for a paid driver at an additional premium cost
Inclusions and Exclusions of Motor Insurance in India
Any Motor Insurance policy covers the losses or any damage caused to the vehicle due to the following:
Inclusions:
- Damages caused due to riots or strikes
- Damages due to fire or burglary
- Damages due to terrorism acts
- Damages due to Earthquake
- Damages due to Landslide
- Damages due to floods, storms, cyclone
Exclusions:
Under the motor vehicle policy, any claim will be rejected and will not include the following:
- The driver was driving under the influence of alcohol
- The vehicle was being used for illegal activities
- The driver was driving without a valid driving license
- Any damage is caused to the vehicle outside India
- Wear and tear because of aging
- Damage is caused due to radioactive or nuclear activities
- If a private vehicle is being used for commercial activities
Documents Required to Purchase Motor Insurance in India
While buying a vehicle insurance plan, the following documents are required:
- Policyholder’s name, age, occupation, address, gender, etc.
- Policyholder’s driving license
- Registration certificate of the vehicle and the registration number
- Proof of identity like Aadhaar, PAN card, passport, etc.
- Address proof, which may include passport, bank passbook, driving license, etc.
- Most recent passport-size photograph of the policyholder
- Proof of Income like salary slips for the last three months
Documents Required for Claim Settlement:
Given below is the list of documents that the policyholder has to submit while making a claim request for Motor Insurance in India:
- Policyholder’s name and contact number
- Car Insurance Policy number
- Date and time of the accident
- Vehicle Number
- Car Model
- Location of loss
- Details of the repair garage
- Accident details
In case of accidental damages:
- Insurance Proof
- Registration Book copy
- Original tax receipt
- FIR
- Copy of Driving license copy along with the original, for the person driving the car at the time of the accident
- The estimated vehicle repair cost
- Payment receipts after completion of repairs.
In case of theft of the car:
- Original Car Insurance Policy document
- Registration book along with theft endorsement from the concerned RTO
- Tax payment receipt
- Details of the insurance policy
- Service booklets and keys
- Warranty cards
- FIR or Police Panchanama, with JMFC report
- Acknowledged copy of a letter addressed to the RTO informing theft.
Factors affecting Motor Insurance Premium
Certain factors play a vital role in determining the premium amount to be paid for the insurance policy:
- The profession of the policyholder
- Age of the policyholder
- Make and model of the vehicle
- Geographical location
- Driving history of the policyholder
- Annual mileage of the vehicle
Add- on Covers for Motor Insurance in India
You can upgrade your motor insurance plans with the following add-on covers by paying a nominal extra premium:
- Zero Depreciation– Any car’s value undergoes depreciation over some time. That’s why the insurance company deducts the depreciated value of the car from the claim amount at the time of settlement. In case the insured person has a zero depreciation cover, he will get the claim amount without any depreciation deduction.
- No Claim Bonus Cover– This cover implies that the policyholder will get a No-Claim-Bonus by the insurer along with the premium amount. This is given for not claiming during the policy term of the four-wheeler or two-wheeler insurance plans.
- Engine Protection Cover– Generally, a comprehensive or a standalone own-damage car policy does not provide engine cover. If the policyholder chooses an add-on engine cover, he can get his car’s engine protected too along with the basic insurance policy.
- Daily Cash Allowance– Daily cash allowance cover provides coverage for the transportation costs incurred when the policyholder’s vehicle is in the garage for repair for at least 3-4 days.
- Loss of Belongings– Loss of Belongings cover reimburses the loss due to theft of personal stuff like a laptop or any other expensive item in the locked car if the insured person’s car gets stolen.
- Key Replacement Cover– Key replacement cover comes in handy when the policyholder misplaces his or her original keys. It helps in reimbursing the cost of replacing the key.
FAQs [People Also Ask]
Q1. How long is Motor Insurance in India valid?
If it is a private car insurance plan, then the policyholder will have to renew the plan every year.
Q2. Is No Claim Bonus (NCB) applicable on two cars?
No, No Claim Bonus (NCB) or discount is not allowed on two cars. It can be used on a motor insurance plan of a single vehicle only.
Q3. Is GST applicable to Motor Insurance premiums?
Yes, GST at the rate of 18% is applied to Motor Insurance premiums.
Q4. What is a deductible in Motor Insurance in India?
A deductible refers to the amount that the policyholder has to pay from his or her pocket after which the insurance policy comes into action. There are two types of deductibles – compulsory and voluntary.
A compulsory deductible is an amount that the policyholder is bound to pay at the time of a claim. On the other hand, a voluntary deductible is an amount that is chosen by the policyholder based on his or her convenience. While voluntary deductible has a great impact on the vehicle insurance premium, the compulsory deductible doesn’t have any such condition.