Types of Motor Insurance Policies Explained

Unlike popular belief, not all motor insurance is the same. Like all other forms of insurance, there is no cookie-cutter approach here. Your motor insurance policies depend on your vehicle and its specific needs. For instance, the coverage requirements for a standard car versus a commercially used loading vehicle will differ. There will be no need for two cars, one of which is a standard four-wheeler, while the other is a luxury car.

Motor insurance in India is divided into two categories: third-party liability insurance and comprehensive insurance. While the former is law-mandated and is the minimum coverage that all vehicle owners should always have, thorough coverage is a personal choice based on needs and vehicle type. The options do not end here, though, as there are additional riders, standalone own damage insurance, and commercial vehicle insurance to get better coverage when needed.

Third-Party Liability Insurance

Third-party liability is the most commonly opted-for motor insurance in India. A vast majority of vehicle owners use this insurance. It is a good option for motor insurance because it is the minimum insurance mandated by law. Every motor vehicle owner is required to maintain at least third-party insurance at all times.

As the name suggests, it covers damages to third parties and their property in an accident. However, as this is the minimum coverage, it does not extend to the damage done to the vehicle during the accident. It also does not cover damages to owned vehicles resulting from theft, vandalism, or natural disasters.

It is ideal for individuals who do not drive expensive cars, only travel to nearby locations, and have good to moderate anti-theft and vandalism protection systems. With third-party insurance, they do not have to worry about the financial burden of being in an accident while still complying with the law.

Comprehensive Insurance

Comprehensive insurance, as the name suggests, provides overall protection. While including coverage provided under third-party insurance, comprehensive insurance also extends to owned vehicles. So, if you are involved in an accident, you are not. While the third party and their property are covered, damages to your vehicle will also be covered.

Taking it a step further, such a policy will also cover damages to your property resulting from acts of theft, vandalism, or natural disasters. It means that with a comprehensive motor insurance policy, you get 360° coverage for anything that can go wrong with your vehicle and cause damage.

According to the arguments, a comprehensive motor insurance policy is beneficial for all vehicle owners. Not only does it ensure that you stay in compliance with the law, but it also protects you from any damage done to your vehicle, whether caused by an accident, theft, vandalism, or even natural disaster. Unlike third-party insurance, which protects only the property of the third party involved in the accident, comprehensive insurance protects you from any damage done to your vehicle.

More To Consider

Beyond the basic types of motor insurance, additional options exist to enhance protection and tailor the policy to your specific needs. Whether you’re a private car owner or run a commercial fleet, consider additional coverages, such as standalone own damage or commercial insurance, to help ensure broader financial protection and peace of mind in the event of unforeseen incidents.

Additional Ridders

Riders are add-on covers that enhance your base policy. Common riders include zero depreciation, engine protection, roadside assistance, and return-to-invoice cover. These help cover specific risks that a standard policy may not, offering more financial security. Riders are optional and can be selected based on usage, vehicle type, and risk exposure.

Standalone Own Damage Insurance

This policy covers damage to your vehicle caused by accidents, theft, fire, or natural disasters, but doesn’t include third-party liability. It’s ideal for those with third-party insurance who want vehicle protection. It offers flexibility and is especially useful for those seeking more than basic legal compliance.

Commercial Vehicle Insurance

Commercial vehicle insurance is specifically designed for vehicles used for business purposes, such as food trucks, taxis, delivery vans, or transport trucks. It covers both third-party liabilities and damages to the insured vehicle. Given the increased risk and prevalence of commercial vehicles, this insurance is essential for maintaining uninterrupted business operations and ensuring legal compliance.

FAQs

• Can I switch from a third-party to a comprehensive insurance policy mid-policy?

Yes, you can upgrade your policy at any time by paying the additional premium and completing the insurer’s process.

• Is engine damage due to waterlogging covered in basic insurance?

No, engine damage from waterlogging is usually covered under an engine protection rider, not by default.

• Do insurance premiums vary for electric vehicles?

Electric vehicles often have different premium structures, sometimes lower due to fewer moving parts and eco-incentives.

• What documents are needed to file a motor insurance claim?

You need a copy of your policy, registration certificate, driving license, FIR (if required), and repair bills.

• Does insurance cover damage while driving without a license?

Insurance claims are typically rejected if the driver was unlicensed at the time of the incident.