Motor Insurance Policy

Motor Insurance Policy

Know about the types, coverage details, and benefits of motor or vehicle insurance.

3 mins

Motor insurance, also known as vehicle or auto insurance, offers financial security against losses or damages to your vehicle. The vehicle insurance covers the insured vehicle, the driver of the vehicle and any third-party individual or property involved in the accident. A crucial insurance policy for every vehicle owner, a vehicle insurance policy covers private cars, two-wheelers, and commercial vehicles.

There are three variants of motor insurance policies: comprehensive motor insurance, third-party insurance, and own-damage insurance. The Motor Vehicles Act of 1988 mandates vehicle owners to purchase third-party insurance that covers third-party liabilities to drive/ride on Indian roads.

Before we dig into the different types of motor insurance policies, know the eligibility criteria. Here is a quick look at who is eligible to buy a motor insurance policy.

Features of motor insurance

Here’s a quick look at some of the key features of a motor insurance policy.

Features Benefits 
Coverage Offered as per the vehicle’s insured declared value.
Third-party cover Available
Personal accident cover Available
Cashless claim Available
No Claim Bonus Offered up to 50%

Benefits of motor insurance

Here are some key benefits of a motor or vehicle insurance policy.

Secures your vehicle from damages

Get coverage for any damage caused to the vehicle due to accidents, theft, fire, earthquakes, flood, and other factors. You get compensation for repairing the damages incurred.

Keeps you legally compliant

According to the Motor Vehicles Act, one must at least have a third-party motor insurance. Driving without a valid motor insurance policy falls under a punishable offence. You may get fined up to Rs. 2,000 or imprisoned for three months.

Coverage for third-party liabilities

Get financial assistance to cover the damages caused to a third party from your insured vehicle. Covers damages caused to third party’s property or vehicle. Also, if the third party suffers any bodily injury or death.

Personal accident cover

A motor insurance policy offers personal accident cover up to Rs. 15 lakh. You get coverage for owner-driver as well as passenger or co-passenger, and pillion rider.

Theft cover

The insurer compensates for the loss if your vehicle gets stolen.

Eligibility criteria for buying a motor insurance policy

Here are the eligibility criteria for purchasing a two-wheeler or four-wheeler insurance policy:

  • The vehicle should be registered under your name.
  • You should have a registration certificate.
  • You should have a valid driver’s licence.
  • You should have an updated Pollution Under Control (PUC) certificate.

Types of motor insurance policies

Here are the different types of motor vehicle insurance policies:

Private car insurance policy

This policy insures the private car against loss or personal damage due to fire, natural disasters, theft, and other mishaps. In addition, it offers cashless claims and other benefits. The premium amount varies based on the make and value of the car.

Two-wheeler insurance policy

A two-wheeler insurance policy covers scooters and bikes. It protects two-wheelers against damages caused due to accidents, disasters, fire, theft, and other risks. Two-wheeler insurance policies also provide personal accident cover for the owner-rider and pillion riders.

Commercial vehicle insurance

All the vehicles used for commercial purposes and not for personal use are under commercial motor insurance. Commercial vehicle insurance covers trucks, buses, heavy commercial vehicles, light commercial vehicles. Also, multi-utility vehicles, agricultural vehicles, taxis/cabs, ambulances, auto-rickshaws, etc. It provides financial coverage in case of theft, damage, third-party liability, and personal accident cover. Under motor vehicle insurance policy, there are also policies specifically for heavy vehicles. You can buy heavy motor insurance policy for vehicles like bulldozers, cranes, trailers, and other such vehicles.

Types of coverages offered under motor insurance policies

There are three types of coverage offered by vehicle insurance policies for cars, two-wheelers, and commercial vehicles.

Comprehensive motor insurance cover

A comprehensive car insurance policy is an extensive and all-in-one policy. The policy covers damages and losses caused to the insured vehicle also known as own damage and the third party. A comprehensive motor insurance policy also offers personal accident cover to the owner-driver and co-passenger.

Third-party insurance cover

A third-party insurance policy covers third-party liabilities. The insurer will compensate for any damages or losses caused to a third party. It covers the damages caused to their vehicle or property or physical injury. As per Motor Vehicle Act, having a third-party insurance policy is mandatory in India. This is the most popular and highly bought insurance policy by vehicle owners. The Insurance Regulatory and Development Authority of India (IRDAI) standardises the premiums for third-party insurance policies.

Own-damage cover

This is a standalone insurance cover. It covers damages or losses caused to the insured vehicle due to accident, fire, flood, or earthquake. It also covers theft, riot, or strike. Most vehicle owners prefer buying own-damage motor insurance policy with third-party insurance policy for complete risk coverage.

