Types Of Motor Insurance Policies

Motor insurance is one of the primary financial protection tools that you should have in your possession. With the ever-increasing incidence of accidents in the country and the strict regulations laid out by the government, it is inevitable that you buy adequate insurance protection for your vehicle.

There are various types of motor insurance policies available in the country. You should ideally assess your insurance requirements and decide on a policy that safeguards you in the most optimum way.

How To Choose The Right Motor Insurance Coverage?

Motor insurance plans are classified into different categories based on the extent of coverage offered and the type of vehicle for which the insurance is sought.

  1. Amount of insurance coverage - Motor insurance plans can be divided into three types based on the amount of insurance protection offered:
    1. Third-party liability insurance - This is the most basic form of car insurance and hence, it is also the cheapest. This insurance scheme is also referred to as liability-only insurance or act-only plan. The Motor Vehicles Act, 1988, mandates that all car owners are in possession of this insurance policy for the protection of their vehicles. In case you drive a car without a minimum of third-party liability insurance cover, you are liable to face penalties.
      1. The coverage offered by this insurance plan includes protection to a third party for incidents such as injuries/death and property damage caused in an accident involving the insured vehicle.
      2. It should be noted that the third-party liability insurance cover does not offer own-damage cover, i.e., coverage for the insured vehicle or the owner-driver.
      3. Some insurance companies offer a personal accident cover for the owner-driver along with the third-party liability insurance plan.
      4. Although there is no upper limit on the amount a third party can receive as compensation for death/disabilities, there is a cap of Rs.7.5 lakh on the maximum amount offered for third-party property damages. However, the final claim amount is decided by the court.
    2. Comprehensive motor insurance - Often referred to as a package policy by some insurers, this plan provides more exhaustive insurance protection, as it encompasses third-party liability coverage and own-damage cover. The detailed coverage of the comprehensive motor insurance plan is as described below:
      1. Own-damage cover - This includes protection for the insured vehicle from the following events:
        • Accidental damages
        • Damages while in transit via rail, road, waterways, lift, etc.
        • Damages caused by natural calamities, such as earthquakes, floods, hurricanes, etc.
        • Damages from man-made disasters such as strikes, riots, vandalism, etc.
        • Theft of the insured vehicle

        Additionally, the comprehensive motor insurance plan offers personal accident cover to the owner-driver.

      2. Third-party liability cover - This part of the comprehensive motor insurance policy protects the policyholder from legal liabilities to a third party from accidental injuries/death or property damage. The maximum amount of coverage under this insurance for injuries/death is unlimited. However, there is a cap of Rs.7.5 lakh on coverage for third-party property damage. The final claim payout for property damage is decided by the court.
    3. Motor insurance add-on plans - Apart from the comprehensive and third-party liability insurance plans detailed above, most motor insurance companies also offer add-on covers that can enhance the coverage of the base policy. These riders should be purchased from the same insurance provider by paying an additional amount. Some of these add-on plans are as described below:
      1. Zero depreciation cover - This is a popular motor insurance add-on plan that offers significant savings at the time of a claim. It is also referred to as nil depreciation cover or bumper to bumper policy. Consider that your vehicle is insured with a comprehensive motor insurance policy. At the time of a claim, you will still have to bear the expenses pertaining to depreciation of the vehicle parts and excesses. However, if your comprehensive motor insurance plan was reinforced with a nil depreciation cover, the insurer would bear the expenses for the depreciation of vehicle parts.
      2. Engine protect cover - A comprehensive motor insurance plan does not protect the vehicle from mechanical or electrical damages to the engine. Buying an engine protect cover offers your engine the much-needed protection, especially if you reside in an area prone to waterlogging.
      3. Return to Invoice (RTI) cover - This add-on plan protects your vehicle from total loss expenses. In the event of a total loss scenario such as a car theft, it provides you the actual invoice value of the vehicle, without accounting for its depreciation with age.
      4. Loss of personal belongings cover - Loss of expensive electronic equipments, laptops, etc. kept in the insured vehicle is offered coverage under this add-on insurance plan.
      5. No Claim Bonus (NCB) protect cover - No Claim Bonus is a significant bonus offered by insurers to drivers who refrain from raising motor insurance claims in a policy year. You can preserve this bonus even after raising a claim if your vehicle insurance has an NCB protect cover.
      6. Personal accident cover for the passengers - The comprehensive car insurance policy can be enhanced to offer protection for the passengers by opting for this rider.
      7. Key replacement cover - Under this cover, the insurance company reimburses the cost of replacement of the vehicle keys if these were lost or misplaced.
      8. Roadside assistance cover - This add-on cover offers 24/7 protection to the policyholder from incidents such as flat tyre, fuel depletion, requirement for expert scrutiny, etc.
      9. Consumables cover - Components that are used in a vehicle such as nuts and bolts, screen washers, engine oil, etc. are collectively referred to as consumables. The insurance company does not bear the cost of these components at the time of a claim. However, if your vehicle insurance was equipped with this rider, you will receive coverage for consumables.
      10. Daily allowance cover - This add-on cover offers reimbursement for the expenses involved in hiring an alternate vehicle when the insured automobile is undergoing repairs at a garage.
  2. Type of vehicle - Motor insurance policies can be classified into two types based on the vehicle for which it is purchased:
    1. - This coverage offers insurance protection for all types of cars and SUVs.
    2. Two-wheeler insurance - This insurance plan is availed to protect a two-wheeler from eventualities such as accidents, natural disasters, theft, man-made calamities, etc.

    Apart from the above, motor insurance is also segregated based on the purpose of use of the vehicle. So, you can opt to buy a private motor insurance policy for your personal vehicle. Along the same lines, a commercial motor insurance plan will offer insurance coverage for the vehicle you will be using for business purposes.

    In conclusion, motor insurance in India can be of several types. It is up to you to understand your unique insurance needs and decide on a policy that suits you best. It is also advisable to buy motor insurance online for the security and convenience that it offers.

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