Car Insurance

What is Car Insurance?

Car insurance, also known as motor insurance, is a contract between the insurer and the vehicle owner, where the former agrees to pay for the financial losses caused to the owner’s four wheeler per the policy terms. For this, the insured pays the insurer a periodic amount called the policy premium. It is to be noted that having a third-party car insurance is mandatory for all vehicle owners in India. Hence, not only does car insurance help ease the financial burden, it also ensures that you comply with the motor laws of India.

At Policybazaar, car insurance online starts at ₹2,094* per year. You can avail of additional benefits like 100% coverage, 24x7 roadside assistance, a dedicated claim manager, and a repair warranty for your vehicle. To buy online car insurance, you should compare policies from different car insurance companies and choose the best coverage as per your needs.

Buying car insurance is a great choice because:

• Fulfils legal requirements
• Covers third-party losses or damages
• Compensates for damages to your own vehicle
• Provides peace of mind while driving

Key Features of Car Insurance Policy

*TP insurance price for less than 1000cc engines. **All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard terms and conditions apply.

Third-party Car Insurance vs Comprehensive Car Insurance

By definition, we now know that the basic difference between the two types of insurance is that a third-party insurance policy protects you only against third-party liabilities while comprehensive insurance for your car will offer 360-degree protection.

Here is a table comparing coverage offered under third-party and comprehensive car insurance policies in India.

You May Also Read: Third Party Car Insurance vs Comprehensive Car Insurance

Car Insurance Add-On Covers

Add-ons in motor insurance are additional covers that you can buy with your comprehensive or standalone own-damage policy to enhance its coverage. You can purchase these add-ons for an extra premium.

Let's explore some major add-ons that you can choose with your insurance for car:

1. Zero Depreciation Cover

   Also called a nil dep policy, this add-on offers a complete payout for coverage without subtracting the depreciating value of the vehicle. It helps you get complete protection by providing full settlement coverage for your insured vehicle and eliminating depreciation costs. It is to be noted that tyres, tubes and batteries are covered 50% even under this policy.
   Another significant thing to know is that the zero dep cover applies to certain claims for cars less than 10 years old. The compulsory and voluntary deductibles (if opted for) still apply with the zero depreciation cover.

   Who Should Get It? - Owners of new and expensive cars

2. No Claim Bonus (NCB) Protection Cover

   While NCB provides discounts for not making any claim in the previous policy year, an NCB Protect cover is like an additional protection layer. It helps save you up to 50% on car insurance renewal premiums even if you raised a claim during a policy year. You can purchase this add-on along with a comprehensive insurance policy.

   Who Should Get It? - Those who want to retain NCB despite making claims during the policy year

3. Engine Protection Cover

   A comprehensive car insurance policy provides extensive coverage yet excludes damages to the engine itself. An Engine Protection cover provides coverage for losses due to oil leakage or water ingress, covering key components like the gearbox, engine parts, and differential.

   Who Should Get It? - Best for people living in flood-prone areas

4. Pay as You Drive Cover

   Pay-as-you-drive (PAYD) is a type of car insurance cover which is based on the usage-based insurance (UBI) insurance model. It allows you to reduce your own damage premium by charging you based on kilometres driven in a policy tenure. This add-on is ideal for individuals who drive occasionally or own more than one 4-wheeler.

5. Consumables Cover

   A Consumables Cover add-on covers the costs of replacing essential consumable parts. These small but critical parts include nuts, bolts, screws, AC gas, lubricants, filters, and much more.

6. Key Protection Cover

   Losing car keys can be a harrowing experience., which you can avoid with a Key and Lock Protect cover. With this add-on, the insurer covers the costs of replacing and repairing keys under key protection cover.

7. Daily Allowance Benefit

   Daily allowance add-on covers your transportation expenses when your car is being repaired in the garage after an accident. Under this add-on, the insurer provides a daily travel allowance if the damaged four-wheeler is in the garage for more than 3 days.

