What is motor insurance?
Motor insurance is a financial protection policy that covers your car or two-wheeler against losses arising from accidents, theft, natural disasters, fire, and third-party liabilities. It provides compensation for repair costs, replacement expenses, and legal liabilities that may occur while using your vehicle.
In India, third-party motor insurance is mandatory under the Motor Vehicles Act. This ensures that any damage or injury caused to a third party is financially covered. In addition to third-party coverage, a comprehensive motor insurance policy also protects your own vehicle against accidental damages, theft, floods, earthquakes, and other unforeseen events.
Motor insurance helps reduce the financial burden of unexpected repairs and legal claims. By selecting suitable coverage and add-ons, vehicle owners can enhance their protection and drive with greater peace of mind. Understanding policy terms, exclusions, and coverage limits is essential before purchasing a motor insurance plan.
How Is Motor Insurance Premium Calculated?
Motor insurance premium is determined based on several important factors. Understanding these factors helps you choose the right coverage and avoid overpaying.
The key factors include:
Vehicle Type & Model: Premiums differ for cars, bikes, and commercial vehicles. Higher engine capacity usually means higher premium.
Insured Declared Value (IDV): IDV represents the current market value of your vehicle. Higher IDV results in higher premium but better claim coverage.
Vehicle Age: Older vehicles generally have lower IDV and therefore lower premiums.
Location of Registration: Premium may vary depending on city risk factors and traffic conditions.
No Claim Bonus (NCB): If you haven’t made a claim in previous years, you receive a discount on renewal premium.
Add-On Covers: Optional add-ons like Zero Depreciation or Roadside Assistance increase premium but provide better protection.
Understanding these components ensures you make informed decisions rather than choosing a policy based only on price.
Common Mistakes When Buying Motor Insurance
Many vehicle owners unknowingly make mistakes that affect their financial protection. Avoiding these mistakes can save you money and stress during claims.
Choosing the lowest premium without checking coverage details
Setting a very low IDV to reduce premium
Ignoring useful add-ons
Not reviewing policy exclusions
Forgetting to renew policy on time
Not checking network garage availability
A well-informed decision ensures better claim settlement experience.
What Is Not Covered Under Motor Insurance?
Every motor insurance policy has exclusions. Understanding what is not covered is equally important:
Driving without a valid license
Driving under the influence of alcohol
Normal wear and tear
Mechanical or electrical breakdown
Damage outside geographical limits
Using private vehicle for commercial purposes
Reading policy terms carefully helps avoid claim rejection.
Who Should Choose Comprehensive Motor Insurance?
Comprehensive insurance is recommended for:
New car or bike owners
High-value vehicles
Vehicles driven daily
Owners living in high-traffic areas
Those who want financial protection from theft or natural disasters
While third-party insurance fulfills legal requirements, comprehensive coverage provides broader financial safety.
Why Professional Guidance Matters
Choosing the right motor insurance policy involves understanding coverage limits, exclusions, claim procedures, and add-ons. Many buyers select policies based only on price, which may lead to insufficient coverage.
At Kalra Services, we assist clients in comparing available options and understanding policy terms clearly. Our aim is to help you choose coverage that aligns with your vehicle usage and risk exposure.
Insurance decisions should be informed and well-evaluated, not rushed.
Frequently Asked Questions (FAQs)
Motor insurance is a financial protection policy that covers your car or two-wheeler against losses arising from accidents, theft, natural disasters, fire, and third-party liabilities. It provides compensation for repair costs, replacement expenses, and legal liabilities that may occur while using your vehicle.
Yes, third-party motor insurance is legally mandatory under the Motor Vehicles Act. Driving without valid insurance can result in fines, penalties, and legal consequences. Comprehensive motor insurance is optional but strongly recommended for broader financial protection.
No Claim Bonus (NCB) is a discount provided by insurance companies when you do not make any claims during the policy year. The discount increases with consecutive claim-free years and can significantly reduce your renewal premium.
Common add-on covers include Zero Depreciation Cover, which ensures full claim settlement without deducting depreciation on parts; Roadside Assistance, which provides emergency help during breakdowns; Engine and Gearbox Protection, which covers damages caused by water ingress or oil leakage; and Return to Invoice Cover, which compensates you with the original purchase value of your vehicle in case of total loss or theft.
Cashless repair is a facility provided by motor insurance companies that allows you to get your vehicle repaired without paying the full repair cost upfront. This benefit is available when you take your vehicle to a network garage that is authorized and partnered with your insurance provider.