Discover the Essentials of Motor Insurance: An Informative Overview

The purpose of motor insurance is not only to protect the vehicle owner but also to fulfill legal obligations and reduce the burden of unexpected expenses. In most countries, including India, having at least third-party insurance is legally mandatory to operate a vehicle on public roads.

Importance – Why motor insurance matters today

Motor insurance is increasingly important in 2025 due to several modern challenges and lifestyle changes:

• Rising vehicle ownership: More individuals and families now own multiple vehicles, increasing road traffic and accident risks.

• High repair costs: Modern cars come with advanced technology, making repairs expensive.

• Legal requirements: Driving without insurance can lead to penalties, fines, or even imprisonment.

• Natural disasters and theft: Floods, cyclones, and increasing car thefts make insurance critical.

• Third-party liability: Accidents involving other people’s property or injuries require financial compensation, which insurance covers.

Who it affects:

• Private vehicle owners

• Commercial fleet operators

• Two-wheeler riders

• Cab aggregators and logistics companies

• New car buyers

Having proper coverage ensures peace of mind and compliance with the law.

Recent Updates – Key changes in 2024–2025

Several new developments have shaped the motor insurance space in the past year:

• IRDAI's sandbox regulations (2024): New experimental motor policies allow usage-based insurance (UBI), where premiums are calculated based on kilometers driven or driving behavior.

• OD (Own Damage) cover flexibility: Customers can now purchase OD cover separately and not just with third-party insurance.

• Electric vehicle (EV) policy incentives: Many insurers have launched specialized, lower-cost policies for EVs, including battery protection and charging station assistance.

• Cashless garage networks expanded: Insurers are increasing the number of partner garages for faster, paperless claim settlements.

• Digital policy documents accepted: As per the Ministry of Road Transport (2024), electronic policy documents and e-vahan integration are accepted during vehicle checks.

These updates reflect a more customer-centric, digital-first insurance landscape.

Laws or Policies – Regulatory frameworks in motor insurance

Motor insurance in India is regulated under:

• The Motor Vehicles Act, 1988 (Amended 2019): Mandates that all vehicles must have third-party liability coverage.

• IRDAI Guidelines: Sets product structure, claim protocols, and insurer obligations.

• Compulsory Third-Party Insurance: A minimum legal requirement for all vehicles.

• Long-term insurance for new vehicles: As of 2018, new two-wheelers require a 5-year third-party policy, while new cars need a 3-year policy.

• No Claim Bonus (NCB) Transfer Rules: Allows policyholders to retain their NCB when switching insurers.

The government also encourages the digitalization of documents, standardization of coverage, and inclusion of environmental-friendly incentives for EVs.

Tools and Resources – Digital help for comparing and managing policies

Here are useful platforms and tools that make understanding and choosing motor insurance easier:

Websites for Comparison

• PolicyBazaar – Compare quotes from multiple insurers

• Coverfox – Simplified policy buying with expert assistance

• InsuranceDekho – User-friendly interface for two-wheeler and car policy comparison

Calculators

• Premium Calculator: Helps estimate premiums based on vehicle type, model, location, and NCB.

• IDV Estimator (Insured Declared Value): Assists in finding the right IDV to avoid underinsurance or overpayment.

• NCB Checker: Know your accumulated no-claim bonus for renewal discounts.

Mobile Apps

• Digit Insurance App – Claim filing, IDV tracking, policy documents

• ACKO App – Instant purchase, renewals, zero paperwork

• IRDAI Bima Sugam (Upcoming) – Unified portal for all insurance products

FAQs – Answers to common motor insurance questions

Q1. Is it mandatory to have comprehensive insurance?
No, only third-party insurance is legally required. However, comprehensive insurance is highly recommended as it covers both third-party and own damage.

Q2. What is the No Claim Bonus (NCB)?
NCB is a discount on your renewal premium for every claim-free year. It can go up to 50% after five consecutive years.

Q3. Can I switch my insurer during policy renewal?
Yes, you can switch providers without losing your NCB benefits using the portability facility.

Q4. Is insurance for electric vehicles cheaper?
Generally, yes. Many insurers offer discounted premiums and tailor-made benefits for EVs.

Q5. What should I do after a minor accident?
Inform your insurer immediately, take pictures, visit a network garage (if needed), and file a claim with relevant documents.

Final thoughts

Motor insurance has evolved beyond basic liability coverage. In 2025, with digitization, customer-friendly policies, and EV-specific products, it’s easier than ever to get protected.

When selecting a policy:

• Understand your usage – daily commute, long drives, commercial use

• Consider add-ons like zero depreciation, roadside assistance, or engine protection

• Compare plans online for the best price and claim service ratings

• Keep all your documents digital and updated in DigiLocker or mParivahan

A well-chosen insurance policy ensures financial security, legal compliance, and confidence every time you drive.