Car Insurance: Here’s why it is Mandatory in India

Irrespective of whether we are driving on the road or not, one important document that we compulsorily carry & periodically renew is motor insurance for our cars.

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It doesn’t matter if we are carrying third party car insurance or a comprehensive one, car insurance is compulsory to carry with your vehicle.

So, why is car insurance mandatory in India?

This article will not only help you understand the reasons behind this government’s mandate but also the different types of car insurance that are available in the market & how one can effortlessly buy car insurance online in India.

Car Insurance - The mandatory driving document in India

With higher disposable incomes, surplus availability of vehicles & hassle-free buying procedures, the privilege of owning & driving a car is now being experienced by millions of Indians.

However, driving is not just a privilege, it is also a responsibility. Unfortunately, despite stringent traffic rules, government initiatives & legislations such as the Motor Vehicle Amendment Act, 2019, road accidents continue to be a major developmental issue in India. As per the Road Accident Report by the Transport Research Wing of the Ministry of Road, Transport & Highways, 449,002 road accidents took place in India.

Owing to these challenges, in India, as per the Motor Vehicles Act, passed in 1939 & amended in 1988, all vehicles operating in public space in India must mandatorily have a motor vehicle insurance cover. Please note that having a comprehensive cover for one’s vehicle is not compulsory (but recommended), however, carrying at least a third party car insurance is mandatory as per this act.

While the Motor Vehicles Act is the most important reason to hold car insurance while driving in India, it is not the only reason. Following are 4 must-know reasons that make car insurance mandatory in India.

1. Cover for Damaged Vehicles to Keep Pocket-Burning Car Repair Expenses at Bay

Cars are not just expensive to buy, they are also expensive to own. A simple dent or a windshield crack because of a cricket ball can easily cost you thousands.

When it comes to driving on the road, have you ever wondered what would happen if you rammed into a parked car while protecting a stray dog? It is quite certain that you would be held liable for the damage but if the damaged car’s owner has at least third-party car insurance, the repair damages would be paid by their insurance company protecting you from the liability & vice versa.

Car insurance will protect you against the financial risk of uncertain situations arising while you drive on the road or even when your car is parked leading to unplanned liabilities for you.

2. Cover for Medical Treatment in Case of Accident or Injury

In situations where an individual has been injured due to an on-road accident, hospitalisation for the concerned person will not only call for a stressed-out situation but also expensive medical bills. 

When you would have a third-party cover, the insurance company will pay for the treatment of the injured person ensuring that they are getting the complete treatment required for the uncalled accident saving you from the financial obligation as the driver/owner.

3. Providing a Financial Safety Cover in Case of a Disability

While car insurance makes sure that the insurance company pays for the medical treatment of a person in the case of an accident or injury, however, in an unfortunate incident where the injured has become permanently disabled, the insurance company will provide monetary compensation to the owner/driver.

4. Financial compensation to the family in case of an unfortunate Demise

While casualties caused by road accidents are common, at times, they often lead to a person’s demise. Accident related deaths accounted for 151,113 in India in 2019 as per the Ministry of Road, Transport & Highways.

Car insurance also provides for a monetary cover in such situations, where the owner/driver, who was the sole bread earner of the family, passed away in a fatal road accident as their death would not only bring in profound grief but extreme financial stress for the family.

Such monetary compensation by the insurance company in these incidents ensures that the family or the nearest kin of the deceased can not only meet their daily needs but also sustain themselves in times of insecurity.

Types of Car Insurance Policies in India

Now that you have understood why having car insurance for your vehicle is mandatory in India, the following is a basic understanding of the 3 different types of car insurance policies available in India so that you can compare & buy the most appropriate one for yourself. 

Third-Party Car Insurance Policy

  • Cheapest & most affordable type of car insurance available in the market
  • Compensation only for third-party liabilities including third-party vehicle, person and property
  • Provides coverage for injuries/demise as well as damage of vehicle of the third party
  • More suitable for old vehicles

Comprehensive Car Insurance Policy

  • This is the premier form of insurance cover you can buy for your vehicle in India
  • Provides complete protection for your vehicle including coverage for theft, collision, fire, etc.
  • Includes accidental damages caused to the third party
  • Also covers damages caused due to natural and man-made disasters
  • You can also enhance your insurance cover by paying for additional

Add-on Insurance Cover for Vehicles

This type of insurance works as an additional cover for your car to get the most optimum cover you would need. Includes:

  • Zero-depreciation cover
  • Roadside Assistance for your vehicle
  • Engine replacement cover
  • NCB Protection Cover
  • Geographical Extension Cover
  • Consumables Protection Cover

The Bottom Line

That’s it, Ladies  & Gentleman. We did our job. Now it's your responsibility to make sure that you carry valid insurance for your vehicle throughout your ownership.

However, if you have made up your mind but are confused about how you can buy car insurance for your vehicle, Policybazaar Insurance Brokers Private Limited provides a comprehensive list of Car Insurance Plans. You can compare various third-party and comprehensive car insurance policies & find the best motor insurance for your vehicle.

With car insurance being so easily accessible these days, you can choose & buy from the best & make sure that your car, third parties, as well as you and your family are financially secure against uncertain situations on the road.

Written By: PolicyBazaar - Updated: 14 September 2021
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