Motor Insurance (also known as Vehicle Insurance or Auto Insurance) is an insurance policy that is contracted for private or commercial vehicles to provide financial protection against loss or damage. Vehicles such as cars, trucks, motorcycles, scooters, tractors and other road vehicles can be included in Motor Insurance.
Classification of Motor Insurance
For purpose of insurance, motor vehicles are classified into 3 broad categories:
- Private Cars
- Private Two-Wheelers: Motor Cycles, Motor Scooters, Bikes, etc.
- Commercial Vehicles: Goods and Passenger carrying vehicles – Rickshaws, Taxis, Cabs, Buses, etc.
Benefits of Motor Insurance
It is mandatory to have the basic motor insurance cover in India. However, it is not a good idea to take insurance just for the sake of legal obligation. There are tremendous benefits that can be obtained from this policy against various threats to your vehicle. Some of the key benefits of motor insurance can be given as follows.
- It protects your vehicle from damages: Vehicular damages can come in many forms. It may occur due to accidents, floods, riots, fire, bad weather, etc. A comprehensive cover will help you get reimbursement against these damages incurred to your vehicle. In addition to this, you also have the option of taking add-on covers to maximize your protection.
- It eliminates third-party liability: If you are at fault during an accident, you are liable to compensate for the damages caused to a third party. Third-party insurance is mandatory in India. Getting caught in an accident without a proper third-party cover will land you in all kinds of legal troubles. In addition to paying for the damages from your pocket, you may also have to face charges for not having insurance.
- It compensates dependents when accidents result in death: Motor insurance does not stop at compensating for the damages incurred to a vehicle. A comprehensive cover also provides compensation to the dependents in case of fatal accidents. In addition to life and health insurance benefits, this compensation will come in handy for a grieving family.
- It covers vehicles against theft: When you lose your vehicle to theft, it will cause a huge financial strain. The compensation amount offered against the theft of a vehicle can be used to replace the vehicle. In order to get this compensation, the vehicle owner must produce an FIR copy along with a list of other documents as mentioned in the policy schedule. Compensation for theft will be provided only when the police could not located the vehicle within a reasonable time.
Aslo Read: Bumper to Bumper Car Insurance
Advantages of Buying Motor Insurance Online
Lack of legal enforcement and negligence in following traffic rules are contributing to the increasing number of accidents taking place in India.
Following are the benefits one can avail through motor insurance:
- Reduces your liabilities: In case the third party is harmed or injured from the insured vehicle, the insurance company will pay off the charges for the injuries/damage if the vehicle is covered under the third party. It also sets you free from any legal liabilities that the policyholder could incur because of the accident.
- Damage to vehicle covered: Any damage done to your vehicle as a result of disasters caused by human error can be covered under comprehensive insurance policy. The claim process can be cashless or reimbursement.
- Hospital bill payment: If you are injured or get permanently disabled in an accident, the insurance company pays the hospital bills and other medical charges under personal accident coverage.
- Reimbursement on death: In case of fatal accidents, the family of the insured gets compensation from the insurance provider.
Types of Motor Insurance Coverage
a) Third Party Motor insurance
To provide liability cover. This motor policy applies uniformly to all vehicles, whether Private Cars, Commercial Vehicles, Motor Cycles or Motor Scooters, etc. with certain exclusions.
b) Comprehensive Motor Insurance Policy
Package or Comprehensive policy offer cover for own damage of the insured vehicle and also third party liability cover.
Comprehensive motor policy applies to all Private Cars, Commercial Vehicles, Motor Cycles, Scooters, etc. with certain exclusions as per the vehicle and usage
Documents Required To Buy Motor Insurance
Certain documents are required to purchase a motor insurance irrespective of its type. They are:
- Passport size photograph
- Driving license or PAN card
- Proof of permanent residence
- Registration certificate of the car
Also Read: Best Third Party Bike Insurance In 2019
In India, motor insurance for cars, two-wheelers and commercial vehicles can be completed. To hire a car insurance policy, you must own, be old or new, a car over 18, be an Indian citizen and own the RC of the car.
As a rule, an insured person receives comprehensive insurance within the scope of automobile insurance; However, he / she may receive additional benefits or benefits by paying an additional amount. Here are some supplements along with a comprehensive insurance policy:
Zero depreciation cover: Insurance generally deducts a certain amount as depreciation of your vehicle from the insured amount. However, if you choose not to enjoy depreciation, the insurance company pays the original value of your vehicle in case of damage or theft.
