Motor Insurance
The one cover you cannot legally go without
Motor Insurance
Motor insurance covers the financial consequences of owning and driving a vehicle — damage to your own vehicle, and your legal liability for injury or damage caused to others. Third-party cover is compulsory under the Motor Vehicles Act, 1988.
Every vehicle on an Indian road must carry at least third-party liability cover. What that minimum does not do is pay a single rupee towards your own vehicle, however badly it is damaged — which is where most owners discover the gap.
We size cover against the vehicle, the way you use it and where you park it — then make sure the add-ons that actually matter are in place, and the ones that do not are left out.
What is motor insurance?
A contract that covers the financial consequences of owning and driving a vehicle — both the damage your vehicle suffers and the damage or injury it causes to someone else. Third-party cover is compulsory by law. Cover for your own vehicle is your choice.
Section 146 of the Motor Vehicles Act, 1988 makes it an offence to use a vehicle in a public place without at least third-party liability insurance. Section 196 sets the penalty for doing so at up to ₹2,000 and/or three months’ imprisonment for a first offence, and up to ₹4,000 for a repeat.
In plain terms: the law compels you to protect other people from your vehicle. Everything beyond that exists to protect you.
What a motor policy actually does
- Meets your legal liability for injury, death or property damage caused to others
- Pays to repair your own vehicle after an accident, fire, theft or flood
- Carries a compulsory ₹15 lakh personal accident cover for the owner-driver
- Settles repairs at the insurer’s network garages without you funding them
What the law actually requires
Motor insurance is the one cover in India you cannot legally go without. The rules changed materially in 2018, and again in August 2026.
Compulsory owner-driver cover — ₹15 L
In September 2018 IRDAI raised the minimum compulsory personal accident sum insured for the owner-driver from ₹1 lakh to ₹15 lakh, following a judgment of the Madras High Court. It applies to third-party-only policies as well as comprehensive ones.
Long-term cover for new vehicles — 3 & 5 yrs
For vehicles sold from 1 September 2018, a new private car must carry three years of third-party cover at registration and a new two-wheeler five years — following the Supreme Court’s ruling in S. Rajaseekaran v. Union of India.
The August 2026 extension — 4 & 6 yrs
On 4 August 2026 the Supreme Court ordered those periods extended to four years for new cars and six years for new two-wheelers, in National Insurance Co. Ltd. v. Thungala Dhana Laxmi. It applies to vehicles registered once the order takes effect — confirm the position at the time you buy.
Third-party injury liability — No cap
There is no monetary ceiling on the insurer’s liability for death or bodily injury caused to a third party. Liability for third-party property damage carries a standard limit under the policy wording, which can be increased.
Sources: Motor Vehicles Act, 1988; IRDAI circulars; Supreme Court of India. Third-party premium rates are notified by IRDAI; own-damage pricing is set by each insurer.
The three kinds of motor policy
They are not variations on a theme. They cover fundamentally different things, and the cheapest one covers nothing that belongs to you.
Third-party only
Covers your legal liability for injury, death or property damage caused to another person. It pays nothing at all towards your own vehicle, however badly it is damaged. This is the least you can lawfully hold, and its rates are notified by IRDAI rather than set by the insurer.
The statutory minimumStandalone own-damage
Covers damage to your own vehicle from accident, fire, theft, natural calamity and riot — but carries no third-party liability. It became available separately in 2019, so an owner whose new vehicle already carries multi-year third-party cover can buy and renew own-damage annually.
Your vehicle onlyComprehensive
Third-party liability and own damage in a single contract, together with the compulsory owner-driver personal accident cover and the option to attach add-ons. This is what most owners hold and what we would ordinarily recommend for any vehicle worth repairing.
Both, plus add-onsCover across vehicle classes
Private car
Comprehensive is the norm once a car is worth more than the cost of repairing it. Add-ons matter most here, because parts pricing on newer cars is where claims quietly lose value.
Two-wheeler
Often bought as third-party only because the vehicle value is modest — but two-wheeler riders carry far more bodily-injury risk, which makes the personal accident element the important part.
Commercial vehicle
Goods carriers, passenger carriers, taxis and construction equipment. Cover extends to legal liability towards paid passengers and employees, and the use declared on the policy must match the use in practice.
Electric vehicle
Standard motor cover applies, with the battery typically the single largest component of value. Battery, charger and charging-cable cover, and cover while charging, are worth confirming explicitly rather than assuming.
What a comprehensive policy pays for
- Accidental damage. Collision, overturning and impact damage to your vehicle, whether you were at fault or not.
- Fire and explosion. Fire, self-ignition, lightning and explosion — a meaningful risk in Indian traffic conditions and one of the commonest total-loss causes.