8. Personal Accident Cover

   The personal accident cover compensates if the owner-driver suffers injuries, permanent/partial disability or death in an accident. The maximum sum insured in the PA cover for car insurance is Rs. 15 lakhs.
   Additionally, extended personal accident coverage for co-passengers is also available, subject to pre-determined limits.

9. Roadside Assistance Cover

   The RSA cover or Roadside Assistance cover is the emergency helpline service provided by the insurance provider. It helps you with services like towing, fuel delivery, flat tyre repairs, and lockouts minor repairs. Your insurance company sends a mechanic to your location to fix the damage to your four wheeler. Since insurers do not count Roadside assistance coverage as a claim, it will not affect your NCB.

   Who Should Get It? - Ideal for long-distance travellers & highway drivers

10. Return To Invoice Cover

    The Return to Invoice add-on cover helps you receive your 4-wheeler's original invoice amount in the event of theft or total loss. This includes the ex-showroom price, road tax, and first-time registration charges. It is to be noted that the RTI coverage may differ from insurer to insurer.

    Who Should Get It? - Best for owners of new or luxury cars

11. Personal Baggage Cover

    With Personal possession add-on cover, you get coverage if your personal belongings get damaged in an unfortunate event or stolen when your four-wheeler is parked in authorised parking. The coverage amount is limited and varies from insurer to insurer.

12. Tyre Protection Cover

    A comprehensive insurance policy excludes tyre or tube damages in an unfortunate accident. A Tyre Protection cover covers expenses related to repairing or replacement of tyres or tubes.

    Who Should Get It? - Ideal for those who often go on adventures or drive on rough, bumpy roads

13. Driver and Passenger Cover

    This add-on cover provides financial protection against accidental injuries to passengers riding in the insured car. The insurer covers financial aid for medical expenses, with a maximum coverage of up to Rs. 2 lakh.

List of Car Insurance Companies in India 2025

Here is the list of leading car insurance companies in India including their claim settlement ratio and the number of network garages they cover. You can get an idea of the car insurance quotes from the below table.

Car Insurance for Electric Cars

With the rapid growth of EV cars in India, car insurance for electric vehicles (EVs) is also becoming popular among people. An EV car insurance policy is specifically designed to provide financial protection to electric four-wheelers by providing extra coverage for charging equipment, batteries, electric motors, etc.

Usually, car insurance for EV cars provides 100% battery coverage, unlike general auto insurance plans where the battery is covered only 50%. You can buy electric car insurance plans online easily after comparing plans from different insurers. It covers the following electric vehicles in India:

• Battery electric vehicles
• Hybrid electric vehicles
• Plug-in hybrid electric vehicles
• Fuel cell electric vehicles

Monthly Mode Car Insurance Policy by Policybazaar

With the aim to make motor insurance more accessible, Policybazaar has introduced a ‘monthly mode’ car insurance policy, which will help you to minimise your financial burden by paying premium in smaller chunks rather than a lump sum amount.

With this feature, you can add short-term Own Damage (OD) insurance as either a standalone or as part of a comprehensive policy. While the third party cover remains intact for the entire policy term, the OD coverage is provided only for the selected month. Once the policy term ends, a new policy is issued for the following month.

The policy also offers:

• Fixed IDV for the first 12 renewals, with standard IDV thereafter.
• NCB remains fixed for the first year if the claim is made within a policy term. Post 12 months, the NCB sets to zero.
• Having default on payments can lead to losing of accumulated NCB.
• Seamless and easy premium payments with auto-debit via UPI or net banking.
• Unchanged underwriting guidelines during the initial 12-month period.

This has been launched to reshape the motor insurance industry and provide flexible & convenient options to the customers.

How to Choose the Right Car Insurance Policy?

