All-in-one Guide for Motor Insurance in India

What is Motor Insurance?

Motor insurance (also known as auto insurance, or vehicle insurance), is an insurance policy purchased for private or commercial vehicles to provide financial shield against any loss or damage. Vehicles like cars, trucks, motorcycles, scooters, tractors and other road vehicles can be covered under the motor insurance policy.

How does motor insurance help the owner of the vehicle?

The primary objective of motor insurance policy is to provide:

Financial aid to the owner of the vehicle in case of unfortunate events. Basically, it provides financial shield against any damage incurred to the insured vehicle due to natural or man-made perils.
Liability cover, which could arise due to the damages incurred to the third party property, vehicle due to the collision or accident.
Liability cover against the bodily injury or accidental death of pedestrians, passengers of the other vehicle, etc.
Theft of the insured vehicle.

Classification of Motor Insurance

For purpose of insurance, motor vehicles are classified into 3 broad categories:

Private Cars
Private Two Wheelers: Motor Cycles, Motor Scooters, Bikes, etc.
Commercial Vehicles: Goods and Passenger carrying vehicles – Rickshaws, Taxis, Cabs, Buses, etc.

Based on the categories, the motor insurance premium varies. However, we’ll focus on private motor vehicles – private cars and two wheelers.

Certificate of Motor Insurance

The certificate of insurance is accepted by the police authorities, R.T.O and other public authorities as valid only if it is issued by the insurance company, and must be provided as proof of Insurance, if and when required.

Why Motor Insurance?

It is Mandatory for all plying vehicles on Indian roads as per the Motor Vehicles Act, 1988

The Motor Vehicles Act passed in 1939, which was amended in 1988, and again in April 2017 (passed by Lok Sabha awaiting passage in Rajya Sabha and by the President), ensures the road safety of the people.

Unfortunate incidents like road accidents cause bodily injury, and more than often it leads to the permanent disability of the victim. Not to forget, it may also cause accidental death of the pedestrians, passengers of the other vehicle.

Prior to the implementation of the Motor Vehicles Act, these victims were not compensated, because the vehicle owners did not have the resources to pay any compensation to the victim.

And for this very reason – to safeguard the interests of road accident victim, having a motor insurance was mandated. This is done as third party motor insurance have been mandated.

However, the insurance against the loss or the damage of the own vehicle not mandatory.

But the insurance for the third party liability arising out of the plying motor vehicles in public places is mandatory.

Without having third party motor insurance policy, you may have suffered a financial hit, and possibly, get into legal matters.

Hence, it is advisable to all the vehicle owners to have a motor insurance policy. And to protect from digging a hole in your pocket, one must also buy own damage coverage plan.

What is Covered?

Let’s dive-in to know what’s covered under a motor insurance plan

1) Third party Liability Motor Insurance Covers:

The liabilities, which requires a third party insurance, are as follows:

a) Any liability incurred by the insured vehicle in respect of bodily injury, disability, or death of any person – pedestrians, passengers of other vehicle, and including owner of the goods or his authorised representative

b) Liability incurred due to the loss or damage to any property of a third party

c) Liability incurred due to the bodily injury, disability, or death of any passenger of a public vehicle

d) Liability arising under Workmen’s Compensation Act, 1923 due to the respect of death or bodily injury of:

Paid driver of the insured vehicle
Conductor, or ticket examiner
Workers, carried in a goods vehicle

(e) Liability arising due to the bodily injury or death of passengers of another vehicle.

2) Comprehensive Motor Insurance Policy Covers:

Liability to Third Parties:

With the comprehensive policy for your vehicle, all the liability incurred to the third party is covered. Liability arising due to the bodily injury or death of any person, and any loss or damage incurred to the third party property due to the insured motor vehicle.

Damages incurred to the insured vehicle due to the following perils:
- Fire, explosion, self-ignition or lightning.
- Burglary, house breaking or theft.
- Riot and strike.
- Earthquake (fire and shock damage).
- Flood, hurricane, storm, inundation, cyclone, hailstorm, frost.
- Accidental external means.
- Malicious act.
- Terrorist activity.
- Transit by road, rail, inland waterway, lift, elevator or air.
- Landslide /rockslide.

3)Personal Accidental Cover Under the Motor Insurance Policy

Personal Accidental Cover is mandatory for the vehicle owner

Personal Accident cover is a financial aid to the motor vehicle policyholder. In case of unfortunate accident, where the owner-driver suffers a permanent disability or dies, the compensation is paid by the insurance company. It is compulsory for all the vehicle owners to get a personal accidental cover. Moreover, there are other optional PA covers for passengers and pillion riders. Let’s see more details on PA cover under motor plan.

