Motor Insurance Policy

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

3 mins

04-June-2024

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 insurance, third-party insurance and own-damage insurance. The Motor Vehicles Act, 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 vehicle insurance policies, we should know the eligibility criteria. Here is a quick look at who is eligible to buy a motor insurance policy.

Features of a motor insurance policy

Here’s a quick look at the key features of a vehicle insurance policy that you can avail.

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%

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Benefits of motor vehicle insurance

Here are some key benefits of a motor insurance policy.

Secures your vehicle - Get coverage for any damage caused to the vehicle due to accidents, theft, fire, earthquakes, flood, and other factors. You get compensation from your vehicle insurance provider for repairing the damages incurred.
Keeps you legally compliant - According to the Motor Vehicles Act, one must have at least a third-party vehicle 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.

Benefits of buying motor insurance online

Traditionally, the process of buying motor insurance used to be tedious, requiring a visit to an insurance agent's office. However, with online services, buying motor insurance has become significantly convenient and faster. Here are some of the key benefits of purchasing motor insurance online.

Convenience - Buying motor insurance online is extremely convenient, as you can do it from the comfort of your home or office. You don't have to take time out of your schedule to visit an insurance agent's office.
Compare policies - When buying motor insurance online, you can easily compare policies and features offered by different insurers. This helps you make an informed decision and choose the policy that best suits your requirements and budget.
Cost-effective - Motor insurance policies bought online are generally cheaper than policies bought through agents. Insurers offer better deals and discounts to customers buying policies online, making it a cost-effective option.
Quick and easy - Purchasing motor insurance online is a quick and easy process. You can complete the process within minutes, with minimal documentation, and receive the policy's soft copy through email.
Easy renewal - Renewing motor insurance policies is equally easy when done online. You can renew your policy before the expiry date easily through the insurer's website or an insurance aggregator's website.
Secure process - Purchasing motor insurance policies online is a secure process. Insurers use encryption to safeguard your information and offer secure payment gateways to make payments.

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 vehicle insurance policies:

Private car insurance policy

This car insurance 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 vehicle insurance policies, 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 in India

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

Comprehensive motor insurance cover

Comprehensive vehicle 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 the third-party liabilities. The insurer will compensate if any damages or losses are 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. Also, theft, riot, or strike. Most vehicle owners prefer buying own-damage motor insurance policy with a third-party insurance policy to stay fully covered.

Compare car insurance policies

Here’s quick comparison of the policy coverages offered in the three types of car insurance policies.

Coverage offered	Comprehensive policy	Own damage policy	Third-party policy
Own damage	Yes	Yes	No
Third-party property damage	Yes	No	Yes
Third-party bodily damage	Yes	No	Yes
Car theft	Yes	Yes	No
Add-on coverage	Yes	Yes	No
Personal accident coverage	Yes	Yes	Yes

Inclusions and exclusions of a vehicle insurance policy

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

Damages caused post policy expiry.
Any damage caused when the person driving does not have a valid driving licence.
Damage 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, foreign enemy action. Also, civil war, mutiny, rebellion, hostilities, radiation, or nuclear material/weapons.
Mechanical or electrical breakdown, wear and tear of the vehicle.

Motor insurance offers comprehensive coverage, encompassing various aspects of your vehicle and driving experience. Here are some key inclusions to understand:

Damages and injuries caused to third parties in accidents involving your vehicle.
Damages caused due to accidents, theft, fire, or natural disasters.
Financial support for medical expenses and disability arising from accidents.
Protection to the passengers in your vehicle.
Optional covers like zero depreciation, roadside assistance, and engine protection can be added for extra security.

Why should you buy vehicle insurance?

Vehicle insurance is not just a legal requirement but a critical safeguard for your financial well-being. Know why you should buy motor vehicle insurance:

To stay financially secure

Repair and replacement costs: Vehicle insurance allows you to claim repair or replacement costs for damages caused to your vehicle, protecting you from hefty expenses.
Natural and man-made disasters: Insurance covers damages caused by natural disasters like floods, earthquakes, and storms, as well as man-made incidents like theft, vandalism, and riots.

To get financial coverage for third-party liabilities

Legal requirement: It is mandatory by law to have third-party insurance. Failing to comply can result in fines and legal consequences.
Liability coverage: Insurance covers expenses incurred for damages caused to a third party, including property damage and bodily injuries, ensuring you are not personally liable for these costs.

Personal accident cover

Accident coverage: Motor insurance policies offer personal accident cover up to Rs. 15 lakh, providing financial assistance for medical treatment in case of an accident.
Quality medical treatment: Avail of this cover to get quality medical treatment without worrying about the funds, ensuring timely and proper care.

Additional benefits

Cashless garage network: Many insurance providers have tie-ups with garages where you can avail of cashless repair services, reducing your out-of-pocket expenses.
Roadside assistance: Insurance policies often include roadside assistance, offering services like towing, fuel delivery, and on-the-spot repairs, ensuring you are never stranded.
No Claim Bonus (NCB): If you do not make any claims during the policy period, you can earn a No Claim Bonus, which reduces your premium in the subsequent years, encouraging safe driving and reducing costs.

Customisable add-ons

Engine protection cover: Protects your vehicle’s engine from damages not covered under the standard policy.
Zero Depreciation cover: Ensures you receive the full value of your car parts without factoring in depreciation, reducing your financial burden.
Consumables cover: Covers the cost of consumables like nuts, bolts, engine oil, and lubricants, which are often excluded in a standard policy.