What is not covered under a motor insurance policy?

Here are some of the exclusions under a motor insurance policy:

  • Damage caused post the expiry of the policy.
  • Any damage caused when the person driving does not have a valid driving licence.
  • Damages due to driver's negligence.
  • Any accidental loss or damage caused outside the geographical area mentioned in the policy.
  • Damage caused while the person driving was under the influence of alcohol or any intoxicating substance.
  • Damage caused to the vehicle due to war, terror attacks, invasion, or foreign enemy action. Also, civil war, mutiny, rebellion, hostilities, radiation, or nuclear material/weapons.
  • Mechanical or electrical breakdown, wear and tear of the vehicle.

Why should you buy vehicle insurance?

Know why you should buy motor insurance:

  • To stay financially secure: You can claim repair or replacement costs for damages caused to your vehicle.
  • To get financial coverage for third-party liabilities: You can claim against the expenses incurred for damages caused to a third party. It is also mandatory by law.
  • Motor insurance policies also offer personal accident cover up to Rs. 15 lakh. You can avail of this cover to get quality medical treatment in case of an accident without worrying about the funds.

Things to consider when buying a vehicle insurance policy

Look for the below points before buying a motor insurance policy.

Check the claim settlement ratio

The claim settlement ratio helps you know how many claims have the insurance company settled in a year. A higher claim settlement ratio indicates the insurer’s efficacy in settling claims without any hassle.

Check the list of network garages

Most insurers tie up with several garages across the country, making a network to offer cashless facility to the policyholders. You can repair your vehicle at these cashless garages without paying any cash up front.

Know the policy terms and conditions

You must carefully read the policy terms and conditions to avoid any hassle when raising a claim for vehicle insurance policy. Read the coverage offered, exclusions, deductibles, and other important details. Know the claim process in detail. Also, the procedure you need to follow in case of an accident or damage caused to your car.

Coverage amount

Coverage offered on vehicle insurance policy depends on the vehicle’s insured declared value. You will receive the compensation by claiming the benefits accordingly.

Add-on covers

Check the add-on covers available on the motor insurance policy that you plan to buy. These add-on covers come at additional premiums but give added coverage to your vehicle.

Steps to buy vehicle insurance online

Buy any motor insurance policies online with zero paperwork on Bajaj Finance Insurance Mall. Here is how you can buy vehicle insurance policies.

  • Click on the ‘Get Quote’ button and fill out an application form.
  • Enter your vehicle details such as vehicle type and registration number. Also, your mobile number and residential PIN code.
  • On proceeding, you will get the option to choose or modify the IDV, NCB value, and add-on covers. Choose the appropriate coverage that you need.
  • Choose any of the motor insurance policies as per your preference. Proceed by sharing a few necessary information.
  • You can then make the payment online through any of your preferred payment modes.

Steps to renew motor insurance online

Renewing motor vehicle insurance policy has become easy and convenient. Here’s what you need to do for vehicle insurance renewal.

  • Visit your insurer’s website.
  • Enter your vehicle registration number and proceed.
  • You need to choose the vehicle’s variant and fuel type.
  • Provide the details of your previous motor insurance policy.
  • Fill in your name, mobile number, and other personal details if asked.
  • Choose the policy tenure that you want and submit to get the quote.
  • Make the payment online through any of your preferred modes.

Benefits of renewing motor insurance online

Most insurers now offer vehicle insurance policies online. Buying/renewing motor insurance online has several benefits, such as:

  • You get to compare multiple motor insurance policies online. You can compare the coverages offered, premiums, add-on covers, deductibles and many other features online.
  • You can easily buy/renew your vehicle insurance online in just a few clicks. This helps you to not miss renewing your policy before expiry.
  • Saves you from lengthy paperwork and running around to look for the right motor insurance policy. You can simply visit the website or use the app to know the details and compare the policies.
  • You can also customise your plan as per your choice. This may increase the premium value but will help you get extensive coverage for your vehicle.

Documents required to buy the motor insurance policies

You do not need any documents to buy motor insurance policies on Bajaj Finance Insurance Mall. Simply share some basic information on the application form, such as:

  • Vehicle registration number
  • Mobile number
  • Residential PIN code
  • Previous policy details (if any)

Motor insurance claim process

You can raise a claim settlement process in two ways: cashless and reimbursement. To avail of either of these processes, you need to first contact the insurer. Here is how you can raise a claim settlement request for your motor insurance policy.

