Commented on 26-08-2016

Motor Insurance

Motor Insurance.

The Motor Vehicles Act which was passed in the year 1988 contained a long list of legal mandates for motor vehicles being driven on Indian roads. Having a valid motor insurance policy was also one mandate which is still applicable. The law states that every motor vehicle, whichever type it may be and for whichever purpose it is being used, should have a valid insurance cover on it. This law gave birth to motor insurance policies in India which cover motor vehicles.

Types of motor insurance policies

Motor insurance policies come in three distinct types depending on the type of vehicle covered by them. The most common policies include the following:

  • Car Insurance Policies – These policies cover cars which are being used for personal conveyance of individuals. The policy can be taken for both new cars as well as second-hand cars.
  • Two-Wheeler Insurance Policies – Plans designed for loan repayments. The sum assured under these plans decrease every year by a fixed amount
  • Commercial Vehicle Insurance Policies – These policies are specifically meant for vehicles which are being put to commercial use. The vehicle can be a car, two-wheeler, truck, bus, tractor, tempo, etc.

Besides the above-listed types of policies, there are two other types of policies based on the coverage they provide. These policies are as follows:

  • Liability Only Policy – Also called Third Party Liability Policy, these policies are mandated by the Motor Vehicles Act. The policy covers any financial liability you might incur if your vehicle harms any property or causes bodily injury, including death, to any third party. ‘Third party’ means any person other than you and your vehicle.
  • Comprehensive Policy – These policies are also called package policies and are preferred over Liability Only policies. While Liability Only policies cover only the financial liability with respect to any third party or property, comprehensive policies also cover the financial loss faced due to damages suffered by you and your vehicle. As such, the coverage of comprehensive plans is wider.

Features of motor insurance policies

Some common features of motor insurance plans are as follows:

  • Coverage Amount – The amount of coverage depends on the value of the vehicle. This value is called the Insured Declared Value (IDV) and is the market value of the vehicle adjusted with depreciation. The IDV forms the Sum Insured of the policy and premiums depend on it.
  • Tenure – Most motor insurance plans have a term of one year. However, recent IRDA regulations have allowed two-wheeler insurance plans to be offered for longer terms of 2 or 3 years.
  • Add-on Covers – Optional additional coverage options are available with motor insurance plans. These covers increase the level of coverage and are beneficial. Some popular add-on covers include zero depreciation cover, roadside assistance, return to invoice, passenger cover, medical cover, etc.

Purchase and motor vehicle insurance renewal

You can purchase an insurance policy either from a middleman or directly from the company online. Comparison of different plans is ideal to get the best plan at the best rate. There are premium comparison calculators online which make the job easier.

Motor vehicle insurance renewal is also available online. You can renew motor insurance online at the click of a button. Mahindra Insurance Brokers helps you in both purchase and renewal of your motor insurance policies.

Write us on if you have any query.

Motor insurance is compulsory if you own a vehicle. So, find an insurance plan today and insure your vehicle.

Knowledge Center

1. My Car insurance policy expired? What should I do now or what can happen if the policy is not renewed on time?

There is a key difference between the two:

Car insurance is mandatory as per the provisions of the Motor Vehicles Act 1988. So if your car insurance policy has expired or if you have forgotten to renew your policy, it implies that you and your vehicle are not covered under insurance and your insurance company is not liable to pay any claims arising out of accident. Moreover, driving an uninsured vehicle in any public space is illegal under the said Act. In addition, your No Claims Bonus (NCB) will also be forfeited, if the policy is not renewed on time.

Usually most insurance companies send a renewal notice well in advance of policy expiry date. With advancement in technology, you can also set your own car insurance renewal reminder through online alerts, mobile alerts etc.

In case your car insurance policy has expired or if you have not renewed your car insurance policy on time, then you can approach your existing insurance company or your dealer / agent to renew your policy. You can also approach another insurance company for your car insurance, however, you need to fill in a fresh proposal form and the new insurer may ask for a physical inspection of your vehicle. Insurance companies may apply additional loading on premium if policy has expired 45 days earlier.

2. What is No Claim Bonus in Car Insurance ? Can I transfer the NCB to my new vehicle ?

If you do not make a claim during the policy period, a No Claim Bonus (NCB) is offered on renewals. Insurers reward policyholders for not making claims by giving them a discount on the Own Damage (OD) premium up to a maximum of 50%. In other words, it's a discount that you would get after a claim-free year, an incentive for driving carefully and avoiding accidents. However, it should be noted that NCB would be allowed provided the policy is renewed within 90 days of the expiry date of the previous policy. Another moot point is that NCB becomes nil in case a claim is made by the policyholder. In cases where existing vehicle is sold and a new vehicle is purchased, NCB can be utilised within a period of 3 years.

Period of insurance % of NCB on OD premium
2nd year 20%
3rd year 25%
4th year 35%
5th year 45%
6th year 50%

Transfer of NCB to new Vehicle: You can transfer full benefits of your No Claim Bonus (NCB) to your new vehicle provided the new vehicle is also of the same class. You can also transfer full benefits of NCB when you shift your motor insurance policy from one company to another.

3. What do I do if the vehicle is stolen and along with vehicle all my car documents & original policy is lost?

If your vehicle is stolen, report the matter immediately to the insurance company through their call centre or toll-free helpline. Also inform police (FIR) and the Road Transportation Office (RTO) where the vehicle is registered and obtain an acknowledgement from the RTO with details of the theft of your vehicle. Post that, submit the following documents to the insurance company at the earliest to expedite your claim process.

  • Claim form duly
  • RC copy of the vehicle with all original keys
  • Driving license copy
  • Original policy copy
  • Original FIR copy
  • RTO transfer papers duly signed along with Form 28, 29, 30 and Form 35 (if hypothecated)
  • Final report – A no trace report from the police saying that the vehicle cannot be located.

You can request for a duplicate copy of the car insurance policy from your insurance company, which is available at a nominal fee.

Please note: Standard policy terms & conditions applied. Please refer to the quote comparison & detailed policy wording.