Key replacement cover: If you lost your vehicle key, you can request a refund. With this additional coverage, the insurance covers part of the costs to replace the key.
Engine and electronic circuits cover: If your vehicle is damaged due to damage to the engine or electronic circuits, you can request a refund with this additional coverage.
Roadside assistance cover: If your vehicle breaks down while driving in remote locations, you can request a puncture protection. Another help may be the purchase of fuel or a mechanic if travel problems occur and you do not get help.
Who Decides Motor Insurance Premium Rates?
Insurance Regulatory and Development Authority of India (IRDAI) decides the third party motor premium rates. However, own damage premium rates may differ from insurer to insurer.
1. Third-party Motor Insurance Premium Rates
The third party motor insurance premium rates are based on the vehicle’s engine capacity. The higher the capacity, the higher is the premium. IRDA decides the third party premium and it changes every year.
Here’s the premium for the financial year 2018-19:
|Private Cars||Premium Per Annum (In Rs.)|
|Less Than 1000 CC||2055|
|1000 CC to 1500 CC||2863|
|More Than 1500 CC||7890|
|Two-Wheelers||Premium Per Annum (In Rs.)|
|Less Than 75 CC||569|
|75 CC to 150 CC||720|
|150 CC to 350 CC||887|
|More Than 350 CC||1019|
2. Comprehensive Motor Insurance Premium Rates
The premium for ‘own damage’ cover, of which the premium is higher than the third party insurance premium, is based on risk and damages to the insured vehicle.
The rates differ and are subjected to many factors such as:
- Insured Declared Value or IDV
- Geographical Location (Bike registration RTO)
- Engine Capacity (CC)
Insured Declared Value (IDV): IDV is the current market value of your vehicle, not the resale value. The market value is dependent on the ex-showroom price and depreciation of the vehicle. IDV is the maximum value that an insurance company will reimburse at the time of claim.
|Vehicle Age||Insured Declared Value|
|Between 0 – 6 Months||95% of Ex-showroom|
|Between 6 Months – 1 Year||85%|
|Between 1 Year – 2 Years||80%|
|Between 2 Years – 3 Years||70%|
|Between 3 Years – 4 Years||60%|
|Between 4 Years to 5 Years||50%|
What is NOT Covered under the Motor Insurance Policy?
There are few exclusions under the Motor insurance policy:
There are certain exclusions to a standard own damage motor insurance policy, which are as follows:
- Any damages incurred when the policy is not active or lapsed
- When damage is caused deliberately
- Cost of consumables
- Consequential loss
- Any wear and tear due to ageing
- Any mechanical or electrical breakdown
- Damages arising due to driving without a legal and valid license
- Damages arising due to driving under the influence of alcohol or drugs
- Loss or damage incurred while driving outside India
- Loss or damage due to radioactive or nuclear-related activities
- If the vehicle is used for purposes other than the permitted use, for example, commercial use, your claim will be rejected.
How can You Save Money On Motor Insurance Policy
- Automobile Association of India: If you are a member of the Indian Automobile Association approved by IRDAI, you will receive a 2.5% discount on your own claims bonus.
- Anti-theft device: If you install an IRDAI approved anti-theft device, you will receive up to a 2.5% discount on the premium.
- Voluntary Deductible Discount: Well, you can opt for a voluntary deductible, which means you can pay the minimum amount at the time of the claim, and the insurance company offers a pre-established percentage of the deductible on the self-injurious premium. If you don’t claim, you don’t have to pay money and save money.
- No Claim Bonus: If it is time to extend your car insurance and you have not claimed in the previous contract, you are eligible for the Bonus without claim, a discount on your own loss premium. You will receive up to 50% discount on your own premium for damages if you do not file claims for 5 years in a row.
Also Read: Top 10 Car Insurance Companies In India 2019
How to Renew Your Motor Insurance Policy?
If your motor policy is still in force, you can renew it instantly.
- Compare motor insurance plans, choose the right type of policy for your vehicle.
- Enter the basic vehicle details – make, model, and also vehicle registration detail.
- Enter whether or not you have lodged any claims in the previous policy tenure, check if you are eligible to get No Claim Bonus. If you didn’t lodge any claim, you will get a discount.
- Proceed to complete the process of renewal.
- There is no need of inspection and documents, and you will receive your insurance policy instantly.
