What’s in the blog?
Many people see motor insurance as just a legal formality. It’s a wrong notion. This blog breaks down what motor insurance really covers, why it’s more than just a rule, and which smart add-ons can save you big money in tough times.
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Motor insurance is very different from life insurance or term insurance. People take motor insurance as soon as they purchase a vehicle. But, it’s not because they are so aware or cautious; it’s simply because it is legally mandatory to take a motor insurance before hitting the road.
You might wonder if the law already ensures that every vehicle is insured, why am I here explaining its importance?
Well, I’ve seen this firsthand: most people treat motor insurance as just a legal formality. Even well-educated, seemingly aware clients look at it as an unwanted expense while budgeting for a new vehicle. I’ve often heard people complain, “Insurance bhi lena padta hai alag se!”
And that’s exactly why I’m taking this effort because motor insurance is not an add-on expense. It’s an essential safety net that can save you from big financial shocks. And I truly believe it’s my responsibility to help you see it that way.
What Exactly is Motor Insurance and Why It’s So Important?
In the simplest terms, Motor insurance is a contract between you and the insurance company. If something goes wrong, like an accident, theft, fire, or damage due to heavy rain or riots, the insurance company helps cover the cost. If there’s no insurance, you’ll have to pay everything out of your pocket.
Now, it’s important to understand that the Motor Vehicles Act (1988) mandates that every vehicle on Indian roads must have at least third-party insurance.
Now, what does third party insurance mean? It means if your vehicle accidentally injures someone or damages someone else’s property, your insurance will take care of their medical/legal expenses or repairs.
Think carefully… Don’t you find this just bare minimum? What about the damages to your vehicle? What if it gets stolen or gets damaged due to floods or riots? Who will bear all those expenses? That’s where comprehensive motor insurance and the understanding of the importance of motor insurance comes into the picture.
What is Comprehensive Motor Insurance? What Does it Cover?
Comprehensive motor insurance, as the name suggests, covers everything comprehensively. The benefits include –
- Third Party Cover – As mandated by law, the third party covers any accidental damages done to a third party by your vehicle. It will help you cover injuries to a person or their property including medical, legal and expenses done on repairs.
- Own Damage Cover – It covers damages to your own vehicle caused by accidents, theft, fire, natural disasters like floods or storms, and man-made events like riots.
- Add-On Covers – The add-on cover includes benefits that are not mandatory but can increase your protection hugely if you opt for them. This may include features like zero depreciation, return to invoice, no claim bonus protector etc.
Powerful Add-Ons That Make Your Motor Insurance Extra Beneficial
Basic motor insurance gives you good protection, but if you want real peace of mind, these add-on covers are worth exploring. They come at a little extra cost but can save you a lot when it matters.
Zero Depreciation Cover
Normally, when your vehicle is damaged, the insurance company reduces a part of the claim amount, citing ‘depreciation’ for wear and tear on parts like plastic, rubber, or metal.
But with Zero Depreciation Cover, you get a full claim without any deductions for part wear-and-tear.
Best for:
New car owners Owners of luxury or high-value cars Anyone who wants to avoid surprises during claims
Return to Invoice Cover
If your vehicle is stolen or totally damaged, your regular insurance gives you the current market value (called IDV), which is usually lower than the price you paid.
But this cover gives you the full invoice value, including:
- Ex-showroom price
- Registration charges
- Road tax
Best for: Brand new vehicles (especially in the first 3 years) People buying high-end or imported vehicles Owners living in theft-prone areas
Engine and Tyre Protection Cover
Standard policies usually don’t cover damage to the engine or tyres due to waterlogging, oil leaks, or rough road conditions.
With this add-on, you’re protected against those expenses too especially during the monsoon when water enters the engine, or when tyres burst due to potholes or uneven roads.
Best for: People living in flood-prone or poorly maintained areas Daily commuters Owners of expensive vehicles with high repair costs
Roadside Assistance
Ever been stranded because of a flat tyre, dead battery, or simply ran out of fuel?
With Roadside Assistance, help reaches you wherever you are whether you need a tow, fuel delivery, jump start, or on-spot repairs.
Best for: People who frequently travel long distances Night drivers Elderly or solo drivers
Key and Lock Replacement Cover
Modern car keys (especially smart keys or keyless entry) are expensive to replace.
This cover helps you recover the cost of replacing lost or broken keys, or if your lock system gets damaged during a break-in.
Best for: High-tech vehicle owners People with habit of misplacing keys Anyone parking in public or unfamiliar areas
Consumables Cover
When your car is repaired, many small items like engine oil, brake oil, nuts, bolts, AC gas, or coolant are used but regular policies don’t cover these.
This add-on ensures that all these small consumables are included in your claim.
Best for: People who want complete coverage Those buying comprehensive insurance for a new car
No Claim Bonus (NCB) Protector
Every year you go without making a claim, you earn a No Claim Bonus, a discount of up to 50% on your premium.
But even one small claim can reset that to zero.
With this protector, you can make a claim and still keep your bonus intact. It’s like a second chance, without a penalty.
Best for: Careful drivers who want to preserve their discount Anyone with 2+ years of NCB built up Those who don’t want one small mishap to wipe out their savings
My Take
I have seen way too many people under-insure their vehicle and suffer during claims. It is important to understand that motor insurance is not only about compliance; it’s equally about your protection and peace of mind. So, don’t choose insurance that is cheap. Choose the one that is right for you.
If you are unsure about the best-suited motor insurance for your vehicle, team MoneyAnna is always there to help you. We understand that protecting your vehicle is way more than legal paperwork.
Frequently asked questions (FAQ)
Insurance cover and add-ons depend on several factors including type of vehicle, the area you live, usage of the vehicle, driving experience etc. So, no motor insurance, just like any other insurance, is not a one-size-fits-all thing.
IDV stands for Insured Declared Value. It’s the current market value of your vehicle and determines how much you’ll get if your vehicle is stolen or completely damaged.
No. You must continue shopping if you love doing shopping. But, give yourself a fixed budget every month to take care of this emotional need. This way you’ll enjoy guilt-free shopping while keeping your spending in control.
Yes, NCB is linked to the policyholder, not the car. If you buy a new vehicle, you can transfer your accumulated NCB to the new insurance policy.
