What are the Different Types of Motor Insurance Policies in India?

As per the Motor Vehicles Act 1988, all motor vehicle owners in India are legally required to purchase a motor insurance policy for their registered vehicles.

As per the new rates prescribed in the Motor Vehicles (Amendment) Act 2019, fine for driving an uninsured vehicle could be Rs. 2000 for one-time offence and Rs. 4000 for repeat offence with or without imprisonment.

Hence, if you own a vehicle, it is crucial to learn about the motor insurance policies in India and hold one as per your requirement to avoid any penalty.

Types of Motor Insurance Policies in India

In India, motor insurance policies are primarily classified under two categories.

One is the classification of insurance policies based on the extent of the coverage provided. Another approach is classification as per the motor vehicle for which an insurance policy is bought.

Confused? Don’t worry, you will learn about it in no time.

  • Insurance Policy as per Vehicles

Now, let us discuss insurance policies which are defined as per the type of motor vehicle. There are three primary categories, which are discussed below –

  • Private Car Motor Insurance Policy

This type of motor insurance policy is purchased for a car owned by an individual for personal usage.

You can either purchase a third-party liability cover or a comprehensive car insurance policy for your private car.

Under a third-party liability cover, damages or losses sustained by a third-party on your vehicle’s account are covered.

On the other hand, damages sustained by your car due to accident, fire, riots, natural calamities are covered under a comprehensive car insurance policy. It also covers losses suffered by you on account of theft of your vehicle.  

You can always extend the coverage of your car insurance policy by adding various add-ons like Return to invoice, engine protection, zero depreciation and more. Among all of these, Zero depreciation addon also known as Zero depreciation car insurance is very popular among new car owners.

  • Two-Wheeler Insurance Policy

A two-wheeler insurance policy can be purchased for bikes, scooters, scootys, mopeds, etc. Two-wheeler vehicle owners are mandated by law to at least hold a third party two wheeler insurance policy which covers the loss incurred due to damage to a third party by the insured vehicle.

  • Commercial Vehicle Insurance Policy

A commercial vehicle insurance policy can be purchased for vehicles which are not used for personal purposes by the vehicle owner. It includes – heavy commercial vehicles, light commercial vehicles, trucks, buses, auto-rickshaws, cabs, taxis, ambulances, agriculture vehicles, etc.

This insurance policy provides financial coverage for damages suffered by the insured vehicle along with a third-party cover.  

  • Insurance Policy as per Coverage

At first, let us discuss insurance policies defined as per their coverage. These are –

  • Third-Party Liability Cover

A third-party insurance cover is a basic form of vehicle insurance available in India.

As per the law, all motor vehicle owners are mandated to purchase a third-party liability cover for their vehicles.

This type of motor vehicle insurance policy only provides financial coverage for damages sustained by a third-party due to your vehicle. It covers incidents of third-party accident, death, or any damage to third-party property or vehicle.

What about your vehicle?

Damages sustained by your vehicle are not covered under this type of insurance policy. However, it is important to note that a few insurance companies provide financial coverage on account of a physical injury sustained by you due to a vehicular accident against an additional premium.

Is there a limit to the coverage amount?

There is no upper limit for the sum insured available under a third-party liability cover if a third-party suffers a personal injury due to your vehicle.

  • Comprehensive Motor Insurance Policy

As the name suggests, a comprehensive motor insurance policy provides exhaustive and all-round financial protection to motor vehicle owners.

A comprehensive insurance policy constitutes the features of a third-party liability cover along with coverage for damages to self and own vehicle.

So, what all is covered under this type of policy?

  • Accidental Damages – If your vehicle suffers any damage due to an accidental collision or mishap on the road, such losses are covered under a comprehensive insurance policy.
  • Fire – Damages sustained by your vehicle due to an accidental fire is also financially covered.
  • Theft – In case your vehicle is stolen, you receive compensation up to the sum insured.
  • Man-Made Disasters – Damages suffered by your vehicle due to riots, vandalism or any other man-made disasters are covered under a comprehensive insurance policy.
  • Natural disasters – Vehicular damages caused due to natural disasters are also covered.

Sounds great, right? There’s more.

In addition to the above-mentioned incidents, you also receive financial coverage if you suffer any personal injury due to road accidents.

Apart from these, if you have purchased your vehicle after September 2018 you can avail an Own Damage Cover for it. This policy provides the benefits of a comprehensive cover sans the third party benefits.

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.