What is Vehicle Insurance?

Vehicle Insurance (Motor Insurance) provides financial protection against damages or losses to your vehicle due to accidents, theft, fire, natural calamities, or third-party liabilities. It is a legal requirement in India under the Motor Vehicles Act, 1988.

• Covers damages to own vehicle and third-party property/person
• Applicable to cars, bikes, scooters, and commercial vehicles
• Offers peace of mind and compliance with legal obligations

Why is it Mandatory?

According to the Motor Vehicles Act, 1988, every motor vehicle plying on Indian roads must have at least a third-party insurance cover.

• Ensures compensation to third parties injured or killed
• Helps manage road accident liabilities legally
• Non-compliance may attract fines or vehicle seizure

Penalty: ₹2,000–₹4,000 and/or imprisonment for driving without valid insurance

Types of Vehicle Insurance

• Third-Party Insurance (Mandatory): Covers injury/death/damage to third parties only. Does not cover own damage.
• Comprehensive Insurance: Covers both third-party liabilities and own damage to the insured vehicle.
• Standalone Own Damage Insurance: Can be bought in addition to third-party cover.
• Pay-as-you-drive Policies: New-age usage-based plans where premium depends on kilometers driven.

Key Features and Benefits

• Cashless Repairs: Tie-ups with network garages ensure quick, cashless service
• 24x7 Roadside Assistance: Available as a rider in most comprehensive plans
• Natural Calamity Protection: Flood, cyclone, fire, and more
• Coverage for Theft: Full insured value paid if vehicle is stolen
• Accidental Damage: Coverage for vehicle repair/replacement after an accident

How to Choose the Right Policy

Consider the following factors while selecting vehicle insurance:

• Type of Vehicle: Car, bike, luxury model, commercial use
• City/State: Premiums vary based on location risk zones
• Age of Vehicle: Older vehicles may benefit from third-party cover alone
• Usage: Daily use, long-distance, or occasional driving
• Budget: Comprehensive plans cost more, but offer better protection

Use online quote comparison tools to check premium differences and inclusions.

Add-ons and Riders

Enhance your motor insurance with optional add-ons:

• Zero Depreciation Cover: Full claim amount without depreciation deductions
• Engine Protect Cover: Covers water damage to the engine
• Roadside Assistance: 24x7 towing, battery jumpstart, fuel delivery
• Return to Invoice: Full invoice value of the car reimbursed in case of total loss/theft
• NCB Protection: Keeps your no-claim bonus intact even after a claim

No Claim Bonus (NCB)

NCB is a discount offered on renewal premium for every claim-free year.

• Starts at 20% after 1st claim-free year, goes up to 50% in 5 years
• NCB is transferable if you switch insurer or sell vehicle
• Claiming even one damage claim can reset NCB to zero (unless NCB protector is opted)

Always check NCB retention options during policy renewal.

Tax Implications

Vehicle insurance premium is generally not eligible for tax deduction under Section 80C or any other provision, except in the case of business use.

• For self-employed/professionals: If vehicle is used for business purposes, insurance expense can be claimed under business income
• GST component: 18% GST applicable on premium; input credit available for registered businesses
• Employees: No deduction allowed unless reimbursed by employer as part of CTC

FAQs for Clients & Taxpayers

• Is third-party insurance enough?
  Legally yes, but it doesn't protect your own vehicle. Comprehensive plans are advisable.
• Can I switch insurer during renewal?
  Yes, you can port to another insurer with retained NCB and benefits.
• What happens if I miss my renewal?
  You lose NCB if not renewed within 90 days; inspection may be required for revival.
• Is online insurance valid?
  Yes, online policies are legally valid and often cheaper due to lower distribution costs.
• Do CAs and professionals get special vehicle insurance?
  Some insurers offer professional-specific discounts or packages, especially under group coverage.