Peace of mind

Financial security: Knowing that you are covered for various risks and liabilities allows you to drive with peace of mind, without the constant worry of potential financial setbacks.
Legal compliance: Having the right insurance means you are always compliant with legal requirements, avoiding penalties and legal issues.

Things to consider while buying motor insurance online

When buying motor insurance online, it’s important to keep several factors in mind to ensure you get the best coverage for your needs:

Coverage options: Evaluate the coverage options provided by different insurers, including third-party liability, own damage, and add-ons like zero depreciation, engine protection, and roadside assistance.
Premium costs: Compare premium quotes from multiple insurers to find the most cost-effective option without compromising on coverage.
Claim settlement ratio: Check the insurer’s claim settlement ratio to understand their reliability and efficiency in settling claims.
Customer reviews: Read customer reviews and ratings to gauge the quality of service and support provided by the insurer.
Cashless network garages: Ensure the insurer has a wide network of cashless garages for hassle-free repairs.
No Claim Bonus (NCB): Look for policies that offer attractive No Claim Bonus benefits for claim-free years, which can significantly reduce your premiums.
Policy flexibility: Consider the flexibility of the policy terms, such as the ease of renewing, modifying, or cancelling the policy.

Why is vehicle insurance mandatory in India?

Vehicle insurance is mandatory for all vehicles on Indian roads, as per the Motor Vehicles Act of 1988. The main reason behind the mandatory requirement is to ensure financial protection for third-party liabilities, including injury, death, or damage to property caused by a vehicle owner. This helps to ensure that the person responsible for the accident is financially equipped to handle the damages caused.

How to reduce vehicle insurance premium

Car insurance premium can be a significant expense for vehicle owners, but there are ways to reduce it and save money. Some of the most popular tips for lowering vehicle insurance premiums include installing anti-theft devices, choosing a higher voluntary excess, and improving your driving record. You can also opt for a pay as you drive policy, which charges premium based on the mileage count of your car. Additionally, policyholders can also take the benefit of No Claim Bonus, a discount offered by the insurer for making no claims on the policy during the previous year. By following these simple tips, vehicle owners can considerably reduce their car insurance premiums and ensure they get the most value out of their insurance policy.

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.

You simply need to fill up an application form by clicking on the ‘Get Quote’ button.
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 the IDV, NCB value, and add-on covers.
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 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 vehicle insurance 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 it 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. Many insurers also offer only digital insurance. 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

No documents are required to buy any motor insurance policies on Bajaj Finance Insurance Mall. You only need to 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.

Claim - 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.
Inspection - Once the claim request is raised, the insurer will conduct an inspection of the vehicle to verify the details and the damages. In some cases, you may also opt for an online inspection.
Claim approval - After verifying the claim documents, the insurer will settle the claim amount as per the terms and conditions of the policy. In case of cashless claims, the insurer will directly clear the bills with the network garage. In case of reimbursement, the claim amount will be transferred to the bank account registered with the insurer.

Parameters affecting vehicle insurance premium

Different factors affect vehicle insurance premiums. Some of these are:

The type of vehicle, age, location, driving history, and insurance coverage.
The vehicle’s make and model.
The engine (petrol or diesel) of the vehicle affects the IDV; this impacts the premium amount.
Purchasing vehicle insurance online provides transparency and a lower premium rate, leading to better coverage options.
Accumulating NCB over claim-free years can significantly reduce premiums.
The type of add-ons purchased along with the motor insurance policy affects the insurance premium.

Opting for the right coverage and understanding the factors affecting vehicle insurance premiums can help you choose the best insurance policy for your vehicle.

Motor vehicle rule updation by IRDAI

IRDAI updated the vehicle 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 rule continued.
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 policies 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.

How to file a motor insurance claim?

Following an accident or theft, it's crucial to immediately file a motor insurance claim. Here are the steps to do this:

Contact your Insurance company

Notify your insurer as soon as possible and provide complete details about the incident.

Lodge a police complaint

In case of theft, lodge an FIR at the nearest police station.

Document submission

Submit the necessary documents, including the claim form, a copy of the FIR (if applicable), and vehicle details to the insurer.

Survey and claim approval

Your insurer will arrange for a survey of the damage. On approval, the insurer will settle the claim according to the policy terms.

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Frequently asked questions

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

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.

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 a discount when renewing your vehicle insurance policy.

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 submitting 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.

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 deductible of Rs. 1 lakh, you need to pay Rs. 1 lakh. The insurer pays the remaining amount.

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, 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.

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.

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

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

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.

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.

The three types of motor insurance include third-party liability insurance, comprehensive insurance, and own damage insurance. Third-party liability covers damages to third-party property or injury. Comprehensive insurance includes third-party liability and own damage coverage. Own damage insurance specifically protects against damages to your vehicle.

The duration of a motor insurance policy can vary, but in India, most insurers provide motor insurance for a minimum period of one year. Some insurers also offer long-term policies that extend up to 3 years.

The principles of motor insurance include insurable interest (the policyholder must have a financial stake in the vehicle), indemnity (policyholders should not profit from a claim), and utmost good faith (all relevant information should be truthfully disclosed when taking out the policy).

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