Selecting the right insurance for your car means understanding the right coverage, policy inclusions and exclusions. A car insurance policy is not just a legal requirement, but also safeguards you from a financial setback. As per Motor Vehicles Act, 1988, every vehicle must have a valid Third-Party Liability insurance cover. Driving without a valid third-party car insurance is a punishable offence
Different types of car insurance policies
The three main types of car insurance covers available are: third party insurance, standalone own-damage insurance and comprehensive car insurance.
A third-party car policy is a mandatory cover required by all vehicles under the Motor Vehicles Act, 1988. It covers financial and legal liabilities if your car causes injury, death, or property damage to another person or vehicle.
Own-damage car policy covers damage to your car - such as physical damage, theft or loss. Unlike third-party policy, own damage cover is not legally mandatory and added to ensure coverage for your own car.
Lastly, comprehensive car insurance is an all-inclusive policy that combines the mandatory third-party cover and own damage protection.
A comprehensive car insurance is an all-inclusive policy that combines mandatory third-party liability and optional own damage protection
| Cover type | What it covers | What it does not cover | When you should get it |
|---|---|---|---|
| Third-party insurance | This covers your legal liability if your car causes injury, death, or property damage to a third party. It is the minimum cover you need to drive legally. | It does not cover damage to your own car. If your car is stolen, damaged in an accident, or affected by covered risks, you cannot claim for your car under only this cover. | It may suit you when you want only the legally required minimum cover, or when your main concern is meeting the legal requirement at a lower premium. |
| Standalone own damage insurance | This covers damage to your own car from covered risks, as per the policy wording. It is meant to protect your car, not the other person’s liability claim. | It does not cover third-party liability. You need an active third-party policy along with it because own damage cover alone is not enough for legal road use. | It may suit you when you already have an active third-party policy and want protection for your own car against covered damage. |
| Comprehensive car insurance | This combines third-party liability and own damage cover in one policy. It can cover legal liability to others as well as covered damage to your own car. | It does not cover items excluded by the policy, such as normal wear and tear and other listed exclusions. The exact coverage depends on the policy wording. | It may suit you when you want broader cover for both legal liability and your own car, and you are comfortable paying more than a third-party-only policy. |
A comprehensive policy usually gives wider protection than a third-party-only policy, but it also costs more because it includes own damage cover.
Decide the cover type
Choose third-party, standalone own damage, or comprehensive cover based on whether you want only legal liability cover or cover for your own car as well.
Collect the required details
Keep your registration number, car variant, previous policy, previous claim history, owner details, nominee details, and loan details ready.
Set or review the IDV
Check the insured declared value shown in the quote. Do not reduce the IDV only to lower the premium without understanding the lower maximum claim value.
Select add-ons
Select add-ons as per car's age, repair cost risk, usage and location. Common add-ons are zero depreciation, engine protect, roadside assistance and return to invoice cover
Check network garages
Take a look at the cashless garage network in your city. Wider network can make repairs and claim settl
Check insurer’s claim support
Take a look at claims process, cashless garage availability, required documents, and customer support options.
Pay securely and verify the policy
Pay through the insurer, broker, agent, or authorised digital platform. Check issued policy document thoroughly.
Factors to consider while choosing a car insurance policy
To select the right car insurance policy, compare overall policy coverage, not only the premiums. Car insurance premium can change based on IDV, add-ons, and other policy inclusions. Check details carefully so you know what is covered, what you may need to pay during a claim, and whether the policy fits your budget and requirements.
| Item to compare | What to check | Why it affects you |
|---|---|---|
| Insured declared value, or IDV | The current insured value of your car shown in the quote | A lower IDV can reduce the premium but can also reduce the maximum payable amount in a total loss or theft claim |
| Premium | The final amount payable for the selected cover | This is your upfront cost for the policy period |
| Deductibles | Compulsory deductible and any voluntary deductible selected by you | This is the amount you pay from your pocket during a claim before the insurer pays the admissible balance |
| Add-ons | Covers such as zero depreciation, engine protection, roadside assistance, consumables cover, or return to invoice, if offered | Add-ons increase the premium but may reduce your out-of-pocket cost for specific claim situations |
| Exclusions | Losses and situations not covered by the policy | An excluded loss will not be paid even if you have an active policy |
| Cashless garage network | Whether convenient repair garages are available in your city | A wider usable network can reduce the amount you need to pay upfront for covered repairs |
| Claim process | How to intimate a claim, submit documents, and get a survey or repair approval | A clear claim process reduces delays after an accident |
Incorrect details can affect a claim
Make sure you declare any modifications, CNG or LPG kit, commercial use, ownership details, or expired policy gap while getting a new policy. If you make a claim that is linked to incorrect vehicle or policy information, the insurer may reject your claim or reduce the claim amount.
What if you are renewing instead of buying a new policy?
When renewing car insurance policy, compare the renewal quote as well coverage, inclusions, exclusions and add-ons with your current policy. Make sure you check if your IDV has changed, if add-ons are still needed, and claim history for NCB utilisation.
Key takeaways
- Third-party car insurance is the legal minimum required to drive a car on a public road in India.
- Comprehensive car insurance includes third-party liability and own damage cover in one policy.
- The main items to compare before paying are IDV, premium, deductibles, add-ons, exclusions, cashless garage access, and claim process.
- A lower premium can come from a lower IDV, fewer add-ons, or a higher voluntary deductible.
- Incorrect details about claims, modifications, fuel kits, usage, or policy history can affect claim assessment.
- After buying the policy, you should verify the car details, owner details, policy period, IDV, premium, add-ons, deductibles, nominee, and hypothecation details.
Frequently asked questions
Third-party car insurance is enough only for meeting the legal requirement to cover liability to others. It does not pay for damage to your own car, so it may not be enough if you want repair cost protection for your vehicle.
IDV means insured declared value. It is the value of the car shown in the policy and is used as the maximum reference value for certain claims such as total loss or theft, subject to the policy terms.
No. You should choose add-ons based on your car's age, usage, location, repair cost risk, and budget. For example, roadside assistance may be useful if you travel often, while some repair-related add-ons may be more relevant for newer cars.
Yes, you can buy car insurance after expiry, but you should not drive the car without valid third-party cover. For own damage cover, the insurer may ask for vehicle inspection before issuing or activating the policy.
You usually need the car registration details, previous policy details if renewing, owner details, nominee details, claim history, and loan or hypothecation details if the car is financed.
You should check the policy document to confirm that the registration number, engine number, chassis number, owner name, policy period, IDV, add-ons, deductibles, nominee, and loan details are correct. Errors should be reported for correction as early as possible.
Sources and references
- 1.The Motor Vehicles Act, 1988, Section 146, Necessity for insurance against third-party riskIndia Code, legal requirement for third-party motor insurance
- 2.Motor InsuranceIRDAI policyholder education resource on motor insurance
About the authors
Nikhila PS
Written by · Senior Content EditorNikhila is a content creator with 6+ years in EdTech and motor insurance, turning complex policies into clear, engaging content. She enjoys exploring digital trends, social media, and art while planning her next short escape.
Rekhit Singh Kaushal
Reviewed by · Senior Director - Motor UnderwritingRekhit Singh Kaushal is Senior Director at ACKO, a leading digital motor insurance provider in India. With deep expertise in insurance strategy and innovation, he brings trusted insights on car and bike insurance to help drivers stay protected.