While buying car insurance online, consider these factors to get the right coverage at the best price:

• Appropriate Policy Coverage: While third-party insurance is sufficient to avoid traffic fines, a comprehensive policy offers complete protection to you and your vehicle.
• Insurer Claim Settlement Ratio (CSR): A higher claim settlement ratio (CSR) of the insurer implies there are greater chances of your claims being settled.
• Cashless Garages: Choose an insurer with an extensive network of cashless garages. It will broaden the scope of availing of a cashless repair facility without paying cash from your pocket.
• Know the Claim Process: Go for an insurance company with an easy claim process, 24x7 claim support, and a faster claim settlement.
• Select the Suitable IDV: Choose the IDV that matches your car's market value. While a lower IDV can help you save on your premium costs, you may incur higher out-of-pocket expenses during claims.
  Note: You can also use an IDV calculator online to get the right IDV for your car.
• Compare Car Plans Online: Compare multiple 4-wheeler insurance plans online to find the best-suited plan within your budget. You can easily compare car insurance plans from 20+ insurance companies at Policybazaar.com.
• Customer Assistance: When buying insurance for a car, consider the customer service and additional benefits the insurer provides. An insurance company that offers 24/7 customer assistance is essential. This will help you to settle your queries and claims conveniently.

How to Calculate New Car Insurance Prices Online?

The IRDAI decides the third-party insurance rates for all 4-wheelers based on their engine capacity. Here are two ways to calculate the own damage premium for a new car:

Using Car Insurance Calculator

The easiest method to calculate the insurance amount for a new car is to use a free online Car Insurance Premium Calculator. If you want to calculate car insurance premium online, simply visit the calculator on Policybazaar.com and enter a few basic details of your four-wheeler, like make, model, variant, and ex-showroom price. The calculator will instantly show the estimated new car insurance price along with the IDV.

Calculating New Car Insurance Cost via Formula

An OD insurance premium for a new four-wheeler can also be calculated by using the following formula:

OD Premium = IDV * Premium Rate (decided by the insurer) + Add-Ons - Discount & benefits (no claim bonus, theft discount, etc.)

IDV or the Insured Declared Value can be calculated by using the following formula:

Insured Declared Value = (Current market value - the depreciation value) + (Cost of accessories - their depreciation value)

Factors Affecting IDV in Car Insurance

When you buy a new car, its Insured Declared Value (IDV) is calculated at 5% less than its ex-showroom price. IDV refers to the maximum amount you will receive by your insurance company in case of theft or total loss of your car. Here are a few factors that affect the IDV in car insurance.

1. Age of the Vehicle

   The IDV decreases as your car gets older. The table below shows how the age of your four-wheeler affects the IDV.

   Vehicle Age	Depreciation (%)
   0 - 6 months	Up to 5%
   6 months - 1 year	Up to 15%
   1 - 2 years	Up to 20%
   2 - 3 years	Up to 30%
   3 - 4 years	Up to 40%
   4 - 5 years	Up to 50%
   5+ years	Based on insurer & market value

   Note:If you choose a lower IDV, it may reduce your premium but will also lower the claim amount.

2. Make & Model of the Car

   Usually, the IDV for luxury and premium cars is higher, whereas regular sedans and hatchbacks have a comparatively lower IDV. If you have an expensive car, it becomes all the more important to choose the right IDV to ensure you get adequate compensation in case it suffers damages or total loss.

3. City of Vehicle Registration

   Metropolitan cities like Delhi, Mumbai, & Bangalore usually have a higher IDV since the risk of accidents and theft is higher. However, tier-1 & tier-2 cities and rural areas generally have a lower IDV.

4. Depreciation Rate

   As your car ages, the value of its components declines. This, in turn, reduces its IDV. The table below provides a clear idea of the depreciation rate at which the car components are calculated:

   Car Components	Rate of Depreciation (%)
   Fiberglass parts	30%
   Plastic/Rubber parts	50%
   Metal parts	5% - 10% per year

   This depreciation charge can be avoided by opting for a zero depreciation or nil depreciation add-on cover.

5. After-Market Modifications

   Any extra accessories installed in your car may increase your car's IDV. While buying insurance, you must include the value of these modifications to ensure full coverage.

   Understanding these factors help you to make an informed decision about buying car insurance and ensuring maximum protection at the right cost.

