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What is Motor Insurance?

  • An insurance policy to cover you against loss and damages to your motor vehicle due to accidents, theft, fire or natural disasters.
  • You can take motor insurance for your private 4-wheelers (cars, SUVs etc.), or your 2-wheelers (bikes, scooters etc.)
  • A firm can take commercial motor insurance for vehicles in their name

There are generally two types of liabilities that are covered in motor insurance policies:

  1. 3rd party liability: This compensates for the damages caused to other individuals or their vehicles when involved in an accident with your vehicle. By law, this type of motor insurance is mandatory in India
  2. Comprehensive plan: This includes 3rd party liability cover as well as for you and your own vehicle

Off late a new type of motor insurance policy has been approved by the IRDAI. This is known as Pay as you go policy wherein you pay only for the kms driven. Premiums are calculated as per the declaration given at the time of the policy.

  • Another way of classifying motor insurance (both 2-wheeler and 4-wheeler insurance ) is in the scope of their coverage:
    1. - Regular policy (with depreciation): This is the same as a Comprehensive policy as mentioned above. In this kind of motor insurance policy, the insurable value of your vehicle is calculated basis the depreciation caused due to the age and condition of the vehicle. Additionally, in this kind of policy, there are many exclusions, like generally plastic parts are covered only for 50% compensation.

Inclusions in motor insurance (keeping aside exclusions listed later):

  • Earthquake
  • Landslide
  • Fire
  • Burglary
  • Riots
  • Strike
  • Terror act
  • Other accidental damages

Exclusions in motor insurance

  • Damage due to driver being under the influence of alcohol or drugs
  • Illegal usage of the vehicle
  • Not having a valid driving license
  • Loss outside the jurisdiction (i.e., India)
  • Any other loss which violates the policy agreement

How is motor insurance premium calculated?

Insurance firms consider multiple factors before finalizing the premium. Some of these include:

  • Age of the owner of the vehicle
  • Driving/claim history
  • Owner’s profession
  • Vehicle make and year of production
    • This also determines the vehicle’s IDV (Insured Declared Value) amongst other factors
  • Geographic location, etc.

NOTE: A minimum of 3rd party insurance policy is mandated by law in India.

Insurance companies reward their clients with a no-claim bonus in subsequent premium(s) if the client has not had any claim(s) in the preceding policy term. This goes as a direct discount in the subsequent/next premium.

If you have a cashless policy, your insurance company will take care of the payments directly to the garage. If not, they will reimburse you against producing the actual bill from the garage, subject to deductibles and other conditions..Read More

As per Indian laws, the local RTO must be informed whenever such a change as installation of CNG/LPG kits in the vehicle. Such kits must also be tested and marked safe by competent authorities.

Once the RTO makes appropriate changes in the Registration Certificate of the vehicle, the owner must contact the policy issuer and get the changes made there. Your premium may undergo some change/increase under own damage section.

The short answer is yes. You as the seller, need to inform your insurance company regarding the transfer. Thereafter the new owner needs to fill a new proposal form. The insurance provider will charge a nominal fee for the transfer and adjust the no-claim bonus accrued in the current cycle of the policy on a pro-rata basis.

Please note that the original policy holder needs to intimate the insurance provider within 14 days from the date of transfer of the vehicle, in case of comprehensive covers, failing which the own damage claims may not be honoured. Please contact your policy issuer for details.

You need to complete the following requirements:

  • Duly filled claim form
  • A copy of the Registration Certificate (RC)
  • Original loss statement as issued by an authorized garage
  • Original invoice and payment receipt
    • In case of cashless settlement, this gets handled directly between the garage and the insurance provider, wherein they share the repair invoice
  • FIR copy in case of theft/vehicle loss
    • Keys need to be surrendered in case of a theft claim
PS: All of this may get handled directly by the garage in case of cashless claims. You will still need to furnish the documents.


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