Motor insurance is a contract between the vehicle owner and the insurance company that provides financial coverage for damages to the insured vehicle, third-party property, and bodily injuries. It is mandatory by law in many countries, including India and the U.S., to have at least third-party liability insurance for any vehicle on the road.
Types of Motor Insurance
1. Third-Party Insurance
This is the most basic form of motor insurance and is legally required in many countries. It covers:
- Damages to third-party property
- Injury or death of a third party
It does not cover damage to your own vehicle.
2. Comprehensive Insurance
Comprehensive insurance provides wider coverage, including:
- Third-party liability
- Own damage (vehicle repair/replacement)
- Theft
- Fire
- Natural calamities (like floods, earthquakes)
- Man-made disasters (like riots, vandalism)
3. Own Damage (OD) Cover
Introduced recently for more flexible insurance, this cover only includes damage to your own vehicle. It is optional and generally used with third-party liability insurance.
Add-On Covers
You can enhance your policy by including add-ons:
- Zero Depreciation Cover – Full claim without considering vehicle depreciation.
- Engine Protection – Covers damage to the engine, not usually included.
- Roadside Assistance – Help with flat tires, breakdowns, or towing.
- NCB (No Claim Bonus) Protection – Keeps your discount intact even after a claim.
- Return to Invoice Cover – Reimburses the on-road price in case of total loss/theft.
Why is Motor Insurance Important?
- Legal Requirement: Driving without insurance can lead to fines or legal action.
- Financial Security: Covers repair costs and medical bills.
- Third-Party Protection: Compensates for damages to others.
- Peace of Mind: Helps during stressful situations like accidents or theft.
How to Buy Motor Insurance Online
- Compare Plans on aggregator sites.
- Choose the Coverage you need (TP/Comprehensive).
- Select Add-Ons based on your driving habits.
- Provide Vehicle Details – registration number, make, model, year.
- Make Payment – policy issued instantly in most cases.
Motor Insurance Renewal Tips
- Renew before expiry to avoid inspection.
- Check for accumulated No Claim Bonus (NCB).
- Re-evaluate your coverage and add-ons annually.
- Compare premiums online for better deals.
How is Motor Insurance Premium Calculated?
Premiums depend on:
- Type of coverage
- Vehicle age and value
- Make and model
- Location
- Add-on covers
- Claim history
Use online motor insurance calculators to get quick estimates.
Documents Required for Motor Insurance
- Vehicle Registration Certificate (RC)
- Previous policy (for renewal)
- Driving license
- ID and address proof (sometimes)
Common Exclusions in Motor Insurance
Motor insurance does not cover:
- Drunk driving or driving without a license
- Regular wear and tear
- Damage due to racing or illegal use
- Mechanical/electrical breakdown
- Consequential losses (unless add-ons cover it)
FAQs
1. Is motor insurance mandatory?
Yes, third-party liability insurance is legally mandatory in most countries.
2. Can I switch insurance providers at renewal?
Absolutely. You can compare and switch to any provider during renewal without losing your NCB.
3. What is IDV in motor insurance?
IDV (Insured Declared Value) is the maximum amount the insurer will pay if your vehicle is stolen or totaled.
4. What happens if my policy lapses?
You lose coverage, and any claims during the gap won’t be honored. Also, your NCB may lapse.
5. Is online motor insurance safe to buy?
Yes. Always buy from official insurer websites or trusted aggregators.
6. Can I transfer insurance when selling my vehicle?
Yes. The new owner can get the policy transferred or buy a new one.
7. What is a No Claim Bonus (NCB)?
NCB is a discount on your premium for every claim-free year. It ranges from 20% to 50%.
8. How do I file a motor insurance claim?
Inform the insurer immediately, submit documents (like FIR, repair bills), and follow their inspection and settlement process.