Third-party Car Insurance Price List As Per IRDAI

As per IRDAI, the third-party premium rates of car insurance are based on the car engine’s cubic capacity (cc). Here are the premium rates per the latest IRDAI notification.

Factors Affecting Car Insurance Premium

Several factors affect car insurance prices. You can easily check your insurance premium using an online car insurance premium calculator. However, you must keep in mind certain factors that can affect the insurance price for a car.

• Type of Coverage: The car insurance premium price is decided based on the type of policy you choose. Basically, third-party insurance policies have the lowest premium as it only covers third-party damages. However, the premium price is higher in case of an own-damage or comprehensive insurance policy.
• Insured Declared Value (IDV): IDV, the current market value of the insured four wheeler, significantly affects the premium. It is the maximum amount a policyholder receives in case of a total loss or theft. Usually, the higher the IDV, the higher its insurance premium.
• Car Make & Model: A four-wheeler's make & model, fuel type, and variant significantly affect its insurance price. Typically, it is costlier to insure high-end or luxury models than the basic hatchback models because of the higher repair & part replacement costs.
• Area of Vehicle Registration : Usually, the 4-wheeler insurance premium is higher in metropolitan cities because of denser traffic and, consequently, higher chances of accidental damage.
• Vehicle Age: The manufacturing year of the four wheeler is also considered when deciding the car insurance premiums. Insuring newly launched cars can be expensive since their spare parts might not be available in the market.
• Add-on Covers: Though enhancing the policy coverage with add-on covers provides wider protection, it will increase the premium, too. Hence, you must choose the add-ons for your policy wisely.
• No Claim Bonus: If you have not filed claims during the policy term, the insurer provides a discount in terms of the No Claim Bonus (NCB). You can use this reward to reduce the policy premium at the time of car insurance renewal.
• Driving Record: Many insurers check your driving history when deciding the four-wheeler insurance premium prices. Traffic infractions and accidents can affect this amount.

How Can You Save on Your Car Insurance Premium?

Now that you know the factors that affect the prices for car insurance, it is worthwhile to know about the tips through which you can lower the premium cost. Follow the below-mentioned points to save on car insurance premium while ensuring optimum coverage.

1. Compare Car Insurance Plans

   Car insurance premium rates vary based on the coverage options and benefits the insurer offers. Hence, you should compare car insurance policies online to select the one with a cost-effective premium.

2. Install Anti-theft Devices

   Another way to save on your insurance premium for cars is to install an ARAI (Automotive Research Association of India)-certified anti-theft device in your four-wheeler. If you have installed security devices in your car, insurers provide a discount of up to 2.5% of OD premium or Rs. 500, making your premium more affordable.

3. Avoid Modifications

   It is important to understand how modifications affect car insurance premiums. Every modification done to your four-wheeler increases its value and, in turn, its premium cost. Hence, you must not make any unnecessary modifications to avoid high premiums.

4. Choose the Right Add-ons

   You should take some time to identify the add-on covers tailored to your vehicle's type and requirements. It ensures optimum coverage and helps lower your overall car insurance premium. You may consider some beneficial add-ons such as zero depreciation, roadside assistance, and engine protection for a great driving experience..

5. Avoid Small Claims

   If you face minor issues with your bike and the cost is manageable, you should avoid making claims for them since this can affect your NCB and, ultimately, the premium. Hence, this small, mindful step of not making claims for minor damages can help you save big on your car insurance premium.

   Did you know you can save from 20 to 50% with an NCB discount? Read this guide to know how NCB is calculated in a car insurance policy?

6. Opt for Pay as You Drive (PAYD) Insurance

   Pay-as-you-drive (PAYD) or pay-as-you-go insurance is usage-based car insurance policy. Under this, you pay the policy premium only for the number of kilometres you drive. Hence, if you don't drive frequently or long distances, you should opt for PAYD to save on your policy premium.

