What Does Motor Insurance Cover in India?

5 min read | Updated on May 27, 2025, 16:19 IST

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Instagram is full of ‘India is not for beginners’ reels. In one such incident, Ravi, a resident of West Delhi, parked his SUV outside his home just under a 30-year-old Neem tree after coming back from work late evening. The next day, he found out the car’s sunroof had shattered, and he thought it would be a case of a burglar trying to get into the car through the roof. He called the motor insurance helpline, and they suggested he file an FIR as it was a break-in attempt.

A couple of days later, his next-door neighbour told him something rather funny. He showed him his CCTV footage of a monkey (yes, a real monkey) jumping from the Neem tree directly on the car’s sunroof, instantly shattering it. Ravi was amused and informed the insurance company of the new development. The motor insurance rep also had a bit of a laugh and told him that any damage done by an animal is covered in his comprehensive motor insurance policy.

People often ask about the inclusions and exclusions in a motor insurance policy. The answer is quite difficult and rather elaborate because it depends on a variety of factors, starting with the category of motor insurance policy one has opted for. Motor Insurance, in general, is an excellent tool that protects a vehicle owner from unexpected expenses arising from accidents (such as repairs) and third-party liabilities. Policies also have owner-damage cover, thereby extending the overall protection.

In this blog, we’ll break down the different types of motor insurance available in India and what each one actually covers so that you can stay protected, informed, and stress-free on the road.

Understanding Motor Insurance in India

Motor Insurance is a mandatory contract between an insurance company and a vehicle owner in India. It is labelled mandatory because no vehicle is permitted to be legally driven in India unless it has valid insurance (third-party liability coverage is necessary). Further, a comprehensive insurance policy insures your vehicle against damages caused by accidents or other causes. It also covers theft and complete loss of the vehicle, along with damages sustained to the driver during an accident.

Each motor vehicle insurance category has its own benefits, but we at Upstox always recommend having comprehensive motor vehicle insurance for the complete protection of your vehicle, its passengers, and third parties who might be involved in an accident.

Detailed Coverage of Motor Insurance Types

Here is a table providing the details, inclusions, and exclusions of the different categories of motor insurance policies in India:

Category of Motor Vehicle Insurance	Meaning	Inclusions	Exclusions
Third Party Insurance	Mandatory insurance (as per the MV Act, 1988) that covers legal liabilities towards third parties. You cannot legally drive a private or commercial vehicle in India without it.	- Injury or death of third parties involved - Damage to property (covered up to ₹7.5 lakhs)	- Any damage to your own vehicle - Total loss of the vehicle - Theft - Self-injury
Own Damage Insurance	Optional coverage that protects against damage to your own vehicle.	- Accidental damage to the vehicle - Damage due to natural causes or act of God	- No coverage for third-party liabilities
Comprehensive Insurance	All-inclusive coverage that includes both third-party liabilities and damage to your own vehicle.	- Third-party liabilities - Own vehicle damage - Driver injuries/life cover (optional)	- Wear and tear - Mechanical breakdown - Driving under influence - Regular maintenance

Add-On Covers for Enhanced Protection

While taking a new motor vehicle insurance or opting for a renewal, you are asked about optional add-on covers. These riders provide extra protection for your car, and help reduce the total repair bills drastically. Even though opting them might increase the premium, they are worth looking at, and you must go for the add-on which is relevant to your vehicle, region, and usage type.

Here are a few common add-ons*:

Zero Depreciation Cover

Get full claim settlement without depreciation deductions on replaced parts.

Engine Protection Cover

This cover covers repair costs for engine damage due to water ingress or oil leakage, making it ideal for flood-prone regions

Roadside Assistance

Provides 24/7 help for flat tyres, battery issues, towing, and emergency refuelling.

No Claim Bonus (NCB) Protection

Retains your NCB benefits even after you claim the policy term.

Return to Invoice Cover

In case of total loss or theft, it pays the difference between the current insured value and the original invoice price.

(*This is not an exhaustive list as there are various other add-ons you might add to your policy depending on the requirements.)

Choosing the Right Motor Insurance

always review the motor insurance policies on an online platform like Upstox, which not only provides the correct coverage requirements but also gives you a list of quotations from top motor insurance companies in India.

Here are a few things you should consider while choosing the right motor insurance:

Assess Your Needs

Consider your vehicle’s age, usage frequency, location, and risk exposure.

Evaluate Budget

Third-party insurance is cost-effective but limited; comprehensive insurance is more expensive but offers wider protection.

Consider Vehicle Type

New or high-value cars benefit greatly from comprehensive plans with add-ons.

Add Relevant Covers

Enhance protection with useful add-ons like zero depreciation, engine protection, or roadside assistance.

Strike a Balance

Choose a policy that aligns with your protection needs and financial comfort.

Summing Up

Motor insurance is an excellent tool for protecting your vehicle and giving you peace of mind while on the road. Besides being a mandatory requirement, its importance is often realised when your vehicle encounters an accident. By understanding what each type of policy covers, you can make an informed decision tailored to your needs. If budget and affordability are not issues, you should always go for comprehensive motor vehicle insurance to be a responsible driver and provide complete protection for your car or motorcycle.

FAQs

What does motor insurance cover in India?

It covers third-party liabilities, own vehicle damage, and add-ons like engine protection and zero depreciation.

Is third-party insurance mandatory in India?

Yes, as per the Motor Vehicles Act, third-party insurance is legally required for all vehicles.

What is not covered under motor insurance?

Common exclusions include wear and tear, mechanical breakdowns, and damage from drunk driving or without a valid license.

Which is better: comprehensive or third-party insurance?

Comprehensive insurance offers broader protection and is ideal for new or high-value vehicles.

Can I customise my motor insurance policy?

Yes, with add-ons like roadside assistance, NCB protection, and return to invoice cover.

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Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.