Motor insurance is not just a legal formality; it’s a necessity for vehicle owners in India. Whether
you own a car, a two-wheeler, or a commercial vehicle, having the right insurance policy
protects you from financial burdens in case of accidents, theft, or damages. With multiple
coverage options available, understanding the nuances of motor insurance helps in making
informed decisions.
Types of Motor Insurance
- Third-Party Insurance: The most basic form of motor insurance mandated by law. It covers damages to another
person’s vehicle, property, or bodily injuries but does not cover damages to your own
vehicle. Since it is compulsory, driving without third-party insurance can result in legal
penalties, including fines or even suspension of your driving license.
- Comprehensive Insurance:
Offers wider coverage, including damages to your own vehicle, third-party liability, theft,
and even natural calamities. Insurance and protection plan that ensures financial
security in various situations, including floods, fire, and vandalism.
- Standalone Own Damage Insurance: Specifically covers damages to your vehicle due to accidents, theft, fire, or natural
disasters. It can be purchased alongside a third-party insurance policy. This is
particularly useful for those who want to enhance their coverage beyond third-party
liability without opting for a full-fledged comprehensive plan.
- Pay-as-you-drive (PAYD) Insurance: A relatively new offering in India that calculates premiums based on the distance you
drive. Ideal for those who use their vehicles occasionally, this type of insurance helps in
reducing premium costs for people who have low annual mileage, making it a
cost-effective option.

Coverage for Different Vehicle Types
Car Insurance
Car insurance in India is designed to offer financial protection for both personal and commercial
four-wheelers. Comprehensive policies can include add-ons like zero depreciation cover, engine
protection, and roadside assistance to enhance coverage. Given the rising costs of car repairs,
having comprehensive coverage can save substantial expenses in case of damage or
accidents.
Two-Wheeler Insurance
Two-wheeler insurance ensures coverage for bikes and scooters. Since two-wheelers are more
prone to accidents due to their vulnerability on the road, having at least a comprehensive plan is
advisable. Long-term policies of up to five years are also available for ease of renewal, ensuring
uninterrupted protection without the hassle of yearly renewals.
Electric Vehicle (EV) Insurance
As EV adoption rises in India, insurers now offer dedicated EV insurance plans. These policies
account for unique risks such as battery damage, charging equipment coverage, and increased
repair costs compared to traditional vehicles. Since EVs come with expensive battery packs,
insurance covering battery replacements can be crucial in avoiding hefty repair bills.
Commercial Vehicle Insurance
Businesses relying on transport need commercial vehicle insurance for trucks, taxis, and buses.
It covers third-party liability, driver protection, and financial losses due to accidents or
operational disruptions. Commercial vehicle insurance is particularly important for logistics and
delivery businesses that operate fleets, ensuring minimal downtime and financial loss in case of
accidents.
Key Add-ons to Consider
- Zero Depreciation Cover: Ensures full claim settlement without factoring in
depreciation costs. This is highly recommended for new car owners, as vehicle
depreciation significantly reduces claim payouts in standard policies.
- Engine Protection Cover: Covers damages to the engine caused by water ingress or
lubricant leaks, which are common in flood-prone areas. Repairing or replacing an
engine can be extremely costly, making this add-on a wise investment.
- Roadside Assistance: Provides emergency support for breakdowns, towing, and minor
repairs. This is especially useful for those who frequently travel long distances or drive in
remote areas where assistance may not be readily available.
- Return to Invoice: Offers compensation equal to the invoice value in case of total loss
or theft, ensuring you recover the full cost of the vehicle rather than just the depreciated
value.
- Consumables Cover: This includes the cost of consumables like engine oil, nuts, and
bolts, which are not covered under a basic plan but are necessary in most repair
scenarios.
How to Buy Motor Insurance in India
- Compare Policies Online: Platforms like PolicyBazaar, Acko, and Tata AIG allow easy comparison of different
policies, helping you choose the best coverage at competitive prices.
- Understand Policy Inclusions and Exclusions: Read the fine print to ensure you know what’s covered and what’s not. Some policies
may not cover damages caused by negligence, so being aware of these clauses helps
avoid claim rejections.
- Check Claim Settlement Ratio: Opt for insurers with a high claim settlement ratio to ensure hassle-free claim
processing. A higher ratio indicates the insurer’s reliability in honouring claims.
- Choose Add-ons wisely: While add-ons enhance coverage, they also increase premiums. Pick only those
relevant to your needs to balance protection and cost-effectiveness.
- Opt for Digital Policies: Many insurers now provide paperless policies that make renewals and claims much
simpler. Digital insurance also reduces paperwork, making the process quicker and more
efficient.