7. Avoid Policy Lapse

   If you renew car insurance after its expiry, it leads to a policy lapse. It, in turn, increases the renewal premium and cancels NCB. So, you should get your car insurance renewal on time to avoid hefty premium amounts.

8. Increase Deductibles

   Deductible is the amount that you agree to pay out-of-pocket when making a claim. When you increase your share of deductibles, the insurer offers you some discount on the car premium as you agree to pay more when you have a claim.

Benefits of Buying Car Insurance Online from Policybazaar

Buying car insurance online is a time-saving and more economical process. Most online car insurance policies involve zero paperwork, making the documentation process convenient and fast.

If you buy a car insurance policy from Policybazaar.com, you get additional benefits, which are as follows:

• Self-video Claim: You can easily raise a claim to your insurer by submitting a self-shot video of your insured four-wheeler through the PB Claim app. Within 2 hours, a garage will be given the approval to start the repair.
• Free Pick-up and Drop: In accidental cases, you can avail of the free pick-up & drop service. Your insured car will be picked up, if within a 20 km radius, and dropped to the nearest garage.
• 3-day Repair Assurance: For most cases, your car will be repaired within 3 working days across any insurer.
• Cashless Assurance: With this advantage, you can avail of a 100% cashless claim facility. Though it is applicable to PAN India; however, it is available in limited cities. If an insurer does not offer this facility, they will provide reimbursement claims within 24-48 hours.

How to Buy Car Insurance Online?

Buying car insurance online is quick, hassle-free and completely paperless. Whether you have a new car or an old one, you can easily compare and choose the right car policy in just a few minutes by following these simple steps:

• From the homepage, click 'Car Insurance' tab.
• Enter your car number or select 'Brand new car'
• Provide your car details and fill out the registration form.
• Now, compare car insurance plans, policy features, benefits, & premium prices from different insurers.
• Select a policy that best fits your coverage needs and budget.
• Secure pay the premium amount via cards, UPI, or net banking.
• After the payment is successful, your car insurance policy will be instantly mailed to you.

Tip: Always select a comprehensive policy for broader coverage and opt for essential add-ons like Zero Depreciation, 24x7 Roadside Assistance, and Engine Protection, among others.

Benefits of Car Insurance Renewal Online

Car insurance policies have a validity and need to be renewed for continued coverage. Renewing your car insurance online offers several advantages other than saving the policy from getting lapsed. It is a more convenient and time-saving process. Let us look at some major benefits of car insurance renewal online:

• Easy Comparison: When you renew car insurance online, you can easily compare plans offered by multiple insurers in just a click. This helps in easily understanding the policy features and additional services offered by different insurers.
• Seamless Customisation: Another benefit of online 4-wheeler insurance renewal is the feasibility of personalising the policy based on the coverage requirements. You can easily modify the four wheeler insurance coverage during renewal by adding or removing add-ons.
• Easy to Switch the Insurer: If you are dissatisfied with your current insurer or find some other insurer’s offerings more appealing, you can switch car insurer at the time of renewal.
• Secured & Transparent: Secured payment gateways make car insurance online renewal a safe and transparent process. Premium payment can easily be done using credit cards/debit cards/and UPI.

How to Renew Car Insurance Online?

Renewing your car insurance online ensures continued coverage and helps you avoid penalties. With Policybazaar, you can renew a car policy in just a few minutes, by following these simple steps:

• Click on the 'Car Insurance' tab on the homepage.
• Enter your car registration number and provide your car details.
• Fill in your contact details and proceed further.
• Compare multiple car insurance plans from leading insurers.
• Choose the one that best matches your requirements.
• Select the necessary add-ons and proceed towards payment.
• Pay the policy premium amount via cards, UPI, or net banking.
• Upon successful payment, you will instantly receive your car insurance policy in your email.

Tip: Ensure your car insurance renewal before expiry to keep your NCB (No Claim Bonus) intact.

