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What is Motor Insurance?

As the name suggests, motor insurance is insurance for motor vehicles. It offers financial protection against loss or damages caused to the motor vehicle because of an accident, theft, a natural calamity, etc. It provides cover to you, the insured vehicle, a third-party person, and property.

Two important things you should note -

  • As per the Motor Vehicles Act, 1988, it is mandatory to purchase a third-party motor insurance. Driving a motor vehicle without insurance in a public place is a punishable offence under the Motor Vehicles Act.
  • Irrespective of whether you’re purchasing the motor insurance online or offline, it is important that you purchase it from a company authorised by the Insurance and Regulatory Authority of India (IRDAI).

Why should you purchase a Motor Insurance Policy?

  • Legal Compulsion:

    As per the Motor Vehicles Act, driving a motor vehicle without insurance in a public place is a punishable offence. The fine for driving without insurance starts from Rs 2000 for the first offence and Rs 4000 for the subsequent offence. It could also lead to imprisonment for 3 months within the law's discretion.

  • Financial Security:

    Not only is the cost of purchasing a vehicle high, but the cost of repairing the vehicle in case of severe damage is also very expensive. A motor insurance policy provides financial protection to you against any unforeseen events like accidents, theft, or any other serious damage to your motor vehicle.

  • Covers A Wide Range Of Risks:

    A motor insurance plan offers protection against a variety of risks. From thefts to accidents, from manmade disasters to natural calamities - it covers a lot of risks. Further, it won’t just provide protection to your own vehicle, you will also be protected against any legal liabilities owing to damages or financial losses caused to a third party person or property.

Benefits of buying Motor Insurance online

Here are some benefits of purchasing a motor insurance policy online -

  • The buying process is simpler. You don’t need to go through the hassles of submitting documents or filling out forms.
  • You can easily research, and compare the various options available - and then make an informed decision.
  • You can avail discounts and special offers on the premium amount.
  • The policy can be purchased and renewed from anywhere, anytime - and in just a few clicks.
  • The policy issuance, too, is quick. You don’t need to wait for days or weeks to receive the policy papers.

Types of Motor Insurance Policies in India

You will come across various types of Motor Insurance policies in the market, such as -

  • Comprehensive Insurance policy

    As the name suggests, it gives you complete, enhanced insurance coverage. This type of insurance policy covers the third-party liability as well as the damages caused to your own vehicle. The best of both worlds!

  • Third-party Insurance policy

    This is the most basic vehicle insurance and a statutory requirement. Without this policy, it is illegal to drive your motor vehicle in India. This policy covers any injury/losses caused to a third party individual or property by your insured vehicle.

  • Own-damage Insurance Cover

    This covers the damages caused to your own vehicle due to fire, rain, theft, etc. You can raise a claim under this policy to get compensation for the expenses incurred for repairing your vehicle.

Categories of Motor Insurance Policies in India

There are three main categories of motor insurance in India -

  • Private Car Insurance

    This insurance covers motor vehicles that are used for private or personal purposes against mishaps like burglary, accidents, man-made disasters, natural calamities, etc.

  • Two-wheeler Insurance:

    As the name suggests, this insurance covers two-wheelers, like bikes, scooters, etc., and offers protection against accidents and other mishaps such as fire, theft, etc.

  • Commercial Insurance:

    This insurance policy covers all types of vehicles that are used for commercial purposes - and not for personal purposes. Examples include buses, cabs, auto-rickshaws, trucks, agricultural vehicles, ambulances, etc.

Add-ons available with Motor Insurance Plans

The motor insurance comes with certain add-ons in case you want extra protection for your vehicle.

Zero/Nil Depreciation Cover

With time, the value of your vehicle depreciates. If your motor vehicle gets damaged following a collision, and you have this add-on in your policy, you can claim the total cost of wear and tear of any of its body parts. The depreciation value of your vehicle won’t be deducted from your claim amount. This cover is applied to vehicles that are less than 5-year-old.

Engine Protector Cover

This covers you against the damages caused to the engine due to water seeping into the vehicle, leakage of lubricating oils, differential parts, or gearbox/engine failure.