A) Personal Accident Cover for Private Cars:

Compulsory PA cover for owner-driver: The motor insurance policy comes with the coverage of Rs.2 lakhs for the owner-driver of the insured car on paying the premium of Rs.100.
Optional PA cover for co-passengers: You can get personal accident cover for named and unnamed passengers with a sum insured of Rs.2 lakh per occupant on the premium of Rs.100/person.
Optional Legal Liability cover for Paid Driver: Under Workmen’s Compensation Act, 1923, compensation will be paid. The optional paid driver PA cover comes at Rs.50.

B) Personal Accident Cover for Private Two Wheelers:

Compulsory PA cover for owner-driver: The motor insurance policy comes with the coverage of Rs.1 lakh for the owner-driver of the insured two wheeler on paying the premium of Rs.50.
Optional Pillion Rider PA cover: You can get personal accident cover for named and unnamed passengers with a sum insured of Rs.2 lakh per occupant on the premium of Rs.100/person.

What is Not Covered?

There are few exclusions under the Motor insurance policy:

There are certain exclusions to a standard own damage motor insurance policy, which are as follows:

Any damages incurred when the policy is not active or lapsed
When damage is caused deliberately
Cost of consumables
Consequential loss
Any wear and tear due to ageing
Any mechanical or electrical breakdown
Damages arising due to driving without a legal and valid license
Damages arising due to driving under the influence of alcohol or drugs
Loss or damage incurred while driving outside India
Loss or damage due to radioactive or nuclear-related activities
If the vehicle is used for purposes other than the permitted use, for example, commercial use, your claim will be rejected.

Who Decides Motor Insurance Premium Rates?

Insurance Regulatory and Development Authority of India (IRDAI) decides the third party motor premium rates. However, own damage premium rates may differ from insurer to insurer.

Third-party Motor Insurance Premium Rates

The third party motor insurance premium rates are based on the vehicle’s engine capacity. The higher the capacity, the higher is the premium. IRDA decides the third party premium and it changes every year.

Here’s the premium price list for the FY17-18 as effect from 1st April’17:

Private cars	Premium per annum
Not exceeding 1000cc	Rs.2,055
Exceeding 1000cc but not exceeding 1500cc	Rs.2,863
Exceeding 1500cc	Rs.7,890

Two wheelers	Premium per annum
Not exceeding 75cc	Rs.569
Exceeding 75cc but not exceeding 150cc	Rs.720
Exceeding 150cc but not exceeding 350cc	Rs.887
Exceeding 350cc	Rs.1,019

Comprehensive Motor Insurance Premium Rates

The premium for 'own damage' cover, of which the premium is higher than the third party insurance premium, is based on risk and damages to the insured vehicle.

The rates differ and are subjected to many factors such as:

Insured Declared Value or IDV
Geographical Location (Bike registration RTO)
Engine Capacity (CC)

Insured Declared Value (IDV): IDV is the current market value of your vehicle, not the resale value. The market value is dependent on the ex-showroom price and depreciation of the vehicle. IDV is the maximum value that an insurance company will reimburse at the time of claim.

Note: The Ex-showroom price is different than the on-road price. The on-road price includes road tax and other taxes.
Insured Declared Value calculation based on the Ex-showroom:

Vehicle Age	IDV
Between 0 - 6 Months	95% of Ex-showroom
Between 6 Months - 1 Year	85%
Between 1 Year - 2 Years	80%
Between 2 Years - 3 Years	70%
Between 3 Years - 4 Years	60%
Between 4 Years to 5 Years	50%

Note: The IDV for vehicles aged over 5 years is calculated vary from company to company. You may have to contact with the insurance company.

Geographical Location of the Vehicle Registration (RTO): Depending on the registration zone (RTO) of your vehicle the premium varies. The zones are categorised as Zone A and Zone B.

Zone A: Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune and Ahmedabad.

Zone B: Rest of India.

Depending on the Zone A or B, premium will vary. Vehicle owners who have registered their vehicle under Zone A will pay a slightly higher premium than the Zone B vehicle owners

Engine Cubic Capacity: Yes, the vehicle engine capacity is considered when deciding the premium of comprehensive motor plan. The thumb rule is higher the Engine CC higher the premium.

Multi - Year Motor Insurance Plan

Opt for a Multi-year policy to save money

Multi-year or long-term motor insurance policy means coverage for 2 or 3 years in a single policy. You don’t have to renew your vehicle insurance policy every year. Multi-year motor insurance policy helps you to save money, especially from every year hike in third party premium.

Multi-year Car Insurance:

So far, none of the motor insurance companies offer multi-year car insurance policy. However, they have recently agreed to offer long-term motor insurance policies for private cars. Even IRDAI hadn’t passed multi-year third party policy for motor cars.

