What is Motor Insurance?

Saving money to buy the car of your dreams and finally seeing it parked in your garage is a dream come true. But all this can come crashing down when you are involved in an accident that causes injuries to you and damage to your car. Don’t let the absence of insurance put a strain on your family and your finances.

What is a motor insurance policy?

The motor insurance policy covers the costs of driver injury and vehicle damage that can occur due to natural disasters, accidents, and other threats. The Indian government has made third-party motor insurance mandatory as per Section 146 of the Motor Vehicles Act, 1988.

Benefits of motor insurance

Motor insurance provides a myriad of benefits to the policyholder.

  • Prevents legal troubles

    As the government of India has made it mandatory to have motor insurance, not having one means you need to pay fines and penalties when caught.

  • Financial security

    Motor insurance can save you from spending all your savings as it covers the damages to you and the third party in case of a comprehensive coverage policy.

  • Provides financial aid in case of death

    In the case of the policyholder’s death, the family doesn’t have to suffer from a financial aspect as they get a lump sum which can help them cover funeral costs until they can be back up on their feet.

  • Provides no claim bonus

    If the policyholder has not claimed during the year then he is eligible for a no-claim bonus which is a discount on the motor insurance policy renewal.

Different types of motor insurance

The type of motor insurance you opt for depends on the type of vehicle you drive.

  • Two wheeler insurance

    This motor insurance is for two-wheelers such as bikes and scooters. It covers the damage to the vehicle in case of theft, natural disasters, and accidents. It also covers third-party damage.

  • Private car insurance

    When a car is being used for personal reasons, this is the insurance plan to purchase. It covers injury to the owner and third party and damage to the owner’s and/or third party’s car due to a collision.

  • Commercial car insurance

    This vehicle insurance is for trucks, taxis, auto-rickshaws, buses, heavy/light commercial vehicles, and agricultural vehicles.

What is covered under motor insurance?

The motor insurance coverage depends on the type of coverage you choose.

  • Third-party insurance

    This is an affordable insurance policy that covers injury or death caused to the third party and any damage to their vehicle by your vehicle. It doesn’t cover the injury to the policyholder and the damage to his/her vehicle.

  • Comprehensive insurance

    It covers everything in third-party insurance and also protects the policyholder in case injury or death occurs and/or the vehicle is damaged making the premiumds higher. It also protects against theft, vandalism, natural disasters, and damage from trees falling on the vehicle.

Why should you buy motor vehicle insurance?

Motor vehicle insurance is mandatory but it can save the policyholder from experiencing a financial crisis. As the cost of repair or replacement is high, insurance saves one from emptying their savings and protects family members in case of unfortunate death caused by an accident.

What is the claim process for vehicle insurance?

Here is how you can claim vehicle insurance.

  • Register claim

    Most insurance providers provide an online claim registration process where you need to fill out a claim form online or call them. You need to provide details such as your contact details and why you are submitting a claim.

  • Repair vehicle/File a complaint

    Depending on the extent of the damage, you need to move it aside so no further damage is done and send it for repair. If the vehicle has been stolen, a police complaint must be filed immediately and a copy of the report must be given to the insurance provider.

  • Settle claim

    In the case of a reimbursement claim, you need to keep all the repair bills from the garage and then submit them to your insurance provider. The amount will be reimbursed as stipulated in the insurance policy.

Summing Up

Motor vehicle insurance protects you from financial trouble in case you get injured, injure someone else, or cause damage to your own to someone else’s vehicle. It is legally mandatory and provides numerous benefits to the policyholder. The insurance cover depends on the type of policy you choose.


Owner damage (OD) refers to the repair cost coverage to the policyholder’s car. It covers total loss, theft, and accidental damages resulting from natural calamities, fire, terrorist attacks, and transportation.

Motor insurance does not cover depreciation, consequential losses, and non-accidental damage to the policyholder’s vehicle.

Car insurance premiums are cheaper if the policyholder purchases them after s/he turns 25 years old. People who have impeccable driving records can expect cheaper rates.

Also known as the nil depreciation cover or the zero-depreciation cover, the bumper to bumper insurance covers the damages done to your vehicle barring damages to glass, batteries, tubes, engine, and tyres.