Return to Invoice Cover

This add-on provides you with compensation equal to the car's invoice value i.e., the original value of the car when you bought it. The claim applies when a car is stolen or when it is beyond repair.

NCB Protect Cover:

NCB means “No Claim Bonus”, which is a discount that is offered on the premium if there is no claim made in the previous policy tenure. You can get a maximum discount of 50% if you don’t make a claim for 5 consecutive years. However, if you do make a claim, the NCB will reset to 0%. This add-on cover helps in avoiding this - meaning, even if you were to make a claim, your discount would stay intact.

Consumable Cover:

With this add-on, the insurance coverage is expanded to the consumable parts of your vehicle, such as engine oil, coolant, grease, nuts, bolts, etc.

Roadside Assistance Cover:

This add-on is a blessing. If your vehicle breaks down in the middle of the road, leaving you stranded, this cover helps you get roadside assistance. All you need to do is contact the insurance company’s toll-free.

Roadside Assistance Cover:

This add-on is a blessing. If your vehicle breaks down in the middle of the road, leaving you stranded, this cover helps you get roadside assistance. All you need to do is contact the insurance company’s toll-free.

Here are some services available under roadside assistance -

Changing a flat tyre.

Minor on-site repair.

Car towing.

Fuel delivery.

Arrangement of replacement of car keys

Battery jump-start

Tyre Protection Cover:

This add-on cover provides coverage for the repair and replacement cost of the vehicle’s tyres. It also covers the labour charges incurred during the process.

Key Replacement cover:

If your vehicle key is lost, damaged, or stolen, this cover comes to your rescue. It gives financial compensation for the costs incurred while replacing or repairing the key and lock-set.

Loss of Personal Belongings Cover:

This add-on provides financial coverage for any damage caused to any of your personal belongings or possessions kept inside the insured vehicle.

Personal Accident Cover:

This add-on cover provides financial protection against death, permanent total, and permanent partial disability caused due to an accident. There are three types of personal accident covers available -

Personal accident cover for the owner-driver:

This offers the owner-driver protection against any accidental disability or accidental death.

Personal accident cover for passengers:

This provides protection to the passengers travelling against any disability or death caused due to an accident.

Personal accident cover for the paid driver:

In case the vehicle is driven by a paid driver, then taking this cover will provide protection to the driver of the vehicle against any accidental disability or death.

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As you can see, there is something for everyone. Motor Insurance is unique and important. You need to buy this insurance, even if your vehicle is off-road. Whenever you buy a new vehicle, take out some time, read the vehicle insurance details thoroughly, and invest in the cover that fits your needs the best.

Motor Insurance Policy Types

When you go to a bookstore, you can see that the books are segregated based on whether they’re fiction or nonfiction, their genre, the reading ages, etc. This gives you a variety of options and also makes the job of picking one easier. You can compare them and make the choice that is right for you!

Similarly, you can choose your motor insurance plan from a variety of options. Every individual's needs differ. Some may find comprehensive motor insurance beneficial, but others may find the plan unsuitable for their needs. There are diverse types of motor insurance policies and add-ons for you to choose from. You can select the type of motor insurance according to your preferences and requirements.

Let's dive right in.

According to the IRDAI, third-party insurance is mandatory for all Indian registered vehicles. The third-party liability insurance shields you from any financial losses that may arise as a consequence of bodily injury, death, and property damage to a third party.

Third-party liability covers damage done to another person and their property in an accident involving your vehicle. The maximum compensation for property damage is limited to Rs.7.5 lakh and there is no limit to the compensation amount in case of death or disability.

The damage to be paid by the insurance company both in case of damage to third party property as well as person is decided by the Motor Vehicle Accident Claims Tribunal.

Own Damage Insurance is designed to protect your vehicle in case of an unexpected mishap. This policy covers the damages incurred by your vehicle resulting from any kind of loss or damage due to accidents amongst many other reasons like fire, natural calamities, etc.

A standard policy will pay the cost of repair after deducting depreciation for the age of the car, cost of consumables, and a standard deduction called compulsory deductible.

