A Brief Introduction of Motor Insurance in India: Benefits of Motor Insurance

About motor insurance in india

Motor Insurance is a very important product and we should know about it. Either you or me both are having risk while driving any motor vehicle on the road. Nobody is 100% safe on the road. However, you can reduce the risk by safe driving.

Our life is full of uncertainties and accidents can happen anytime. An accident can damage the vehicle at any level. Apart from accidents there can be any other natural calamities and theft also.

Motor insurance can safeguard us from these sudden financial losses.

What is Motor Insurance In India?

Motor insurance is a legal contract between Policyholders and insurance companies. In this contract insurance company promise to pay the financial compensation for the financial loss/liabilities.

Financial loss or liabilities incurred by the policyholder due to an event (Man-made or natural) involving the insured’s vehicle. It means it protects you from the financial loss associated with your motor vehicle.

Motor insurance is mandatory in India. Without having your vehicle insurance, you can’t drive it on the road. Therefore, motor insurance is for legal requirements and for financial protection as well. Compensation will totally depend on the types of coverage and policy you have.

Types of Motor Insurance Policy

There are following types of motor insurance in India.

1- Third-Party Insurance: This insurance policy covers the loss or damage to the third party only. In summary, It includes bodily injury, death and property damage of a third party. This is the basic and minimum insurance protection available. It is also called liability only policy also.

2- Comprehensive Insurance: This insurance policy is the next version of third-party insurance. It covers third-party and first-party both. It provides the coverage of damage or theft of the insured’s vehicle, personal accident and third-party liability.

You can also include add on covers to enhance your policy coverage.

3- Standalone Own damage: This policy provides coverage for its own damage section of the vehicle. Standalone OD policy is available for those private cars and two-wheeler which are purchased after 1 September 2018.

Categories of Motor Insurance

Motor insurance is also called auto insurance. There many types of vehicle India. There are two-wheelers, private cars, many commercial vehicles available. These vehicles have their own structure and usage.

Even you can see different types of commercial vehicles. Passenger carrying vehicles, goods carrying vehicles and other special commercial vehicles are available. On the basis of type and usage of vehicle, there are following types of motor insurance-

1- Private Car Insurance

This insurance is designed for private cars only. The motor car which you normally use for personal purposes. Mostly, all general insurance companies are providing private car insurance.

Premium of this insurance depends on type coverage you opt, make and model of car, cubic capacity of the car, your residence zone etc.

Premium of private car insurance is normally lower in comparison to commercial cars. Because the risk for private cars is lower than the commercial cars. You can by a third party or comprehensive insurance policy. Minimum third-party insurance is required.

Most Importantly, After 1 September 2018, a minimum of three years of third-party insurance is mandatory for the new private cars.

Very soon you may also have the option to purchase floater car insurance policy also.

2- Two-Wheeler Insurance

Two-wheeler is a very common transport in India. This is the most popular and convenient mode of transport for crores of people in India. But with the high number of two-wheeler, the risk of an accident is also high. Two-wheeler insurance is to provide financial protection for it.

You can purchase two-wheeler insurance for tenure of 1, 2 and 3 years. After 1 September 2018, you can buy it for tenure of five years. Minimum five years third-party insurance is mandatory for a new two-wheeler.

3- Passenger Carrying Vehicle (PCV) Insurance

Passenger carrying vehicle is a very important segment of the commercial vehicle. It is for ferrying passenger vehicles. PCV includes taxi, cab, school bus, transport bus, three-wheeler taxi etc.

If you are the owner of any passenger carrying vehicle then have a huge responsibility. Please ensure that you have included the passenger cover in the passenger-carrying vehicle insurance.

You should never miss the motor insurance policy for this kind of vehicle. In case of damage, theft or third-party loss, you will be protected from the financial and legal liabilities.

4- Goods Carrying Vehicle (GCV) Insurance

Goods carrying vehicle is used to transport goods from one place to another. This kind of vehicle come in many shape and sizes. This category has a high risk of damage because of high traveling on the road.

Truck, tempos and lorries etc are goods carrying vehicles. You must opt a comprehensive insurance policy for GCV. It will protect against the damage of vehicle, theft, and third-party damage. You should opt for maximum coverage.

5- Miscellaneous Vehicle Insurance

Some vehicles are commercial vehicle but it does not count in the category of either passenger carrying or goods carrying vehicle. These are for a special job and have special shapes and sizes.

These vehicles are normally used for construction, mining, and agriculture, etc. This includes Shovels, excavators, tractors, etc.

Why Motor Insurance? What is the Importance of It?

Why it is mandatory in India? For an example, you are going somewhere by your car.

Suddenly, you met in an accident and a person bodily injured through your car or damage a third-party’s property. Motor insurance policy will save you from the legal and financial liabilities. Your insurance company will pay the compensation.

If you have comprehensive motor insurance then you get the financial compensation in case of damage or theft of your vehicle.

This policy also provides the cover for owner-driver. What if the owner of a car is the only earning person of the family and he dies in his car accident. His company will pay the sum assured to his family and his family will be able to survive.

If he was not the only earning person then also the amount of compensation will be very helpful to the family in his absence.

What is Add-On Cover in Motor Insurance?

In brief, add on covers are the additional benefits, which you can add in your comprehensive insurance. There are various add on covers available and you can choose as per your requirement and need. You can enhance the policy coverage by opting add on benefits.

Some of the popular add on covers are Zero Depreciation cover, Return to Invoice cover, Engine Protection cover, Consumable cover, Roadside assistance, Tyre protection cover, Loss of personal belonging, Key protection cover, passenger cover, etc.