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Motor Insurance

Motor Insurance is also called as Car (Two Wheeler) insurance, Vehicle insurance or Auto insurance. As the name suggests, a motor insurance is an insurance for two wheelers, cars, trucks, motorcycles, etc. The basic purpose of Motor insurance is to provide financial protection against physical damage to the vehicle or bodily injury to third party as a result of accidents, collisions apart from liabilities arising from such incidents. Motor insurance gives protection to the vehicle owner against (i). damages to his/her vehicle and (ii). pays for any Third Party Liability determined as per law against the owner of the vehicle. Third Party Insurance is a statutory and legal requirement and hence every vehicle owner should mandatorily insured his/her vehicle at least for Third Party cover. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by or arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable offence in terms of the Motor Vehicles Act, 1988.
motor insurance
In India, as per the IRDA business data, Motor Insurance GPW is at Rs.59,246 crores for 2017-18, which represents 70% of the Retail lines of business overall. But as a % of the overall General Insurance premium, the Motor premium represents around 39% in terms of GPW. This premium is for both Own Damage and Third Party premium.
motor insurance
motor insurance
The overall insurance premium for this segment has been growing at between 17-20% for the past 2 years and will continue to maintain this momentum in the future years, given that Long Term policies have been approved recently by IRDA. As per a recent global study, the Motor Insurance premium is likely to double to around Rs.115,000 crores by 2025. Motor TP premium constitutes 56% of the overall Motor Insurance GPW and Own Damage Premium 44%.

Motor Insurance in India is of two types:

  • Third Party Liability Cover:
    Third party liability insurance covers the damages caused by the insured, to an unrelated third party. In case of accidents, a third party liability insurance plan, covers all the damages that the insured driver has caused to the third party, their motor vehicle and its accessories. It also covers bodily injuries to the third party. The policy however does not cover bodily injury to the insured.
  • Comprehensive Motor Insurance Plan:
    This motor insurance plan provides coverage for all the damages caused to the third party (bodily injury or property damage), as well as suffered by the insured to the vehicle. The damages caused may be due to human acts (while driving) or a natural calamity. It covers the damages to the insured’s motor vehicle, third-party legal liability, theft and personal accident coverage.

Benefits of Car Insurance

Covers Accidental Damage Repair Costs: Paying for the repair post an accident can be expensive for any individual, especially if it a high end car. This repair expenses incurred can burn a big hole in the insured’s pockets unexpectedly if they do not have their vehicle insured?

Add on to take care of additional Risks : There are many relevant add on Motor Insurance like Zero Depreciation, Return to Invoice, Tyre and Engine Secure, Key Replacement etc which can ensure better coverage for your vehicle in case of accidental damage.

Legal Liability : If there is an unfortunate accident and injury to a third party, the insurance policy can take care of the possible financial liability that arises. Sometimes, if the injured person is a successfully person, the legal liability can run into lacs of rupees.

Covers Accident related Hospitalization Expenses: If due to an accident, the insured is required to be hospitalised, then the motor insurance policy safeguards you from spending the hospital expenses from the insured’s own pocket.

Accidental Death Cover: If the insured unfortunately dies post an accident and if he is the only earning member of the family, the family can be put into financial hardship. The insurance policy atleast provided an Accidental Death benefit to the immediate kin to tide over the initial financial burden.

Road Side Assistance : Currently most insurers offer Road Side Assistance to the insured for a small increase in premium. This comes in handy when the insured is stranded on a highway following an accident or breakdown

What is the Basis of Arriving at Sum Insured for your Motor Policy?

For Own Damage:
The Sum Insured under a Motor Insurance policy reflects the value of the motor vehicle determined based on the concept known as Insured's Declared Value. Insured's Declared Value is the value arrived at based on the Manufacturer's present value and depreciation based on the Age of the Vehicle.

For Third Party:
Coverage is as per requirements of the Motor Vehicles Act, 1988 . Compulsory Personal accident cover for owner-driver is also included.