For example - Rahim purchased a Own Damage Cover for his car with an IDV of Rs 5 Lakhs. After a few months, while driving, another driver swerved and bumped into his car. This collision severely damaged his car, and the repair costs are estimated to be Rs 1.5 lakhs. The repair costs will be covered and paid subject to the terms of the policy.

The purpose of comprehensive car insurance is to provide coverage for loss and damage incurred by both parties involved in the accident. If an unpredictable event results in any loss or damage, this policy will help you get monetary assistance from your motor insurance company.

The policy includes comprehensive coverage for damages your vehicle sustained, as well as liability coverage for third parties.

The risks involved in driving in India are well known. Furthermore, an increase in private vehicles can increase the likelihood of road accidents and the violation of traffic laws. Even with the increased protocols taken, accidents continue to occur. It is important that you choose a policy that provides adequate coverage so that you are protected physically and financially.

Now that you are aware of the various types of motor insurance policies available, we're sure you can go ahead and decide which policy serves your needs the best.

Type of Coverage

You save for years to buy the car you have always dreamt of. Then, when you finally purchase it, you do everything you can to keep the car in good condition. You pay attention to the way you drive because aggressive driving, urgent braking, etc. can make your car wear out early. You park it in the shade whenever possible to protect its paint and interior from the damaging effects of the sun. You wash it regularly to keep it clean.

Don’t you think you should put the same amount of effort into selecting an insurance plan to protect your car? A sudden accident, breakdown, natural calamity, man-made disaster, and other unexpected contingencies could damage your vehicle within minutes. And a motor insurance policy is a small price to pay for immeasurable peace of mind. Not to mention that it is mandatory to purchase an insurance plan for your vehicle. Driving without an active insurance plan can lead to legal repercussions, and financial ones too - if your vehicle happens to face any damage.

What you should know, though, is not all types of risks are covered under a motor insurance policy. The policy will provide insurance coverage against specific hazards subject to certain terms and conditions.

In this article, let’s learn about all the risks that are covered under a motor insurance policy.

Coverages under Motor Insurance

  • Loss or Damage to the vehicle

Accidents.

Natural calamities like earthquakes, floods, storms, cyclones, hurricanes, tempests, inundation, hailstorms, frost, landslides,lightning, etc.

Theft, burglary, riots, strikes, etc. resulting from human intervention.

Malicious acts like hostilities, an explosion of war weapons, terrorism, etc.

Damage while in transit by rail, road, inland waterways, lift, elevator or air.

Fire, explosion, self-ignition.

Please note: This is just an indicative list. The types of risks covered under motor insurance may vary across insurance companies. Ensure you read all the relevant policy documents so you’re well-informed before making the purchase.

  • Coverage for accidental disability and death

Insurance companies have to compulsorily offer personal accident cover in motor insurance policies. This cover offers protection to the owner of the vehicle in case they get injured in an accident.

For instance, Aman’s friend Jay recently visited him. Aman is driving Jay around and suddenly his car meets with an accident and the both of them get severely injured and succumb to their injuries. Here the insurance company will provide compensation to Aman’s family but not Jay’s.

Insurance companies also allow you to opt for a personal accident cover for the passengers as well.

So, in the above example, if Aman had opted for a personal accident cover for passengers at the time of buying the motor insurance plan, the insurance company would have provided the compensation to Jay’s family as well.

  • Third-party legal liability

A motor insurance policy also provides a third-party liability cover. It offers protection to the insured against legal liabilities that may occur due to the loss/damage caused by them to a third party.

Basically, it covers the vehicle owner’s legal liability to pay compensation for -

Death or bodily injury to a third-party individual.

Damage to the third-party property.

For instance, say Sachit buys a motor insurance policy that also offers coverage for third-party legal liability. A few days after taking the policy, Sachit while driving his vehicle, meets with an accident that damages Mr. Rai’s scooter. The motor insurance cover purchased by Sachit will cover the repair costs for the damage caused to Mr. Rai’s scooter.

Important:

In case of injury or death of a third party, the amount that will have to be paid to the third party or their family will be decided by the court. There is no compensation limit.

In case of damage to third-party property, the amount that will be compensated cannot exceed the limit of Rs. 7.5 lakhs.

