Car Insurance in India: Discover Why It's Mandatory

In India, along with the large population of people, there is also a large population of cars that gets difficult to manage. The rise in the number of vehicles has led to the rise of ever-increasing traffic and has also increased the probability of accidents. Accidents may devastate car owner, their family, and any third parties involved. It may leave the individuals involved in the accident in a position of distress and financial turmoil. Fortunately, the government of India has made it mandatory to have third-party car insurance.

Understanding the Motor Vehicles Act

The Motor Vehicles Act in India mandates that all vehicles operating in public spaces must have valid motor vehicle insurance. At a minimum, vehicle owners are required to have a Third-Party Liability Insurance policy, even when opting for basic insurance plans. This third-party cover is essential in case of an accident caused by the vehicle owner or another driver, offering financial protection against damages or injuries caused to a third party. However, it’s important to note that this type of insurance does not necessarily cover damages to the insured vehicle or the owner.

Key Provisions of the Motor Vehicles Act

The Motor Vehicles Act, 1988, amended by the Indian Parliament, came into effect on 1st July 1989. It governs various aspects of transportation, including:

1. Licensing of drivers and conductors
2. Vehicle registration
3. Issuance of permits for vehicle operation
4. Traffic rules and regulations
5. Liability, offenses, and penalties
6. Insurance requirements

The act emphasizes that vehicle owners must always carry their motor vehicle insurance documents while driving.

Why is Car Insurance Compulsory?

The number of car accidents in India is quite high. The cost of such accidents is usually quite high to bear by a single individual. Here is where having a four-wheeler third-party insurance is useful. As per Section 146 of the Motor Vehicles Act, 1988, it is mandatory to buy a third-party car insurance policy in India. Individuals who have car insurance and have met with an accident can directly contact their car insurance provider. The insurance provider can help with the finances by offering claim settlement. Third-party car insurance usually covers vehicle damages, physical injuries, property damage, and accidental deaths. However, if the accident was caused due to substance abuse, the insurance provider may deny the claim immediately. If you have recently purchased a car, you can use the  car insurance calculator online to get an estimate of the premium. While third-party car insurance is compulsory, most individuals prefer to buy comprehensive car insurance to get overall protection. A comprehensive cover usually covers third-party liabilities, repairs, maintenance, and damages from accidents, fire, theft, or a natural calamity. It protects the car by providing overall coverage against several adversities. You can check for online car insurance
plans and choose the one that suits your specific needs. *

Types of Car Insurance Policies in India

Understanding the types of car insurance available can help you choose the best coverage for your needs.

1. Third-Party Car Insurance Policy

1. The most affordable and basic type of car insurance.
2. Provides coverage for third-party liabilities, including damage to another vehicle, person, or property.
3. Covers injuries or death of a third party caused by the insured vehicle.
4. Suitable for older vehicles with limited market value.

2. Comprehensive Car Insurance Policy

1. Offers extensive protection for the insured vehicle.
2. Covers theft, collisions, fire, and damages caused by natural or man-made disasters.
3. Includes coverage for third-party liabilities as well as damages to the insured vehicle.
4. Optional add-ons are available to enhance coverage.

3. Add-On Insurance Cover

1. Provides additional benefits beyond basic and comprehensive policies.
2. Popular add-ons include:

• Zero Depreciation Cover: Ensures full claim without factoring depreciation of vehicle parts.
• Roadside Assistance: Offers support in case of breakdowns.
• Engine Protection Cover: Covers engine repair or replacement costs.
• NCB (No Claim Bonus) Protection: Retains discounts on premiums despite claims.
• Geographical Extension Cover: Extends coverage to other regions.
• Consumables Protection Cover: Covers costs of consumable items like nuts, bolts, and engine oil.

By understanding the Motor Vehicles Act and the available insurance options, you can ensure compliance with the law and safeguard yourself against financial liabilities.

What are the advantages of buying car insurance?

As mentioned above, a car owner can choose from two types of car insurance in India: third-party car insurance or comprehensive car insurance. While having a four-wheeler third-party insurance
is mandatory by law, it may not offer sufficient coverage. Hence, several individuals choose comprehensive coverage instead to get overall protection. Read further to find the key advantages of car insurance:

• Offers financial coverage

One of the most significant advantages of buying car insurance is that it provides coverage against damage or loss caused to the insured vehicle. A comprehensive car insurance policy provides coverage against theft, fire, and natural disasters, in addition to accidents. This means that if a car is stolen, the owner can claim compensation from the insurance company. Similarly, if a car is damaged in a fire or natural disaster, the owner can claim compensation from the insurance company. *

• No Claim Bonus

Another advantage of buying car insurance is the no-claim bonus (NCB). NCB is a discount on the premium offered by insurance companies to car owners who do not make any claims during the policy period. The discount increases with each claim-free year, up to a maximum of 50% after five years. This incentivizes car owners to drive safely and follow traffic rules, thereby reducing the number of accidents on Indian roads. It is essential to ensure timely car insurance renewal to get the NCB. *

• Stress-free protection

Having car insurance provides peace of mind to car owners, knowing that they are financially protected in case of any unforeseen events. A comprehensive car insurance policy provides coverage against a wide range of risks, including damage to the insured vehicle, injury or death to the driver or passengers, and third-party liability. This ensures that car owners are protected against financial losses arising from such risks. *

How to Buy Car Insurance in India?

You can easily buy
or offline through various channels available. If you are wondering whether to buy online or offline, read further:

• Why online?

The online purchase of car insurance is quick and easy. You can buy one from an insurance provider’s website directly. Most websites allow you to compare policies, get quotes, and purchase insurance online. You can use an online car insurance calculator  to access your coverage needs. You can choose a plan that meets your needs and complete the buying process in a hassle-free manner. *

• Why offline?

Car owners who prefer to purchase insurance offline can do so by visiting the nearest branch office of the insurance company. They can meet with a representative, discuss their requirements, and choose the policy that best suits their needs. The representative can also provide guidance and assistance with the documentation and payment process. Several individuals may also prefer to buy a car insurance policy through insurance agents. * Car insurance is mandatory in India for several reasons. The reason is to proect the interest of the public, promote safe driving habits, and offer financial protection to car owners. Having a valid car insurance policy is essential to comply with the law and ensure that you are financially protected in case of any unforeseen events. *Standard T&C Apply   Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.