Motor Insurance

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In today's date, there is hardly anyone who does not make use of vehicles. However, certain consequences come along with the purchase of such vehicles.Motor insurance policies are used to cover the insured vehicle in circumstances of financial losses that might happen due to a mishap or other damages. 

Is it compulsory to issue motor insurances?

Section 146 of the Motor Vehicles Act 1998, motor insurances are mandatory.  Accordingly, it is imperative to purchase motor insurance before taking your vehicle out on the roads. However, suppose you don't wish to buy a comprehensive insurance plan. In that case, you should get third-party policy coverage because that is the bare minimum that is mandatory to acquire for your vehicle to ply.

What is the amount covered by such motor insurances?

Generally, vehicles are insured at a fixed Insured Declared Value (IDV). IDV refers to the current value of your vehicle according to its current market price. It is higher for a new vehicle, and the value generally depreciates with time.

What are the factors that affect motor insurance premiums?

To make an informed decision, you need to understand some of the major factors that deeply influence motor insurance premiums. Some of them are listed as follows:

  • Type of cover

A comprehensive insurance policy covering both insured vehicles and a third party attaches higher premiums as opposed to its third-party counterpart.

  • The geographical location (Area of residence)

Your residential area is one of the key factors determining your motor insurance premiums in India. For instance, if you reside in a metropolitan city in the country, there are higher chances of vandalism and accidents. However, this factor depreciates if you are a resident of smaller Tier 2 and Tier 3 cities. Therefore, this factor leads insurance providers to set increased premiums on your motor insurance policy.

  • Installed safety features

This particular factor also plays a key role in determining your motor insurance premium. For example, suppose your vehicle is equipped with additional safety features, for instance, airbags, anti-theft devices, alarms, GPS tracking systems, and anti-lock braking features. In that case, insurers consider your efforts towards securing your vehicle. Thus, they set discounted and affordable premiums accordingly.

  • Ancillary modifications

If you have installed expensive gadgets on your vehicles like roof nails or alloy wheels, there are high chances that you look at increased premiums. However, if you want coverage for these features as well, you should install these features from the respective car dealer right at the time of its purchase.

  • No claim bonuses

No claim bonuses or NCBs is the reward that the owners are eligible for if they drive responsibly all year round and do not file for damages. Additionally, it is prudent to keep off claiming in case of minimal damages. For example, if your windshield is broken, keep it off from the records.


Motor insurances assure you peace of mind because the owners know that they have financial backing in case of damages.


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