Let’s take Sachit’s example again. Say Sachit had caused damage worth Rs. 10 lakhs to Mr. Rai’s shop. In this case, Mr. Rai will only be compensated for Rs. 7.5 lakhs.

So, these are some of the things covered under a motor insurance policy. A motor insurance plan offers protection against the financial expenses of the damages caused to the insured vehicle, the policyholder, or to a third party.

While it is important to understand what a motor insurance policy will cover, it is also important to educate yourself about the situations it won’t cover. Generally, mechanical or electrical breakdowns of the vehicle, wear and tear of the vehicle’s tyres or tubes, damage to the engine due to oil leakage are some of the situations not covered under a motor insurance policy. We have written a detailed article on this. You can check it out here.

Apart from these core coverages, a Motor Insurance policy will also offer multiple customizations in the form of customizations, add-ons, or riders. These are covered here.

Insured Declared Value (IDV)

Say you were to buy a car.

How much would you pay for a car that has run only 100 KMs in 3 months? Would you pay the same price as a brand new car? No right? Now, what about a car which is one year old?

A car like your smartphone, or your house furniture is a depreciating asset. The market value of these assets changes significantly with age and usage.

Car Insurance policies will also value your car for its current market value - the value after depreciation. This value is basically called "Insured Declared Value" or "IDV".

The Insured Declared Value (IDV) of the vehicle covered under a motor insurance policy functions in a similar way. It, basically, is the approximate market value of the vehicle you own. In simpler words, it’s the price you might receive for it in the event you raise a claim in case of theft or total damage to the vehicle. And you, as the owner, get to declare the IDV.

IDV is one of the most important aspects of motor insurance. It is crucial that you understand how it affects coverage, premiums, and claims.

Let’s have a look!

The Insured Declared Value is the value assigned to the car. It is the amount of coverage you will receive for your vehicle in case of irreparable damage or theft.

Premium rates are determined based on IDV. The insurance premium is directly proportional to the IDV of your vehicle, When your vehicle’s IDV value increases, your premium shall also increase. When your IDV decreases, your premium shall also decrease.

Insured Declared Value is calculated based on the following parameters -

Make, model and variant of the car. Of course, the car’s value will be based on its manufacturer, make, model like a BMW has a higher value than a Maruti Swift Dzire. The IDV will hence also differ for different types of cars (sedan, hatchback, SUV, etc.) For instance, Maruti's IDV will be different from a BMW’s.

Maruti Dzire will have different IDVs as compared to Maruti Celerio. Maruti Dzire LXI will have a different IDV as compared to Maruti Dzire ZXI.

Cubic capacity and ex-showroom price of the vehicle. Ex-showroom price is the base price of the vehicle before adding the costs for registration, insurance, and road tax. The ex-showroom price varies from city to city due to logistics and state government costs. Correspondingly, the IDV hence will vary depending on the ex-showroom price. For example, Chennai and Pune may have different ex-showroom prices.

The age of the car: Finally as was mentioned earlier, as the car gets old, the car’s market value decreases. This decreasing value due to wear and tear is called depreciation. The older the car, the higher the depreciation, the lesser your IDV. This includes depreciation of accessories too.

To calculate the Insured Declared Value, the formula used is -

(Manufacturer's listed price - depreciation) + (Cost of accessories not included in the listed price - a depreciation of these parts, if any.)

  • Computing Depreciation

All vehicles depreciate over time. In fact, depreciation begins as soon as you take the vehicle out of the showroom. This happens because of the age, wear and tear of the vehicle.

For example - Rahul and his brother Rohan own the same Honda City model. Rahul bought his car in 2018, whereas Rohan bought his in 2019. Even though the make and model of both vehicles are the same, Rahul’s car will be more depreciated as compared to Rohan’s. This is because his car is older.

The depreciation is computed based on the age of the vehicle and is decided by each insurer as per its own methods. Here is an indicative example of how depreciation would be calculated by an insurer -

Age of the car Depreciation % for IDV
Up to 6 months 5%
6 months to 1 Year 15%
1 year to 2 years 20%
2 years to 3 years 30%
3 years to 4 years 40%
4 years to 5 years 50%
Beyond 5 years To be negotiated

*Depreciation is not taken into account for calculating the IDV of vehicles aged more than 5 years.

