What is Motor Insurance?
Motor insurance is the insurance policy for vehicles. It could include Car Insurance and Two-Wheeler Insurance. Vehicles that are used for commercial purposes, like buses and trucks, are covered by Commercial Vehicle Insurance.
Motor insurance is mandatory in India. It is compulsory to buy auto insurance when you purchase a vehicle.
Types of insurance
Based on the Coverage
Motor insurance policies can be classified into the following types, based on the coverage they offer:
- Third-party Liability Insurance – This type of insurance policy is mandated by law for all vehicles plying on the roads. This insurance provides protection to third-party for damages to property or injuries to individual, where the policyholder is accountable for the accident. Third-party liability insurance only covers minimal risks, and it does not protect the policyholder for damage or theft of the insured vehicle, or injuries that he suffers.
- Comprehensive Insurance – This type of insurance policy covers third-party liability, and the expenses incurred by the policyholder in the event of damage or theft of the insured vehicle. The policyholder also benefits from a personal accident cover that offers compensation if he is injured or faces death in an accident. The comprehensive insurance policy can be enhanced through add-on covers that offer extended benefits.
- Add-on Covers – Some of the add-on insurance covers that supplement a comprehensive insurance plan are as follows:
- Zero Depreciation Cover – This is one of the most popular add-on covers in motor insurance. This policy ensures that the policyholder receives the full claim amount on the value of replaced parts, following an accident. However, this cover is available only for vehicles that are less than three years old.
- Roadside Assistance Cover – In the event of an emergency such as a flat tyre, battery issues, or an empty fuel tank, this cover provides you assistance even if you are stranded at a remote location. Policyholders can benefit from services like fuel assistance, battery recharge, taxi, or even accommodation assistance.
- Engine and Electronic Circuit Cover – This insurance covers expenses incurred when there is a damage to the insured vehicle’s engine or electronic circuits.
- NCB Protection Cover – The No Claim Bonus is a reward given to a policyholder for not making any claims during the policy term. The NCB can amount to a significant reduction in premium for the following year. However, when the policyholder makes a claim in the subsequent years, he stands to lose the accrued NCB. The NCB Protection cover, as the name suggests, does not nullify the NCB in the event of a claim; it just brings down the slab at which the NCB discount is given on premium.
- Key Replacement Cover – In the case of a lost ignition key, this insurance cover offers reimbursement for a part of the cost of a substitute key.
Based on Purpose of Use
Vehicles can be used for private or commercial purposes, and the type of insurance that the owner purchases depends on the intended use of the vehicle.
- Private Motor Insurance – This type of insurance policy is purchased by owners of two-wheelers who intend to use the vehicle for private purposes. A comprehensive private insurance
and its owner in the event of accidents, and also offers third-party liability protection. - Commercial Motor Insurance – This is an insurance policy that prevents a business from suffering financial loss from damages to the commercial vehicle. It offers third-party liability protection, and accident cover for the driver of the vehicle.
It is possible to strengthen your two-wheeler insurance by opting for sufficient additional coverages. These days, insurance companies also provide you the convenience of purchasing and renewing insurance policies online. So it is advisable to compare policies and choose one that is appropriate for your needs.