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Quick Introduction to All that You Need to Know About Vehicle Insurance in India

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Feeling overwhelmed with the jargons – NCB, IDV, Inclusions, Exclusions – of your motor insurance policy? Here’s a quick guide to all that you need to know about your two-wheeler or car insurance policy. 

Have you ever spared second thoughts to your motor insurance policy? The chances are that you just selected the first plan that you came across or randomly chose the motor insurance policy suggested by your vehicle dealer. 

There’s more to motor insurance than meets the eye. Understanding the details of your insurance plan – what’s covered, what’s not covered, the premium costs play a crucial role in helping you get the most out of your motor insurance plan. 

Here, in this post, you can find a quick introduction to all that you should know about motor insurance plans in India. 

  1. Motor Insurance Plans are Mandatory in India

Irrespective of the type of vehicle you own – a two-wheeler or a four-wheeler, a private vehicle or a commercial vehicle, it’s a MUST for all vehicles in India to have a motor insurance policy. According to the motor vehicles act of 1988, owning and driving a vehicle on Indian roads, without valid motor insurance is unlawful. 

If the traffic police find out that you’re driving the vehicle without a valid insurance policy, you are likely to face penalties. 

  1. Two Major Types of Motor Insurance Policy

All motor insurance policies – car insurance and two-wheeler insurance can be divided into two major classifications:

  • Third-party Liability Only Insurance 

This plan offers you financial coverage to cover for the damages caused by your vehicle to third-party property and third-party people in case of an accident.

Let’s say that your vehicle hits a compound wall accidentally. Your third-party liability only insurance pays for the damages for repairing the wall. However, it doesn’t offer any compensation for the damages sustained by your vehicle during the accident. For that, you require a comprehensive insurance plan. 

  • Comprehensive Motor Insurance Plan

These plans not only pay for third-party liabilities but also offer coverage to damages/injuries sustained by your vehicle and its drivers/passengers. 

According to Indian road rules, all vehicles must have at least third-party liability insurance. However, it’s highly recommended that you take comprehensive vehicle insurance to get extensive coverage. 

  1. Motor Insurance Plans have to be Renewed Every Year

Most vehicle insurers offer motor insurance plans with a validity of one year. You have to renew it every year to continue enjoying coverage without any breaks. Make sure to renew the policy within the due date. If you fail to renew during this period, your vehicle may be subjected to extensive checks before you can continue the motor insurance plan. 

  1. Understanding NCB and IDV 

These are the two main terms that you have to understand while you take a vehicle insurance plan

  • NCB – No Claim Bonus

If you do not make any claims during a policy year, you are eligible for NCB discounts on the premium for the subsequent year. NCB discounts are cumulative, and every successive no-claim year helps you enjoy higher discounts on premiums during renewal. 

  • IDV – Insured Declared Value

This is the maximum value that the insurer will provide you as compensation if your vehicle gets damaged in an accident. The IDV is calculated based on the current market value of the vehicle minus depreciation costs. 

  1. Add-On Covers for Extended Coverage

Most motor insurers offer an array of add-on covers to extend the coverage offered by your vehicle. You can choose one or many add-on covers as based on your requirements. Some of the popular add-on covers include – emergency roadside assistance, zero depreciation cover, etc. 

Wrapping Up – Motor Insurance is Not Complicated 

Make sure to go through the policy document to understand the features of your motor insurance plan, and check out the coverage offers, terms, and conditions, so that you pick the right plan that suits your specific requirements. 

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