The depreciation rate and its current market value play an important role when calculating your IDV. The amount of the claim will be determined by these factors. So, your car's IDV decreases every year from the time it is purchased.

The IDV should be the maximum amount of compensation that you will receive in case of the total loss or theft of the car. This is to ensure that you get a sufficient amount to meet the financial losses incurred when the car is damaged beyond repair or the car is stolen.

Choosing a lower IDV can cut down your expenses, but this can prove to be a big headache during the claim settlement process as there might be situations wherein the loss or damage goes beyond the chosen IDV, for instance, if your vehicle is stolen.

Don’t overstate the IDV of your vehicle. This will increase the premium and your claim will be settled based on the quantum of loss and not the IDV you have chosen.

Avoid making random calculations to fix the IDV. Stick to the formula mentioned to determine your IDV as this shall help you avoid any kind of trouble that can happen during claim settlement.

Note: The IDV and other values can vary from insurer to insurer. Do read the policy wordings before purchasing it.

Let us understand the concept of IDV better with an example

Harsh purchased a luxury car worth Rs. 30 lakhs. His driving style is safe, and he follows all traffic laws. Due to that, he has an impeccable driving record and no claims against him. After two years, as per the depreciation chart, the car's value declined by 30%, and now the IDV of the vehicle is Rs 21 lakhs.

Scenario 1: While renewing his car insurance, Harsh set the IDV to be Rs. 12 lakhs to save up on premiums. Unfortunately, a few months later, his car gets stolen. Now, when he raises a claim, he will be eligible to receive only Rs 12 lakhs instead of the IDV he should have set, i.e, Rs 21 lakhs. While he saved some money on the premiums, he will face a huge loss of approximately Rs 9 lakhs.

Scenario 2: Now, Harsh did a simple market analysis before renewing the policy and discovered that a used car of the same manufacturing year and model is being sold for approx Rs. 22 lakhs currently. Considering the depreciation factor, Based on the market analysis, he estimated the IDV to be around Rs 21,00,000. He can claim this amount in the event that his car is stolen or completely damaged.

  • Pro Tip: Find the second hand value of your car from a credible source, and ensure you fix your IDV around this value - since you need sufficient coverage in the event of total damage or loss of your vehicle. This is to ensure that you don’t face any sort of hassles later. Also, check whether the policy document you receive from the insurer contains the exact values you discussed with the insurer as per the requirements mentioned above.

How to Calculate Motor Insurance Premiums

Imagine you and your neighbour own the same model of a vehicle. And recently, both of you purchased motor insurance plans for your vehicles from the same insurance company, too. Your neighbour’s motor insurance premium amount, however, is lower than yours.

Wondering why?

Because besides the model of the vehicle, there are many other factors that affect the premium of a motor insurance policy - such as the add-on covers you opt for, the age of your vehicle, your claims history, the deductible opted under the policy, apart from your geographical location.

Let’s dive deeper into the factors that affect motor insurance premiums - in this article.

Factors That Affect Motor Insurance Premium Rates

The make, model, and engine capacity of your vehicle is one of the most important factors that affect your motor insurance premiums. Premiums of a sports car will be higher than standard cars. Similarly, vehicles with bigger engine sizes are more prone to accidents. Hence, the premiums, too, will be higher.

For example - The premium of an insurance policy for a Honda City will be more than that of a Maruti Swift. On the other hand, the premiums of an insurance policy for Maruti Swift ZXi will be more than that of a Maruti Swift LXi.

Motor insurance premiums will be higher if your car is registered in an area that experiences dense traffic, or has higher cases of vandalism, etc.

The age of the motor vehicle is another important determining factor when it comes to calculating motor insurance premiums. The older the vehicle, the higher will be the depreciation (reduction in the value of your vehicle). This means that the premiums will be less if you insure an old vehicle and more if you insure a new vehicle.

Insurance companies may look at whether you have made any claims in the past. If you have, your policy will not be eligible for an NCB, which is why the premiums will increase - and vice versa.