Inclusions and Exclusions under your Car Insurance Policy:

The damages to the vehicle due to the following perils are usually covered under OD section of the Motor Insurance policy. It provides a quick snapshot of what is covered and what is not...however please go through the terms and conditions of your policy for the entire set of coverages and exclusions:
Inclusions – what is covered Exclusions – what’s not covered
Fire, Explosion, Self- Ignition, Lightning Driving without a valid Driving License
Burglary/Housebreaking / Theft Driving under Influence of intoxicating liquor/ drugs
Riot, Strike Accident taking place beyond Geographical limits outside India
Earthquake While Vehicle is used for unlawful purposes
Flood, Storm, Cyclone, Hurricane, tempest, inundation, hailstorm, frost Electrical/Mechanical Breakdowns of the vehicle due to regular wear and tear
Accidental external means
Malicious Act
Terrorism acts
While in Transit by Rail/ Road, Inland waterways, Lift, Elevator or Air
Land slide / Rock slide

Frequently Asked Questions (FAQ’s)

Third Party Liability insurance is mandatory for all vehicles plying on public roads in India. This covers Liability for injuries and damages to others that you are responsible for. In addition, it is prudent to cover loss or damages to the vehicle itself by way of Comprehensive/Package policy, which covers both “Liability” as well as “Own damage” to the insured vehicle.
The same is determined on following factors amongst others -- Age of vehicle; Make& Model; No Claim Bonus; Safety Features etc. Third Party Liability Premium rates are laid down by IRDA. In case of break in insurance, vehicle inspection would be required and extra charges will have to be incurred for the same.
motor graph
No Claim Bonus (NCB) is the benefit accrued to an insured driver for not making any claims during the previous policy period. As per current norms in India, it ranges from 20% on the Own Damage premium (and not on Liability premium) and progressively increases to a maximum of 50%. If, however, a claim is lodged, the No Claim Bonus is lost in the subsequent policy period. NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB.
A motor policy is usually valid for a period of one year and has to be renewed before the due date without fail. Premium needs to be remitted to the insurance company prior to expiry of the policy. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also lost
Deductible or "excess" is the amount over and above, which the claim will be payable. There is a normal standard/compulsory excess for most vehicles ranging from Rs 50 for two-wheelers to Rs 500 for Private Cars and Commercial Vehicles which increases depending upon the cubic capacity/carrying capacity of the vehicle. However, in some cases the insurer may impose additional excess depending upon the age of the vehicle or if there is high frequency of claims.
Yes, the insured can avail of the NCB facility if you change the insurer on renewal. You would have to produce proof of the NCB earned by way of renewal notice from the current insurer
For the purpose of applying premium rate, the place where the vehicle is registered is reckoned (not the place where the vehicle is used). If your vehicle is registered in Chennai, the rate applicable for Zone A is charged.
Generally, the following documents are required to be submitted. However, read through your policy to see the complete list—duly filled in claim form, RC copy of the vehicle, Original estimate of loss, Original repair invoice and payment receipt. In case cashless facility is availed, only repair invoice would need to be submitted and FIR, if required. For theft claims, the keys are to be submitted. Theft claims would also require non-traceable certificate to be submitted
As per Rule 141 of Central Motor Vehicle Rules 1989, a certificate of Insurance is to be issued only in Form 51. It is only in Motor Vehicle Insurance, apart from the policy, that a separate certificate of insurance is required to be issued by insurers. This document should always be carried in the vehicle
If a CNG / LPG kit is fitted in the vehicle, the (Road Transport Authority (RTA) office where the vehicle was registered should be informed so that they make a note of the change in the registration certificate (RC) of the vehicle.
Yes, the insurance can be transferred to the buyer of the vehicle, provided the seller informs in writing of such transfer to the insurance company. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance along with pro-rata recovery of NCB from the date of transfer till policy expiry. It may be noted that transfer of ownership in comprehensive/package policies has to be recorded within 14 days from date of transfer failing which no claim will be payable for own damage to the vehicle.

