What it is
Motor insurance is a contract that protects a vehicle owner in two ways, according to the Insurance Regulatory and Development Authority of India (IRDAI). It covers damage to your own vehicle, and it pays for any liability towards a third party that is determined as per law against you as the owner.
A third party is anyone other than you and your insurer: a pedestrian, another driver or the owner of property your vehicle damages.
Third-party cover
Third-party insurance deals only with your legal liability for harm to someone else, whether to a person or to their property. IRDAI describes it as a statutory requirement, meaning the law makes it compulsory.
Comprehensive cover
A comprehensive policy is the broader option. Going by IRDAI’s description of motor insurance, it combines protection for damage to your own vehicle with the third-party liability cover. The exact events and costs it pays for differ from policy to policy, so the policy document is what decides this.
| Feature | Third-party only | Comprehensive |
|---|---|---|
| Legal liability to third parties | Covered | Covered |
| Damage to your own vehicle | Not covered | Covered, subject to policy terms |
| Legally required | Yes | The third-party part is |
How it works
If your vehicle is used in a public place and someone else is hurt or their property is damaged as a result, the law makes you, as the owner, responsible. The third-party policy exists to meet that responsibility, so the cost does not fall on you personally.
Damage to your own car or bike is a separate matter. Only a policy that includes own-vehicle protection responds to it.
What it means for you
Driving a motor vehicle in a public place without insurance is a punishable offence under the Motor Vehicles Act, 1988. Third-party cover is the minimum you need to stay on the right side of the law.
Whether to add own-damage protection depends on how much loss you could bear if your vehicle were damaged. The sources do not give premium figures, so compare quotes yourself.
IRDAI’s general advice for buyers is simple:
- Check that the insurer is registered with IRDAI.
- Buy through a genuine licensed agent or broker, and ask to see an identity card or licence.
- You can also buy directly from the company.
- Read the policy brochure or prospectus carefully to understand what is covered and what is not.
Common mistakes to avoid
- Assuming a third-party policy pays for repairs to your own vehicle. It does not.
- Buying from someone who cannot show a licence or identity card.
- Skipping the brochure, where the exclusions are listed.
- Driving with no valid policy at all, which is an offence in a public place.