The type of fuel also affects the motor insurance premiums. For instance, if you own a petrol or a diesel car, the premiums will be relatively lower than a CNG car - because the cost of maintenance of CNG cars is higher.

IDV represents the estimated market value of the vehicle. It is the maximum amount the insurance company will pay in case a claim under the policy arises.

Formula to calculate IDV:

IDV = Showroom price of the car + Cost of accessories (if any) - Depreciation value as per IRDAI

IDV is exclusively used for comprehensive motor insurance policies, and the higher the IDV, the higher will be the premium amount of the policy.

Insurers offer you the option to voluntarily opt for a deductible and as a result, reduce your premium amount. Deductible is the amount you will have to pay before the insurance company starts paying up.

For instance, you buy a motor insurance plan and opt for a deductible of Rs. 2500 and you get a discount of Rs. 750 on the own damage premium. A few weeks later you file a claim for Rs 10,000. In this case, you will have to pay the Rs. 2500 of the cost along with the compulsory deductibles out of your pocket every time you make a claim.

Voluntary deductible is one of the measures used to control premiums of a motor insurance policy. Generally, the motor insurance premium will be lower if you opt for a higher deductible and vice versa.

The premium will also be affected based on the coverage, add-ons, etc. you opt for. The more covers you opt for with your base motor insurance plan, the higher will be the premium amount.

Yes, premiums for the same car value, with same customizations, add-on coverages etc can be different from platform to platform, agent to agent. There can be intermediaries who are able to negotiate better rates for their customers, and there can be intermediaries who may charge more so that they can make more commissions.

Components Of A Motor Insurance Premium

Premium Of Own Damage Cover

Damages caused to the insured vehicle because of an earthquake, storm, fire, accident, etc. are covered under the own damage cover. The premiums for this type of cover will vary across insurers.

Premium Of Third-party Liability Cover

A third-party insurance policy, too, has been made mandatory for every vehicle owner in India, as per Motor Vehicles Act, 1988. It offers you financial protection against legal liabilities that occur due to the loss/damage caused to a third party individual or property. The premiums of a third-party liability cover are decided after taking into consideration the cubic capacity of your vehicle engine.

Compulsory Personal Accident Cover

Looking at the increase in cases of road accidents, the government has made it mandatory for vehicle owners to purchase a personal accident insurance cover. This cover provides financial protection against death, permanent total, and permanent partial disability caused as a result of an accident.

Riders/ Add-on Covers

Riders are ready-made extensions that provide an extra cushion under specific situations. There are several add-ons you can buy with a motor insurance policy like zero depreciation cover, engine cover, lock and key replacement cover, no claim bonus protection cover, etc. The premiums will be higher if you opt for more add-ons and vice versa.

Other Components

Other than the above mentioned components, several discounts will also affect your motor insurance premiums. These will include the discounts you get for -

No Claim Bonus Percentage

Insurance companies offer a discount on premium if you don’t make a claim under the motor insurance policy in the previous policy year. You can earn a discount of around 20% to 50% in 5 years if there are no claims made.

Being A Member Of Automobile Association

You can get a discount on your motor insurance premiums if you are a member of a recognised automobile association.

Installing Recognized Anti-theft Devices

Installing anti-theft devices on your vehicles can help you fetch discounts from the insurance company too. Anti-theft devices help prevent and stop theft. For example, a thief will obviously try to steal a car that doesn’t have any security rather than stealing a car with a tyre lock. Anti-theft devices use multiple technologies that enhance the security of your vehicle.

Show More

  • Formula To Calculate The Overall Motor Insurance Policy Premium

    Overall Premium = [Own Damage Cover + Third-party Liability Cover + Add-ons (eg. bonus coverage)] – [Discount & Benefits (No Claim Bonus, Theft Discount, etc.)]

This brings us to the end of the article. Hope this article helped you gain enough clarity on the various factors that affect the premiums of a motor insurance policy.

How to claim?

