Car Insurance
Protect Your Vehicle, Protect Your Peace of Mind
What is Car Insurance?
A car is one of the most important and cherished possessions for any individual, second only to a home. Car insurance is a contract between you and an insurance company, where you pay a premium in exchange for protection against risks related to your vehicle such as damage, theft, injury, or liability in case of accidents.
Importance of Motor Insurance
As mandated by the Motor Vehicle Act, 1988 (Government of India), every vehicle on public roads must be insured against third-party injury and property damage. With India’s rapidly growing automobile market, accidents and repair costs have also increased significantly. Car insurance helps protect you financially from damages to your vehicle and legal liabilities arising from accidents involving third parties.
Benefits of a Car Insurance Policy
Comprehensive Cover
→ Combines Own Damage and Third Party coverage.
→ Own Damage covers damage due to accidents, theft, natural disasters, and more.
→ Covers depreciation parts such as plastic, rubber, battery, glass, airbags, etc., based on vehicle age.
Third Party Damage Cover
→ Covers legal liability for injury or death to others and property damage
→ Human life coverage: unlimited (court decided).
→ Property damage: Up to ₹7,50,000.
Engine Protection
→ Protection against engine damage from water submersion or other causes outside typical accident damage.
Personal Accident Cover
→ Covers driver injury or death. The sum assured has increased from ₹2 Lakh to ₹15 Lakh.
Choosing the Right Car Insurance Provider
Reputation and Financial Strength
● Research provider reputation via reviews, recommendations, and industry news.
Convenience
● Look for providers with digital policy issuance, easy online payments, and mobile apps.
Cashless Garage Network
● Choose insurers with a wide network of garages offering cashless repairs to reduce hassles post-accident.
Customer Service
● Responsive, helpful service for buying, claims, and after-sales support is essential.
Add More Value with Add-On Covers
Standard insurance may not cover all your needs. Popular Add-Ons include:
| Add-On Cover | Description |
|---|---|
| Personal Accident Cover | Covers owner driver’s injury or death and related hospitalization expenses |
| Engine Protection | Covers engine damage due to flood or waterlogging |
| Roadside Assistance | Provides help for minor repairs, battery issues, towing, emergency fuel, and spare keys |
| Zero Depreciation Cover | Full claim without deducting depreciation value on parts |
| Daily Allowance | Compensation for alternative vehicle rental during repair (₹500–₹1000 per day) |
| Consumables Cover | Covers consumable items like nuts, bolts, oils used during repairs |
| Passenger Accident Cover | Compensation for injury or death of passengers other than driver |
| Return to Invoice Cover | Compensation based on original invoice value, not depreciated value (excludes imported cars) |
| Ambulance & Medical Expenses | Covers ambulance and medical costs post-accident |
| Rental Assistance | Transit help during vehicle breakdown |
Important Factors for Choosing Add-Ons
● Vehicle age and model (older cars benefit from Zero Depreciation and Roadside Assistance)
● Geographic location (coastal areas should consider Engine Protection)
● Usage patterns and personal travel needs
● Evaluate add-ons based on relevance to your driving conditions and risk exposure
How is Car Insurance Premium Calculated?
The premium depends on multiple factors, including:
| Factor | Explanation |
|---|---|
| Insured Declared Value (IDV) | Market value of the vehicle after depreciation |
| No Claim Bonus (NCB) | Discount earned for claim-free years |
| Discounts/Offers | Additional accessory costs calculated separately |
| Age of Car | Older cars have lower premiums |
| Geographical Location | Higher premiums in metro cities with more traffic and accident risk |
| Add-Ons | Additional coverages increase premium costs |
How is Car Insurance Premium Calculated?
The premium depends on multiple factors, including:
| Factor | Explanation |
|---|---|
| Insured Declared Value (IDV) | Market value of the vehicle after depreciation |
| No Claim Bonus (NCB) | Discount earned for claim-free years |
| Discounts/Offers | Additional accessory costs calculated separately |
| Age of Car | Older cars have lower premiums |
| Geographical Location | Higher premiums in metro cities with more traffic and accident risk |
| Add-Ons | Additional coverages increase premium costs |
Car Insurance FAQs
| Age of Car | Depreciation (%) for IDV |
|---|---|
| Not exceeding 6 months | 5% |
| 6 months – 1 year | 15% |
| 1 – 2 years | 20% |
| 2 – 3 years | 30% |
| 3 – 4 years | 40% |
| 4 – 5 years | 50% |
● Age and model of the car
● Fuel type and engine capacity
● Registration location (zone)
● Insured Declared Value (IDV)
● Add-ons selected
● Past claims history and applicable No Claim Bonus (NCB)
While Third-Party premium is fixed by IRDAI, Own Damage premium varies between insurers. Platforms like CoverBee help you compare quotes from multiple insurers and select the most suitable plan.
By law, only Third-Party Liability Insurance is mandatory. However, this doesn’t cover damage to your car.
A Comprehensive Policy is recommended as it covers both:
● Damages to your car (accident, fire, theft, natural calamities, etc.)
● Third-party liabilities
It ensures better financial protection and peace of mind.
| Claim-Free Years | NCB Discount |
|---|---|
| 1 Year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 40% |
| 5+ years | 50% |
● NCB is attached to the policyholder, not the vehicle.
● If you sell your car, the NCB can be retained and used on your next vehicle.
● If a claim is made, the NCB resets to 0%.
Your NCB is valid up to 90 days from the policy expiry date. If not renewed within that time, your NCB benefit will lapse and revert to 0%
A deductible (or excess) is the portion of the claim you need to pay out of pocket.
● Compulsory Deductible: Set by IRDAI based on your vehicle’s engine size.
● Voluntary Deductible: You may choose to increase it to reduce your premium, but it raises your share in case of a claim.
Yes. If you fit a CNG or LPG kit, you must:
● Update the RTO (Registration Certificate)
● Inform your insurance company to include the kit in the policy
This ensures coverage under both Own Damage and Third-Party Liability, with a small additional premium.
Typical documents include:
● Duly filled claim form
● Copy of RC (Registration Certificate)
● Original repair estimate and invoice
● Payment receipt
● FIR (if applicable)
● All keys (in theft cases)
● Non-traceable certificate (in case of theft)
If you’re using a cashless garage, only the repair invoice may be needed as the insurer pays
the garage directly.