Multi-year Two-wheeler Insurance:

IRDA allows insurance companies to sell multi-year two wheeler third party policy to their customers. You can now cover your two wheeler for 3 years straight in a single policy at a time. This way you can save money. And also, chances of a policy lapse are less.

How can You Save Money on Motor Insurance Policy

Automobile Association of India – You are eligible for 2.5% of discount on own damage premium, if you’re a member of the Automobile Association of India, approved by IRDAI.

Anti-theft device – Get up to 2.5% of discount on premium on installation of an anti-theft device as approved by IRDAI.

Voluntary Deductible Discount – Well, you can opt for voluntary deductible discount, means, opt to pay the minimum amount of money at the time of claim, and the insurance company offers pre-fixed percentage of discount on the own-damage premium. If you do not claim, you do not have to pay any money, plus you save money.

No Claim Bonus – If it’s time to renew your motor insurance policy, and you didn’t lodge claim in the previous policy tenure, you are entitled to No Claim Bonus, a discount on your own-damage premium. You can get up to 50% discount on the own damage premium, if you do not lodge claims for 5 consecutive years.

How to Renew Your Motor Insurance Policy?

Compare and Renew Motor Insurance Online

Renew your Motor Insurance Online:

If your motor policy is still in force, you can renew it instantly.

Compare motor insurance plans, choose the right type of policy for your vehicle.
Enter the basic vehicle details – make, model, and also vehicle registration detail.
Enter whether or not you have lodged any claims in the previous policy tenure, check if you are eligible to get No Claim Bonus. If you didn’t lodge any claim, you will get a discount.
Proceed to complete the process of renewal.
There is no need of inspection and documents, and you will receive your insurance policy instantly.

What Happens If Your Motor Insurance Policy Expires?

Renewal of Car Insurance after expiry:

Compare motor insurance plans, choose the right type of policy.
Contact the insurance company for the coverage.
Fix up an appointment with the surveyor for the inspection of your vehicle. If the insurance company accepts to offer you the insurance, you can make the payment and you will receive the policy.
The surveyor's insurance report is valid for only 24 hours. So, make sure if you choose to renew you pay the premium within 24 hours of the survey.

Renewal of Two Wheeler Insurance After Expiry:

You can simply renew the expired two wheeler insurance policy instantly.

Compare motor insurance plans, choose the right type of policy.
Enter the basic details and proceed to complete the process of renewal.
There is no need of inspection and documents, and you will receive your insurance policy instantly.

Renew expired two-wheeler insurance policy with Coverfox because:

There is no inspection: At Coverfox, you can renew your two wheeler expired policy without inspection and documentation, even if the policy has expired for more than the 90 days.
You receive your renewed two wheeler policy instantly: Once you enter the basic two wheeler details to renew your policy, compare policies from different insurer, and after opting the right policy, you will receive the policy within minutes in your inbox.

What If You Bought a Wrong Motor Insurance Policy?

There is no free look up period in motor insurance.

If you have purchased a wrong insurance policy – the vehicle model is not the same as you own or if you wanted a private vehicle insurance policy and by mistake you ended up owning the commercial vehicle insurance or vice-versa, then you need to cancel the policy.

If you cancel your motor insurance before the start of the risk date – policy start date, then you may get full refund. However, if you cancel after the start of the risk date – policy start date, the refund would be on pro rata basis.

How to Claim Under Motor Insurance Policy?

In the case of an unfortunate accident, you have to file a claim. Depending on the type of claim, procedure and documents will vary.

For claims to be accepted, your policy should be in-force and the insurance cover of the vehicle should be valid.

Following are the documents required depending on the type of Motor Insurance claims:

Driving Licence
Registration Certificate Book
Police Report (F.I.R / Spot survey if T.P.)
Claim Form with garage estimate
Surveyors report
Final Bill from repairers
Receipt/ bill from the repairer
Discharge voucher (full and final payment)

The procedure differs depending on the type of claim:

1. Claim Own Damage under Motor Insurance Policy:

Intimate the insurance company on their toll-free number.
Lodge a claim with a duly signed Claim Form.
Keep a copy of Driving License, RC book, Policy document ready.
Surveyor will be assigned for inspection.
FIR, if required (Kindly note down, contact details of people and vehicle number involved in accident).
Original Repair Estimate Bill.
In case of cashless service, only Invoice receipt.
In case of reimbursement provide estimate bill, original invoice and payment receipt.

2.Total Loss Claim under Motor Insurance Policy:

If the vehicle is beyond repairs, then you can claim for Total loss.
If the market value is more than the IDV, the insurance company will pay IDV.
The salvage of the damaged vehicle will be taken by the insurance company.
Insurer will collect the RC book, keys and other necessary documents.

