Every vehicle on Indian roads must carry at least third-party insurance under the Motor Vehicles Act. Beyond that minimum, owners choose between a third-party-only policy and a comprehensive policy, and then decide which add-ons are worth paying for. This guide explains the options in plain language so you can compare quotes sensibly. It is general information, not personalised advice — read the policy wording and ask your insurer or advisor about your situation.
1. Third-party insurance
A third-party policy covers your legal liability for injury or death of other people and damage to their property caused by your vehicle. It is mandatory. It does not pay for damage to your own vehicle or for theft. Premiums for third-party cover are set under the regulatory framework.
2. Comprehensive insurance
A comprehensive policy includes third-party liability plus “own damage” cover for your vehicle — accidents, fire, theft, natural calamities such as floods and storms, and specified man-made events. Some insurers also offer standalone own-damage cover to owners who already hold a valid third-party policy.
3. Insured Declared Value (IDV)
IDV is the maximum amount the insurer pays if the vehicle is stolen or declared a total loss. It is based on the vehicle’s listed price minus depreciation for age. A very low IDV reduces premium but also reduces your claim amount.
4. Personal accident cover
Compulsory personal accident cover for the owner-driver is required as per rules, either with the motor policy or through another eligible policy. Cover for passengers can usually be added.
5. Common add-ons
- Zero depreciation: claims for parts are settled without deducting depreciation. Popular for new cars, usually available for a limited vehicle age.
- Engine protection: covers engine damage from water ingression or oil leakage, which standard policies may exclude.
- Return to invoice: pays the gap between IDV and the invoice price if the vehicle is stolen or totally damaged.
- Roadside assistance: towing, battery jump-start, flat tyre help and fuel delivery.
- Consumables cover: pays for items like engine oil, nuts and bolts used in repairs.
- NCB protection: lets you make a limited number of claims without losing your no-claim bonus.
6. No-claim bonus (NCB)
For each claim-free year, insurers offer a discount on the own-damage premium, increasing over consecutive claim-free years up to a cap. NCB belongs to the owner, not the vehicle, and can be transferred to a new vehicle. Small claims can cost you more in lost NCB than they recover.
7. Making a claim
- Inform the insurer promptly and note the claim number.
- For theft or injuries, file a police report (FIR).
- Take photos and avoid moving the vehicle unnecessarily if safe to leave it.
- Use a network garage for cashless repair where available.
- Submit the claim form, driving licence, RC and policy copies.
8. Buying tips
- Compare the same IDV and add-ons across insurers, not just the headline premium.
- Check the network garages near you and the insurer’s claim process.
- Renew before expiry to avoid a break in cover and inspection requirements.
- Financing a new or used vehicle? See our car loan guide and two-wheeler loan guide, and review all family covers with the family insurance checklist.
Frequently asked questions
Is third-party insurance enough?
It meets the legal requirement but does not cover your own vehicle. For newer or higher-value vehicles, many owners choose comprehensive cover.
Is zero depreciation worth it?
It is often useful for new vehicles where parts are expensive; compare the extra premium with the likely benefit for your vehicle’s age.
Can I transfer my NCB to a new car?
Yes, NCB belongs to the owner and can usually be transferred with proof from the previous insurer.
Sources
- Insurance Regulatory and Development Authority of India (IRDAI)
- Ministry of Road Transport and Highways
- IRDAI Policyholder portal
ATTPL Finance is not a licensed financial advisor; this article is for general information.
Need help comparing motor insurance? Contact ATTPL Finance.
