Types of Car Insurance Policies in India

Know about the different types of car insurance policies and their coverage details.
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Types of Car Insurance Plans Available in India
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3 min
10 August 2023

Car insurance is a vital shield for vehicle owners against unexpected financial burdens. In a world of uncertainties on the road, car insurance provides financial protection and peace.

It ensures that you are prepared for accidents, damages, and liabilities that may arise.

Why car insurance is essential?

Car insurance mitigates financial risks associated with accidents, damages, and third-party liabilities.

In case of accidents, insurance covers repair costs, medical expenses, and legal obligations.

Car insurance shields your savings from unforeseen vehicular incidents. Without insurance, you could face substantial financial setbacks in the aftermath of an accident.

Types of car insurance policies in India

There are three types of car insurance policies available in India. Check the details of the policies below. 

Types of car insurance policies Specifications
Comprehensive car insurance Comprehensive car insurance is the most extensive coverage available for vehicle owners. This policy offers protection against third-party liabilities as well as damage caused to one's vehicle due to accidents, natural calamities, theft, and fire. It also covers the costs of hospitalisation for driver and passengers, towing charges, and personal accidents cover.
Own damage car insurance Own damage car insurance is a type of coverage that protects the insured's vehicle from damage caused due to natural disasters like floods, earthquakes, and storms. It also covers losses incurred from man-made incidents such as theft, riots, and accidents caused by drivers who are uninsured.
Third-party car insurance Third-party car insurance is a basic coverage required by law in India. It protects against any legal liability to a third party caused due to accidents resulting in bodily injuries, property damage, or death. It does not compensate for any damage caused to the insured's vehicle.


Types of car insurance add-ons in India

Roadside assistance cover

Provides roadside assistance emergency aid for breakdowns, flat tyres, towing, or accidents, ensuring peace of mind on the road.

No claim bonus (NCB) protector

Preserves your No Claim Bonus (NCB) even after making a claim, reducing future premium costs.

Consumables cover

Covers costs for consumable items like oil, nuts, and bolts, reducing out-of-pocket expenses.

Key replacement cover

Covers expenses for lost or stolen car keys, a common inconvenience.

Daily allowance benefit

Provides a daily allowance for alternate transportation while your car is under repair.

Five types of car insurance coverage in India

Here are 5 types of car insurance coverage:

1. Third-party liability insurance coverage

  • Mandatory by law, covers damages and injuries to third parties.
  • Offers financial assistance for legal proceedings arising from accidents.

2. Comprehensive car insurance coverage

  • Encompasses third-party liability and own damage coverage.
  • Protects against theft, fire, natural disasters, and collisions.
  • Offers peace of mind with comprehensive protection.

3. Personal accident cover

  • Provides compensation for the policyholder's injury or death due to an accident.
  • Includes coverage for permanent disabilities and accidental death.

4. Zero depreciation insurance

  • Ensures full claim amount without considering vehicle depreciation.
  • Ideal for newer cars, saves money on repairs after an accident.

5. Engine protection cover

  • Safeguards against repair costs for engine damage due to water ingression or oil leakage.
  • Offers additional financial protection for unexpected and costly engine issues.

Car insurance types based on usage

Depending on whether you use your car for personal or commercial reasons, you need to purchase insurance that matches the intended use.

Private car insurance

Car owners who plan to use their vehicles for personal reasons can obtain this type of auto insurance policy. You have the option of purchasing either a third-party coverage or a comprehensive policy for your car, depending on your requirements. 

Commercial vehicle insurance

For business owners possessing a fleet of vehicles for commercial purposes, commercial car insurance is the most suitable type of insurance. This particular insurance type provides third-party liability coverage.

Benefits of car insurance policies offered through Bajaj Finance

Car insurance is more than just a legal obligation; it is a shield against financial uncertainties. The different types of insurance policies cover the vehicle owner in different ways. Third-party liability insurance safeguards you from legal hassles and liabilities. Comprehensive coverage extends protection to your vehicle and covers an array of situations. Personal accident cover provides relief during unforeseen accidents, ensuring financial stability.

Zero depreciation insurance minimises out-of-pocket expenses after accidents. Engine protection cover offers a safety net against costly engine-related repairs.

Frequently asked questions

Which type of insurance is best for car?

The best type of car insurance policy depends on your needs and budget. However, comprehensive car insurance is one of the best as it offers coverage for damages caused by accidents, natural calamities, theft, and third-party liability.

How many types of insurance are there for a car?

There are mainly two types of car insurance policies: third-party liability insurance and comprehensive insurance. Third-party liability insurance covers damages caused by the insured vehicle to others. Comprehensive insurance covers damage caused to both parties involved in the accident along with theft and natural calamities.

Is it necessary to have a car insurance policy?

Yes, it is mandatory to have a car insurance policy in India under the Motor Vehicles Act, 1988. Driving without valid insurance can lead to penalties, fines, and even imprisonment. Additionally, having a car insurance policy will protect you against any unforeseen circumstances or financial liabilities that may arise due to an accident or theft.

Disclaimer

*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also a distributor of other third party products from Assistance Services providers such as CPP Assistance Services Pvt. Ltd., Bajaj Finserv Health Ltd. etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective Assistance service provider company.

Note – While we have made all efforts and taken utmost care in gathering precise information about the products, features, benefits, etc. However, BFL cannot be held liable for any direct or indirect damage/loss. We request our customers to conduct their research about these products and refer to the respective product’s sales brochures before concluding their sale.