  • Contact the insurer through their official website or App (if any). You can also write to them at their email ID or send an SMS.
  • You then need to fill the claim form with asked documents. Your insurer will notify you about the documents required as per the claim request raised.
  • In case of cashless claims, the insurer will directly clear the bills with the network garage. And, in case of reimbursement, the insurer will verify your claim documents. Then, transfer the claim amount as per the policy terms and conditions.

Motor insurance rules by IRDAI

IRDAI has updated the motor insurance rules in 2020. Here’s a quick look at what changes have IRDAI made in the rules.

Insurance policy

IRDAI rules in 2018 IRDAI rules in 2020

Third-party insurance policy

Three years for cars and five years for two-wheeler Same rules continue

Comprehensive insurance with third-party cover

Three years for cars and five years for two-wheeler Three years of third-party insurance for cars and five years for two-wheelers with one year of comprehensive cover

Standalone own damage cover with compulsory third-party insurance

Three years for cars and five years for two-wheelers Own-damage cover for one year

A motor insurance policy prepares you financially to tackle any sudden expenses. Repairing or replacing any damaged parts of the vehicle can be expensive. In that case, it may be more expensive. With a motor insurance policy, you can simply claim the amount required to repair or replace the damaged parts without any worry.

Why should you buy motor insurance policy from Bajaj Finance?

Bajaj Finance partners with top insurance companies to offer easy purchase and renewal of vehicle insurance policies. These policies come at affordable premiums. Choose from a range of comprehensive motor insurance policies on Bajaj Finance Insurance Mall. Buy them with a 100% digital process and secure your vehicle.

Frequently asked questions

How does the insurer calculate the motor insurance premium?

The insurer considers the following common factors to calculate the premium for the motor insurance policy.
1. Insured Declared Value (IDV)
2. Make and model of the car
3. Deductibles
4. Cubic capacity
5. Previous insurance history

What is the period of the motor insurance policy?

According to the IRDAI guidelines, new car owners must buy third-party insurance for three years. Two-wheeler owners need to buy it for five years. After this tenure, vehicle owners can choose their preferred duration.

What is a ‘No Claim Bonus’ in vehicle insurance?

A policyholder receives a No Claim Bonus (NCB) for having a claim-free year. You get up to 50% of the bonus for having five consecutive claim-free years. This bonus gets converted to discount when renewing your vehicle insurance policy.

Can I transfer the No Claim Bonus if I change my motor insurance policy provider?

Yes, you can transfer the No Claim Bonus at the time of vehicle insurance renewal. You need an NCB certificate validating the NCB earned from the previous insurer and submit it to the new insurer. Also, share an authentic copy of your expired policy and a certificate showing you have not filed a claim in the policy year.

What is a ‘deductible’ in motor insurance?

The deductible is the amount paid by the policyholder during claim settlement process. If you have a motor insurance policy with Rs. 3 lakh coverage and a deductible of Rs. 1 lakh, you need to pay Rs. 1 lakh. The insurer pays the remaining amount.

Do different cities have different premium rates in India?

Yes, insurers consider the location as one of the factors to calculate the motor insurance premium. For instance, vehicles registered in Chennai fall under Zone A. Hence, the insurer will apply the premium as per the Zone A charges. Even if you move to another town or city, the same charges get applied. Likewise, vehicles registered in a town fall under Zone B premium charges.

Do I have to inform my insurer if I fit an LPG or CNG kit in my vehicle?

Yes, you need to inform any major modifications made to your vehicle. This may impact your premium and coverage. The insurer will not cover the damages caused to new features added to the vehicle if not informed.

What documents do I need to submit for raising a vehicle insurance claim?

You need to submit the below documents when filing a claim for the motor insurance policy.
1. Duly filled claim form
2. Copy of vehicle registration certificate
3. Original estimates of loss
4. Original invoice and payment receipt of the repair
5. FIR copy in case of vehicle loss/theft/accident

Can I renew my motor insurance policy online?

Yes, you can renew your motor insurance policy online. Visit the insurer’s official website or use their app to buy/renew vehicle insurance policy online.

What is a motor insurance cover note?

Insurers give a motor insurance cover note as a temporary Certificate of Insurance (COI) to the policyholders until the person gets the actual COI. The cover note has details of the proposal form and premium paid. It is valid up to 60 days from the date of issuance. The insurer must provide the original policy document within this interim period. You can show this temporary certificate to the traffic policy at the time of checking. Also, you can claim coverage in case of an accident or theft.

Do I need to transfer the insurance in the name of the new owner if I sell the vehicle?

Yes, you need to transfer the ongoing motor insurance policy to the buyer's name if you sell the vehicle. The buyer should apply for the insurance transfer within 14 days of vehicle sale.

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