Imagine you have purchased your dream car after extensive research and have insured it with an optimum motor insurance policy. You are out on a relaxing drive, but another driver tries to blindside you and as a result, damages your car’s trunk and tail lights. Yes, accidents happen uninformed. Despite being a safe driver, you may still encounter these kinds of unfortunate incidents. Motor insurance comes to your rescue to help you deal with the financial losses resulting from any loss or damages to your vehicle in case of theft, accidents, etc. It also covers any third-party liabilities. However, the entire process of filing a claim and getting the desired coverage amount is quite arduous. A seamless claim process depends upon following certain steps, failing which your claim may get declined by your insurer.

What are the steps involved in filing a claim for motor insurance? What documents are you required to submit? What can you do to avoid any problems down the road (pun intended!) - at the time of claim settlement?

Let’s see!

Making a claim

If your vehicle happens to undergo an unfortunate event like an accident, theft, or any similar mishap - you need to file a claim in order to get the cover amount to take care of the costs.

If your vehicle has sustained any loss or damage, you need to contact your insurance company immediately and inform them about the situation to initiate the claim settlement process.

The insurance company will require necessary documents during this process like the vehicle registration certificate, your driving licence, payment receipt, etc. The list of documents differs for different types of claims. So, make sure your motor insurance company gives you a list of documents at the time of policy purchase to avoid any trouble during the claim settlement process.

Steps you need to follow to make a claim

Making a claim involves certain steps. The steps vary, based on the type of damage caused.

(1) Own Damage Claim Process

It is crucial to notify the insurer as early as possible - within a span of 48 hours or as soon as possible after the damage is caused. You should contact your insurance company and provide a detailed description of the extent of the damage caused to your vehicle. Be sure to not withhold any information from your insurer since this may hinder the settlement of your claim.

It is necessary to file an FIR to substantiate your claim if you suspect your vehicle has been stolen, if there was an accidental death or if there was any third-party involvement. The FIR will contain all the essential information about the driver, the vehicle, passengers, witnesses, etc.

After you inform your insurance company, they shall send a surveyor to the location to inspect the vehicle and the intensity of the damage. Once the evaluation is conducted by the surveyor, the reports are sent to the insurance company for the further processes of the claim. An open and transparent procedure is maintained by the insurance company to ensure a streamlined claim settlement process.

Here are the documents you will need to submit while filing an own damage claim.

Duly filled and signed claim form

Copy of the insurance policy

Tax payment receipt

Estimate vehicle repairs cost from the repairer where the vehicle is to be repaired. This should be signed and stamped by the garage.

Original repair invoice and payment receipt - signed and stamped by the garage. In case of a cashless claim, only a repair invoice will have to be submitted.

Claims discharge cum satisfaction voucher signed across a revenue stamp

Vehicle inspection address details if you have not taken the vehicle to the nearest garage

Licence copy of the driver driving the vehicle when the accident occurred - a verified photocopy to the surveyor along with the original

Registration certificate - a verified photocopy to the surveyor along with the original

Pan Card

Aadhar Card

Pollution Under Control Certificate - a photocopy

Cancelled Cheque/ Passbook - in case of a reimbursement claim

Please Note: This is just an indicative list. The documents that you may need to submit while filing an own damage claim may vary across insurance companies.

After inspecting the damage, the service provider shall issue the estimated cost for repair. On receiving the cost, the insurance company will give its approval for the repair of the vehicle.

According to the coverage chosen, you may have to pay deductibles and depreciation charges for the parts when making a claim. A deductible is part of the claim amount that you need to pay from your own pocket. You can refer to our article on Deductibles for more information.

(2) Third-party Liability Claim Process

Go to the nearest police station, file an FIR, and collect the charge sheet. Keep a copy of the report that outlines the order of events and the parties involved.

When making a claim, keep all mandatory documents at hand and provide them to the insurer.

Here’s a list of documents you will need to submit in case of a third-party liability claim -

First Information Report (FIR)

Duly filled and signed claim form

Copy of the insurance policy

Tax payment receipt

Estimate vehicle repairs cost from the repairer where the vehicle is to be repaired. This should be signed and stamped by the garage

Original repair invoice and payment receipt - signed and stamped by the garage. In case of a cashless claim, only a repair invoice will have to be submitted.