Add Ons Available for Motor Insurance in India :

Some of the add ons available in India are below; this differs from insurer to insurer.
Depreciation Re-imbursement : The Insurer will pay you the amount of depreciation deducted on the value of parts replaced under own damage claim, lodged under section 1 (own damage) of the policy. They will pay for the first 2 claims reported to them during the Period of insurance.

Daily Allowance : The insurer will pay Daily Allowance as mentioned in the schedule to enable the insured to meet the cost of hired transport to reduce inconvenience to the insured, if their vehicle is damaged by a covered peril . The allowance would be payable for a fixed period of time during the period of insurance if it is as a result of an accident or theft/total loss claim.

Courtesy/Hired car : Arrangement will be made for the Courtesy/Hire car to reduce inconvenience to the insured if insured Vehicle is damaged by a covered peril mentioned in section 1 (Own damage) of the policy. A Courtesy/Hire car is not intended to be an exact replacement of vehicle.

Return to Invoice : Insurer will pay the financial shortfall between the amount received under section 1 of the policy and the purchase price of the Vehicle as confirmed in the invoice of sale OR current replacement price of new vehicle in case exactly same make/model is available (whichever is less) in the event of the Vehicle being a Total Loss/CTL following an accident or stolen during the period of insurance and not recovered. They will also reimburse the first time registration charges and road tax incurred on the insured Vehicle.

Repair of Glass, Fiber, Plastic & Rubber Parts : A claim for only Glass/plastic/rubber/fiber part where the insured opts for repairs rather than replacement, at our authorised workshops/ dealers/ service stations will not affect No Claim Bonus eligibility at the time renewal, provided number of such claim does not exceed one and there is no other claim for damage to the vehicle during the period of insurance.

Loss of Personal belongings : The insured will be paid for the loss or damage to the insured and their family member’s personal belongings caused by perils mentioned under section 1 of the policy while they are in the vehicle at the time of loss or damage to the vehicle.

Emergency Transport & Hotel expenses : Insurer will pay towards the cost of overnight stay and taxi charges for returning back to the insured’s place of residence or the nearest city they are traveling to if their motor vehicle has met with an accident by any of the peril mentioned under section 1 of the policy and cannot be driven.

Key Replacement : The insured will be reimbursed for the cost of replacing your vehicle keys which are lost or stolen as well as for the cost of replacing locks and keys if the vehicle is broken into. The covered costs also include the labour cost for replacing the lock.

Engine Secure : Coverage is provided for Internal parts of the engine Gear Box, Transmission or Differential Assembly provided loss or damage is due to ingress of water in the engine or leakage of lubricating oil from engine/respective assembly. The insurer will also pay for the lubricating oils/consumables used in the respective assembly.

Tyre Secure : Coverage is provided for repair and/or replacement, as may be necessitated arising out of accidental loss or damage to tyres and tubes.

Consumable Expenses : The insurer will cover cost of consumables required to be replaced/replenished arising from an accident to the insured vehicle. Consumable for the purpose of this cover shall include engine oil, gear box oil, lubricants, nut & bolt, screw, distilled water, grease, oil filter, bearing, washers, clip, break oil, air conditioner gas and items of similar nature excluding fuel.

Road Side Assistance : Repair and Towing Assistance will be provided apart from service for Flat Tyre and Flat Battery – Jump Start Service.

Motor Insurance Products

  • Coverage for Partial Loss & total loss arising out of accident, Fire & allied perils and theft.
  • Coverage for Partial Loss & total loss arising out of accident, Fire & allied perils and theft.
  • IFFCO Tokio offers the best car insurance policy to protect cars from every possible risk.
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  • InstantCover Insurance Web Aggregator Private limited
    710, 6th B Cross, 16th Main Road, Koramangala 3rd Block,
    Bangalore - 560 034.
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