Finance

Classification of Motor Vehicle Insurance Policies in India

Being aware of the different types of motor insurance policies helps you select the right one that suits your specific requirements. 

As per the Indian Motor Vehicles Act of 1988, it’s a must for all vehicle owners to get their vehicles insured before they can drive it on the roads. The sheer number of motor insurance plans can feel overwhelming, especially for first-time buyers. 

To simplify your task, here in this article, we give you the different types of motor vehicle insurance plans in India. Being aware of what’s available can help you make an informed decision that suits your specific requirements. 

Motor insurance policies in India can be classified based on the type of coverage and the type of vehicle. 

Motor Insurance Classification: Based on the Purpose of Use 

The type of motor insurance you buy depends on the type of vehicle and the intended usage of the vehicle. It includes:

    • Two Wheeler Insurance – Also known as bike insurance, this insurance policy protects your two-wheeler from financial liabilities in the event of a road accident. Two-wheeler insurance covers all two-wheelers like scooters, bikes, mopeds, etc. 
    • Car Insurance / Private Motor Insurance – The car insurance, which is also commonly referred as private car insurance, as the name implies, this insurance is purchased by owners of cars, vans, jeeps, etc. who use the vehicle for private purposes. 

 

  • Commercial Motor Insurance – A large number of business owners use four-wheelers, two wheelers and three-wheelers for commercial purposes like transporting goods and employees, ferrying passengers, etc. The commercial motor insurance protects vehicles used for commercial purposes from financial liabilities, in the event of a road accident. Autos, buses, trucks, jeeps, LCVs (Light Commercial Vehicles), and other special types of vehicles like tractors, cranes, excavators, shovels, grabs, and rigs are some of the commercial vehicles that are covered under this type of insurance. 

 

Motor Insurance Classification: Based on Coverage

It can be classified into two major types:

  • Third-party Insurance – It’s the basic type of motor insurance that is mandatory as per law. All vehicle owners should hold at least third-party insurance. It offers compensation to damages and losses caused to third-party persons, property, and vehicles. It does not include damages to self or one’s own vehicle. 
  • Comprehensive Motor Insurance – As the name implies, it offers comprehensive coverage. Besides third-party coverage, it also provides financial protection to own vehicles as well. Besides the default coverage, comprehensive motor insurance also offers several add-on covers that help in enhancing the coverage offered. Some of the popular add-on covers include: 
    • Zero depreciation
    • Roadside assistance
    • Engine protection cover
    • Return to invoice cover
    • Tyre protection cover
    • Loss of personal belongings cover

Here’s a look at the coverage of both plans:

Choose the Right Vehicle Insurance based on your Requirements

Now that you’re aware of the different types of vehicle insurance, the next step is to purchase vehicle insurance online. Make sure to zero in on the right insurance product that meets your requirements, compare insurance providers, and pick the right policy that offers you maximum benefits at the best prices. 

Finally, don’t forget to read the policy terms and conditions carefully to get a clear idea of all the inclusions and exclusions under the coverage.

Choose the right motor insurance policy and stay protected while on the roads. 

Leave a Response