Motor Insurance

What is Motor Vehicle Insurance?

Motor Vehicle Insurance is a policy purchased by the owner of a vehicle (two-wheeler, car, commercial vehicle) to cover risks arising from the use of the vehicle on public roads. Under the Motor Vehicles Act, 1988 it is mandatory that every vehicle used on a public place must have at least a third-party liability insurance.

In simple terms, if your vehicle causes damage to another person (third party) or their property, the insurance policy steps in to protect you from large financial liabilities. You may also choose to cover damage to your own vehicle under a comprehensive policy.

Features and Advantages of Motor Vehicle Insurance

• Legal compliance: Having at least third-party insurance means you can legally drive your vehicle in India.
• Third-party liability cover: Protection for your legal liability arising out of death, bodily injury or property damage of a third party.
• Own damage cover (in comprehensive policies): Covers loss or damage to your vehicle from accidents, theft, fire, natural calamities and more.
• Cashless garage repair network: Some insurers offer repair at network garages without you paying full upfront.
• No Claim Bonus (NCB): If you don’t make a claim during the policy period, you may be rewarded with a discount at renewal.

Major features at a glance:

• Separate sections: Third-Party Section (statutory liability) + Own Damage Section (optional/with comprehensive cover).
• Ability to choose add-on covers (engine protection, zero depreciation, roadside assistance etc.).
• Premiums determined by factors like vehicle type, engine capacity, location, claim history etc.

Best Motor Vehicle Insurance Practices in India

Here are some good practices to follow while buying your vehicle insurance:

• Choose comprehensive cover if your vehicle is new or of high value—third-party cover alone may leave you exposed.
• Check the Insured Declared Value (IDV) of the vehicle—this affects premium and claim payout.
• Look for add-on benefits relevant to your risk profile (zero depreciation, roadside assistance, etc.).
• Confirm the insurer’s cashless garage network in your city or area—repair convenience matters.
• Ensure renewal on time and maintain your No Claim Bonus by avoiding unnecessary claims.
• Compare quotes online and offline—do not rely solely on dealer-bundled offers.
• Read the policy wordings carefully: check for exclusions (driving under influence, use without licence, racing, wear & tear etc.).

Difference Between Third-Party Insurance and Comprehensive Cover

How to Choose the Best Motor Vehicle Insurance Policy

Key points to evaluate when selecting your motor insurance policy:

• Check the insurer’s network of garages—closer the better.
• Compare the premium for the same IDV across multiple insurers.
• Ask about add-ons and whether they make sense for your vehicle usage.
• Look at the claim settlement experience of the insurer (turnaround time, customer feedback).
• Check for discounts—many insurers offer online purchase discounts.
• Verify what is excluded: e.g., intentional damage, driving without proper licence, mechanical breakdown, wear & tear.
• Make sure the policy covers your vehicle’s specific usage (private, commercial, ride-share etc.).
• Ensure continuity of No Claim Bonus if you are renewing or switching insurer.
• Review renewal premium increase trends; older vehicles often see higher premiums or reduced IDV.

Importance of Motor Vehicle Insurance in India

The number of vehicles on Indian roads is increasing rapidly. With higher possibility of accidents, thefts, natural disasters (floods/earthquakes) and vandalism, motor vehicle insurance serves as a vital protection tool.

The importance lies in:

• Protecting you from huge legal liability arising from third-party claims. Without insurance, you could be personally liable for compensation.
• Helping you recover financially in case your vehicle is badly damaged or stolen.
• Giving you access to network repair facilities and streamlined claims.
• Enhancing peace of mind so you can drive without constant worry of what if.

Claim Ratio and Key Considerations in India

While detailed public claim-ratio data for motor insurance companies is less frequently published, you should check for meaningful indicators like:

• How many claims are settled promptly and how many are disputed.
• Whether the insurer has a large network of garages ensuring faster repair and minimal downtime.
• The recent regulatory view: For example, insurers must handle third-party liabilities without unnatural delays.

Tip: When you compare insurers, check sample customer feedback for claim experience—speed, hassle, satisfaction.

Which Motor Insurance is Best for Family/Multiple Vehicles

If you have multiple vehicles (cars + two-wheelers) or you are insuring family-vehicles, consider:

• A bundler policy for multiple vehicles if available (some insurers allow multi-vehicle discount).
• Ensure each vehicle’s usage is clearly defined (private vs commercial) to avoid claim problems.
• Select comprehensive cover for newer cars; older vehicles may be okay with third-party + selective add-ons.
• Maintain good No Claim Bonus across vehicles—some insurers allow transfer of NCB from one vehicle to another.
• Review add-ons across vehicles—roadside assistance for all, key replacement for family cars etc.

Banks & Tie-Ups for Motor Insurance in India

Many banks in India act as corporate agents for insurance companies (bancassurance) and offer motor insurance products (often in tie-up with general insurers). These partnerships may make it convenient to buy insurance along with banking-services, but you should still compare independently.

• Axis Bank has a partnership with Bajaj Allianz General Insurance for motor insurance, through its branch and digital network.
• Bank of India (public sector bank) has a tie-up with The New India Assurance Co. Ltd. to offer general insurance products including motor cover.
• Canara Bank sells motor insurance via tie-ups with several insurers: New India Assurance, Bajaj Allianz General, Tata AIG General Insurance etc.
• South Indian Bank has tied up with multiple general insurers (Bajaj Allianz, New India, ICICI Lombard, Digit etc) to provide motor and other general insurance.
• Indian Overseas Bank (IOB) offers motor insurance through its tie-ups with insurers like Universal Sompo General Insurance Co. Ltd. & SBI General Insurance Co. Ltd..

**Note**: These bank-tie-ups may offer convenience (single place to buy) but don’t mean they are always the cheapest or most appropriate for your vehicle—still compare full features, network, premium and claim-experience.