Motor Insurance Claim Process
- In case of any claim, immediately inform the insurance company and register your claim
- In case of accidental vehicle damage, insurance provider will assign a surveyor to survey the vehicle and claim.
- At the time of survey, the insured needs to submit all the necessary documents like RC book, D/L, permit, load challan etc. for verification
- The policyholder must also file an FIR with police, if there is any case of property damage, injury to the third party, or theft.
- After approval of the claim, insured can either take his vehicle to the network garage or repair it in any garage of their choice.
- If the insured opts for cashless garage facility, payment for necessary repair work will be made directly to the network garage.
- In case insured chooses to repair his vehicle to any other garage, S/he may claim under reimbursement process by sending claim form and repair bills to the insurance company.
Documents Required For Claim Process
In case of an accident or a damage, it is important to intimate the insurance company about the incident on their toll-free number and lodge the complaint. Afterwards, submit the following documents to the insurance company:
- Duly filled in claim form
- Driving license
- Registration certificate
- Police report
- Non traceable certificate issued by the police
- Original repair estimate bill
Motor Insurance Claim (Exclusions)
A motor insurance offers various kinds of coverage for a peaceful driving experience. However, certain situations and cases are not included in the coverage, also called exclusions. Let is look at some of them:
- Normal wear and tear
- Damage due to malicious activity
- Damage by the person driving the vehicle without a license
- Mechanical/electrical breakdown
- Consequential loss
- Damage occurred outside geographical boundaries
Also Read: What Is RTI In Car Insurance?
Top 7 Companies Offering Motor Insurance in India
- Bajaj Allianz
- Bharti AXA
- HDFC Ergo
- Iffco Tokio
- ICICI Lombard
- Royal Sundaram
- Kotak Motor Insurance
Answer: Any claim filed in the context of the insurance coverage offered for a vehicle is known as a motor vehicle insurance claim. Both damage to a vehicle and personal injuries can be claimed. Comprehensive car insurance protection also protects against the death of the vehicle owner in the event of an accident
Answer: There is no single solution for everyone in car insurance. According to your individual requirements, you should choose the ideal policy that best suits your vehicle. The amount of insurance policies available in the market can be overwhelming. However, you can reduce the guidelines based on premium rates, features, benefits and more. Also check the position of the company in the market. The claims settlement rate and the accident rate of a company are some of the best indicators to assess its financial stability.
Answer: People can take out car insurance from the age of 16. Age is one of the factors that are taken into account when determining the premiums of a policy. For young drivers between 16 and 25 years old, insurance companies charge slightly higher premiums.
Answer: Motor Fleet Insurance is a product specially developed for corporate clients. If companies operate more than 15 vehicles for their commercial purposes, the entire fleet may be covered by a single car insurance policy. This coverage helps companies meet various legal obligations and reduce the risks associated with the operation of a fleet of vehicles.
Answer: No Claim Bonus (NCB) refers to the reimbursement of the premium granted by the insurer if a claim has not been made in a given insurance period. For example, if you did not claim your car insurance in the first year, your insurance company may grant you a 10% premium discount for next year.
Many insurance service providers allow the annual definition of the NCB with a maximum of 50%. As soon as the policyholder files a claim, the company will restart the NCB.
Answer: The most important thing to know about the no claim bonus (NCB) is that it applies to the policyholder and not to the vehicle. When you buy a new vehicle, you can transfer the accumulated NCB from your previous vehicle policy to the new one. To do this, you must first cancel your previous insurance policy. Your insurance company will provide you with the NCB retention letter . You can send this letter to your new insurer and transfer the benefits.
Answer: The insurance period for car insurance is usually one year. In recent years, some insurance companies have introduced long-term insurance for up to 3 years for two-wheelers.
Answer: There is no grace period for renewing motor insurance policies. All renewals must be made within the date of expiry. If a policy is not renewed within the date of expiry, it gets lapsed. Once a policy gets lapsed, the vehicle must be inspected again to get the insurance cover back. If a policy is not renewed within 90 days after the date of expiry, the accrued no claim bonus will be lost.
Answer: While making a motor insurance claim, you have to submit a list of documents to the insurance company. These documents typically include the following:
1. A duly filled claim form
2. Registration certificate of the vehicle
3. FIR copy (In situation accidents and thefts)
4. Original estimate of loss
5. Original bill for repair charges paid
For cashless facility, the repair invoice for the vehicle must be submitted along with the FIR copy.
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