3. Theft Claim under Motor Insurance Policy:

Intimate the insurance company and the Police about the theft.
Submit First Information Report (FIR) issued by Police.
Submit a "Non-Traceable" certificate issued by Police, if the vehicle could NOT be traced.
Once claim is approved, submit the 'Non-Traceable Certificate + R.C. Book +Taxation Certificate to the insurer.
The Insurer would take the keys R.C. Books etc.
The claim is settled.

4.Third Party Claim under Motor Insurance Policy:

Immediately intimate the insurance company on their toll-free number.
Lodge the claim with duly signed claim form.
Submit Police FIR copy.
Submit a copy of Driving License, Policy and vehicle's RC book.

The procedure for third party claims is as followed:

(a) On receipt of notice of claim, the matter is entrusted to an advocate.

(b) Full information related to the accident is obtained. And following documents are required:

Driving License
Police report
Details of driver's prosecution, if any
Death certificate, coroner's (Post Mortem report) report, if any (fatal claims).
Medical Certificate (bodily injury claims)
Details of age, income and number of dependents etc.

Can You Avail Tax Benefit Under Motor Insurance Plan?

In a way, yes, you can avail tax benefit under motor insurance.

But read further to know how:

If you use your vehicle for the purpose of business, then the premium you paid can be treated as an expense for which you can avail tax benefit.

Clause:

If the vehicle is used solely for personal purpose and not for business, the motor insurance premium paid would not be accepted to be treated as an expense, and you cannot avail tax benefit.
If the vehicle is partially used for business purpose and partially for personal use, then the income tax deduction would be based on the proportion in which it is used for the purpose of business.

Note: Please consult your chartered accountant for more information to check if you are eligible to avail income tax deduction.

Impact of GST on Motor Insurance Plan

Earlier, different taxes were levied on general insurance. With the implementation of GST, the taxation is simplified to an extent. Having said that, due to GST on motor insurance, the policyholder will now end up paying higher tax on the insurance plan.

Prior to the implementation of GST, it was 15% tax on the motor insurance, but after implementation, the policyholder will pay 18% tax on the policy purchase.

The increase in taxation due to the GST on motor insurance policies, has affected the amount of premium paid by policyholders.

But, one must keep in mind, this increase in rates shouldn't stop you from providing a protective shield to your vehicle. Primarily, because safety comes first.

Documents Required to Buy Motor Insurance in India

At the time of renewal, policy details are required.

The basic documents you may require is RC copy and driving license.

However, with the recent amendment passed by Supreme Court, having PUC certificate is mandatory to buy insurance in Delhi/NCR region. As of now, it is compulsory in Delhi/NCR, but it is expected to be mandated across the country. So, one may have to produce PUC certificate to buy an insurance policy.

From Where You Can Buy Motor Insurance Plan in India

You can buy vehicle insurance either online or offline. However, these days more and more people are buying insurance online. Online buying of motor insurance is instant, cheap, and hassle-free.

You have two options when it comes to buying motor policy online:

1) Visit any insurance company’s website. Enter your vehicle’s details. Enter other basic details, once done, you can proceed to pay the premium. After paying the premium, you will receive the soft copy of your insurance policy in your inbox.

2) Visit any online web aggregator. Enter the vehicle details. You can compare different motor insurance policies offered by various insurance companies. You can buy the most suitable insurance policy for your vehicle after comparing policies online.

Vehicle Insurance Companies in India

Bharti AXA Motor Insurance	Bajaj Allianz Motor Insurance
HDFC Ergo Motor Insurance	IFFCO Tokio Motor Insurance
Kotak Motor Insurance	New India Assurance Motor Insurance
Oriental Motor Insurance	Reliance Motor Insurance
United India Motor Insurance	Universal Sompo Motor Insurance

Want HELP in Buying Motor Insurance Plan?

Compare Motor Insurance Policies, Use Coverfox's Premium Calculator

Coverfox helps you to compare motor insurance plans and to find the best deal for your vehicle.

Now, you can choose the insurance policy as per your requirements. You can decide which policy you must have. Comparing motor insurance policies gives you the benefit of buying the right type of policy.

Once you enter the basic details of your vehicle, the tool will fetch the motor insurance premium quotes from the top insurance companies, this way you can compare policies, premiums, add-on covers, and so on, before buying.

Things to keep in mind:

It is illegal to run any vehicle on the Indian roads without having the third party insurance.
Claims pertaining to the own damage of the vehicle will be paid by the insurance company subject to the surveyor's assessment.
The court will settle any third party claim, the procedure is already laid down by the government to settle these cases.

Compare Motor Insurance Plans at Coverfox