Claims discharge cum satisfaction voucher signed across a revenue stamp

Vehicle inspection address details if you have not taken the vehicle to the nearest garage

Licence copy of the driver driving the vehicle when the accident occurred - a verified photocopy to the surveyor along with the original

Registration certificate - a verified photocopy to the surveyor along with the original

Pan Card

Aadhar Card

Pollution Under Control Certificate - a photocopy

Cancelled Cheque/ Passbook - in case of a reimbursement claim

Please Note: The documents that need to be submitted in case of a third-party liability claim may vary across insurance companies. This is just an indicative list.

All third-party liability claims are settled in the Motor Accident Claims Tribunal (MACT).

File a claim -

At your nearest tribunal if the incident took place close to your residence

At the tribunal closest to the place of the accident, if the incident happened in some other area

The tribunal authority shall examine the entire situation before determining the course of action.

If the third party has faced any loss or damage as a result of the incident, the maximum amount you shall receive to compensate for any property damage is Rs 7.5 lakhs. Any expenses above this amount will be your responsibility. However, in the event of an injury or death, there is no limit to the claim amount.

(3) Theft Claim Process

Report the theft by filing an FIR at the nearest police station with information about the vehicle, such as the chassis number, the registration number, the model, the colour, scratches, dents, etc. so the investigation can be conducted.

You should inform your insurance company of the theft by filing a claim. Disclose the entire situation to them without hiding any details.

The next thing you need to do is inform the Road Transportation Office (RTO) about the theft of your vehicle. The RTO is the authority responsible for vehicle ownership transfer, and the sooner you inform them the lesser the chances of any unauthorised change in ownership by the person who has stolen your vehicle.

Here are the documents you will need to submit in case of a theft claim.

Insurance policy document

Tax payment receipt

Letter of subrogation

Official intimation about theft and discontinued use of the vehicle to the RTO

Form 28, Form 29, and Form 30

Previous insurance policy details like policy number, insuring office/company, duration, and time of insurance.

Additional information about booklets, duplicate keys, warranty cards, and other accessories

Registration book

Claim discharge voucher signed across a revenue stamp

Please Note: The documents that need to be submitted in case of a theft claim may vary across insurance companies. This is just an indicative list.

Once you have informed the police about the theft, the police department will try to locate the stolen vehicle with all your furnished details. In case your vehicle cannot be traced even after six months from the date of the complaint, you are entitled to receive a No-Trace Report from the police station.

You must show the No-Trace Report to your insurer for the approval of your claim. After that, the registration certificate of the stolen vehicle will be transferred to the insurance company.

The process for submitting a claim, as well as the documents needed, varies across insurance companies. So, when buying a motor insurance policy, make sure you ask the insurance company about the claim process as well as the paperwork you will need to submit to receive the claim amount to avoid any hiccups during claim settlement. Following the steps mentioned above systematically will ensure a smooth claim process.

Questions about Car Insurance

Have Questions about Insurance?

The minimum coverage you are required to have depends on the state you live in. However, most states require at least liability insurance.

This varies based on a number of factors, including your driving record, the type of car you drive, and the amount of coverage you choose

Liability insurance covers other people’s injury and damage to their property in an accident.

If you don't have car insurance and are involved in an accident, you could be held liable for any damages caused. You could also face fines and penalties as per your state law.

The best way to save money on car insurance is to explore online and compare rates from different insurers. You can also choose to increase your deductible or opt for lower coverage levels.

Collision insurance covers damages to your car in the event of an accident. It typically costs more than liability insurance, but it can be worth it if you have a newer car.

Comprehensive insurance covers damages to your car that are incurred due to activities like theft or vandalism and not by accidents. It typically costs more than collision insurance, but it can be worth it if you live in a high-crime area.

Rental car coverage is not always necessary, but it can be helpful if you plan to rent a car often. This coverage can help you to pay for any damages that occur to the rental car.

Uninsured motorist coverage protects you in the event that you are involved in an accident with a driver who does not have insurance. Underinsured motorist coverage protects you in the event that the other driver does have insurance, but their policy does not cover all of the damages.

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