How Many Types of Motor Insurance are There in India?

Motor insurance in India can be classified on the basis of two categories: the type of vehicle and the extent of coverage offered by the policy. Let us take a look at each category in detail.


Types of Motor Insurance Based on Vehicle Type

Based on the type of vehicle, there are three types of motor insurance plans:

1.     Car Insurance Policy

This type of motor insurance policy is mandatory for all private cars plying on Indian roads. It provides coverage for all types of private four-wheelers.

2.     Bike Insurance Policy

A two-wheeler or bike insurance policy offers coverage for all two-wheelers like scooters and bikes. It is compulsory to secure any two-wheeler with an insurance cover as per the Motor Vehicles Act of 1988.

3.     Commercial Vehicle Insurance Policy

Commercial vehicle insurance plans offer coverage for all vehicles that are not for personal use. These include buses, taxis, trucks, ambulances, multi-utility vehicles, etc.

Types of Motor Insurance Based on Extent of Coverage

Motor insurance can be classified into the following types based on the extent of coverage:

1.     Third-Party Motor Insurance Policy

A third-party cover is the most basic motor insurance plan and also the cheapest. As per the Motor Vehicles Act, it is mandatory for all vehicles to have a third-party insurance. Such policies offer coverage for third party liabilities like injuries, death, or property damages due to an accident caused by your insured vehicle.

2.     Own Damage (OD) Cover

A standalone own damage cover is a type of motor insurance policy that ensures your vehicle is financially secured in case of the following events:

  • Damages due to natural calamities like floods, earthquakes, cyclones, etc.
  • Damages due to man-made calamities like riots, strikes, vandalism, etc.
  • Accidental damages
  • Theft of the insured vehicle

3.     Comprehensive Motor Insurance Policy

A comprehensive cover is an extensive motor insurance policy that offers coverage for not only third party liabilities but also for damages to your own vehicle. This includes damages caused to your insured vehicle due to an accident, acts of terrorism, fire, malicious acts, natural calamities like storms, landslides, etc. and personal accident cover. However, there are certain exclusions under such policies. Some of these exclusions are

  • Electrical and mechanical breakdowns of the vehicle
  • Regular wear and tear
  • Damages caused while driving without a valid driving licence
  • Damages caused while driving under the influence of intoxicants like drugs, alcohol, etc.
  • Damages caused due to nuclear or radioactive activities

4.     Add-on Covers

Motor insurance providers offer add-on covers along with the comprehensive motor insurance plans to enhance the base policy. These covers can be purchased from the insurance provider at an additional cost over and above the premium for your basic comprehensive motor insurance plan. Some examples of add-on covers are zero-depreciation cover, NCB protection cover, lock and key replacement cover, engine protect cover, return to invoice cover, personal accident cover for passengers, roadside assistance cover, consumables cover, etc.

Now that you know about the different types of motor insurance plans that are available in India, it is up to you to decide which motor insurance policy you should buy. At first, you may want to opt for only a third-party motor insurance due to the lower premiums. However, you must remember that such policies do not cover damages to your own vehicle.

Hence, it is advisable to do your research about the offerings of each type of motor insurance policy and then decide which one is best suited for you. And while you do so, you must consider buying online two-wheeler insurance or four-wheeler insurance for your vehicle, as it not only provides security and convenience, but you may also find better offers on the insurance premiums online.

As we all know, making an investment can be a bit tricky and requires an individual to do thorough research, it is advisable to always compare motor policies online from various providers. However, putting your money in insurance policies is not so complex, especially if you compare it to investing in cryptocurrencies or NFTs. But, one should always understand their budget, premium and sum insured before making any decision.

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