- Theft and burglary. Theft of the vehicle or of fitted parts. A total theft is settled at the Insured Declared Value, which is why setting the IDV honestly matters.
- Natural calamities. Flood, inundation, storm, cyclone, hailstorm, earthquake, landslide and rockslide. Urban flooding is now the single most predictable seasonal claim in several Indian cities.
- Riot, strike and terrorism. Malicious damage, riot, strike and acts of terrorism, all of which sit inside the standard own-damage section.
- Damage in transit. Damage while the vehicle is being carried by road, rail, inland waterway, lift, elevator or air.
- Third-party injury and death. Your legal liability for injury or death caused to another person, with no monetary ceiling on the insurer’s liability.
- Third-party property damage. Your legal liability for damage to another person’s property, up to the limit stated in the policy.
- Owner-driver personal accident. The compulsory ₹15 lakh cover, payable on the owner-driver’s accidental death or permanent disablement while driving, mounting or dismounting the vehicle.
What is not covered
Driving without a valid licence
If the person at the wheel was not properly licensed for that class of vehicle, the own-damage claim will ordinarily be repudiated.
Driving under the influence
Alcohol or drugs void the claim. This is the most common avoidable repudiation there is.
Wear, tear and depreciation
Ageing, rust and gradual deterioration are maintenance, not insurance. Depreciation is also applied to replaced parts unless you hold a nil-depreciation add-on.
Mechanical or electrical breakdown
A component failing on its own is not an insured peril. Damage that follows an accident is.
Use outside what was declared
Running a private vehicle for hire or reward, or a goods vehicle beyond its permitted use, takes the loss outside the contract.
Consequential loss
Loss that follows the event rather than arising from it — the classic example being engine damage from restarting a car standing in floodwater.
Outside the geographical area
The policy covers India unless it has been specifically extended. Cross-border driving needs an endorsement.
Contractual liability
Liability you have accepted by agreement, which would not otherwise fall on you at law.
Add-ons worth understanding
Each carries an extra premium. Add what fits how you actually drive and what you actually own; ignore the rest.
Nil depreciation
Waives the depreciation the insurer would otherwise apply to replaced parts. The single most valuable add-on on a vehicle less than about five years old, where plastic and glass parts attract heavy depreciation.
Engine and gearbox protection
Covers damage to the engine, gearbox and differential from water ingress or lubricating-oil leakage — the exact scenario the base policy excludes as consequential loss. Essential if you park or drive anywhere that floods.
Return to invoice
On a total loss or theft, pays the original invoice value plus registration and road tax rather than the depreciated IDV. Relevant for the first two or three years of a new vehicle.
Consumables
Covers engine oil, coolant, brake fluid, nuts, bolts and washers, which the base policy excludes but which appear on almost every repair bill.
Roadside assistance
Towing, on-the-spot repair, fuel delivery, flat-tyre help and key assistance. Modest cost, disproportionate usefulness.
No Claim Bonus protection
Lets you make an agreed number of claims in a year without losing your accumulated bonus.
Tyre and rim protection
The base policy pays for tyre damage only when the vehicle is damaged in the same event. This add-on covers the tyre on its own.
Key and lock replacement
Replacing a lost or damaged smart key, which on a modern car is a genuinely uncomfortable bill.
Personal belongings
Items stolen from inside the vehicle, subject to a stated limit and usually excluding cash and jewellery.
Passenger and paid-driver cover
Extends personal accident protection to occupants and to an employed driver, neither of whom the compulsory cover reaches.
How to choose a policy
The checks that change the outcome, in the order they matter.
How a claim actually works
Most rejected claims fail on process rather than on cover. These five steps are the process.
Make people safe, then record the scene
Attend to any injury first. Photograph the vehicles, the damage and the surroundings before anything is moved. Where there is injury, death or third-party property damage, a police report is required.
Tell the insurer straight away
Most policies require intimation within 24 to 48 hours. Late intimation is a routine ground for rejection, and it is entirely avoidable. Note the claim number you are given.
Survey and assessment
The insurer appoints a surveyor to inspect the vehicle and assess the loss. Do not begin repairs before the survey unless the insurer has approved it in writing.
Repair — cashless or reimbursement
At a network garage the insurer settles its share with the workshop and you pay only the deductible, depreciation and any excluded items. Elsewhere you pay the bill and claim it back.
Settlement
The insurer releases payment against the approved estimate. On a total loss or theft, settlement is at IDV less the salvage value, and you will need to submit the registration certificate, both keys and a police non-traceable report.
Myths and facts
Terms you should know
Frequently asked questions
Other products in our suite
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