Documents Required for Buying/ Renewing Car Insurance

You do not need any documentation or paperwork when you purchase or renew car insurance online from Policybazaar.com. However, there are some details that you will need to have handy during the process. These include:

• Vehicle Registration Certificate - Owner name, make/model/variant, engine no., chassis no., engine’s CC, fuel type, vehicle class
• Previous Year Policy - NCB, insurer name, policy no, the policy period, Add-on info
• KYC - Proof of Residence and Proof of Identification (Pan Card/Aadhar/DL/Voter ID/Form 16/Passport)

Why Should You Renew an Expired Car Insurance Policy Immediately?

Here are the top 4 reasons why you must renew your expired car insurance policy immediately:

• Legal Requirement: Motor insurance is mandatory for all four-wheeler owners in India. Hence, if you are caught driving without four wheeler insurance, you could incur fines of up to Rs. 4,000 and face imprisonment as well.
• Continued Coverage: If your car insurance has expired, you do not get policy coverage. This means you become financially vulnerable to bear the repair costs yourself in case of accidents, theft, fire, etc.
• Save the Loss of NCB: If you do not renew your expired car policy within 90 days, you will lose your benefits of No Claim Bonus (NCB), which can otherwise help in getting big discounts on insurance renewal premium.
• Save yourself from 4-wheeler Inspection: A four-wheeler with an expired policy may have to undergo a mandatory inspection before the car policy renewal. If the insurer finds it ill-maintained or in bad shape, it may lead to a higher premium.

How to Raise a Car Insurance Claim Online?

It is critical to understand the car insurance claim process for own damage to avoid any claim rejections. Follow the below-mentioned steps to raise a valid car insurance claim conveniently:

• Inform the Insurance Company: The first step is to inform your insurer immediately and share details of the accident/event with them. Fill out the claim form.
• File FIR: File a police report at your nearest police station, if required.
• Record Evidence: Make sure you document and share photographic evidence with the insurer to support your case.
• Submit Required Documents: Attach the documents in case of an online claim for car insurance or keep the required documents handy for claim verification once the insurer’s surveyor visits you for inspection.
• Damage Assessment: After the claim registration, the insurer sends a surveyor for damage evaluation.
• Repair: Once the inspection is complete, you can send your 4-wheeler to a network garage for repairs.
• Claim Settlement: With a cashless claim, the insurer will directly settle the repair bills with the network garage. However, for a reimbursement claim, you will need to first pay the bills and ask your insurer for reimbursement.

Documents Required for Filing a Car Insurance Claim

Whether you are making a claim for car theft, accident, or third-party damages, the insurance company requires several documents. Mentioned below is the list of important documents that you will need when raising a claim for your 4-wheeler insurance:

• Duly filled and signed claim form
• Insurance policy copy
• Driving license
• RC copy
• Copy of police FIR (in case of theft claims)
• Original repair bills and payment receipts
• Estimated repair bills

How to Download Your Car Insurance Policy Copy Online?

When you purchase car insurance online, your insurer sends your policy documents to your registered address. Moreover, you also receive a digital copy of your policy at your email address. However, if you lose your policy documents, you can download your policy copy from the official website of Policybazaar. Here are the steps to download your four-wheeler insurance policy copy online:

• Visit Policybazaar.com and select the ’Sign in’ tab.
• You can sign in via OTP or through your Google account.
• You will now be redirected to your account dashboard.
• From the ‘Your Policies’ section, you can easily download your policy copy online.

Top Reasons to Buy Car Insurance Policy

When you buy insurance for your car, it reduces the tension and provides peace of mind by providing financial and legal protection:

• Legal Requirement: 4-wheeler insurance is compulsory under the Motor Vehicles Act of India. All vehicle owners need third-party coverage to drive on public roads. While this is the basic required coverage, you can opt for comprehensive car policy for enhanced protection.
• Third-party Liabilities: A car insurance policy offers protection against 3rd party injuries, fatalities, and property damages arising from road accidents by the insured vehicle. While it offers up to Rs. 7.5 Lakh coverage for property damages; there is no limit on death claims.
• Own-damage Protection: Own damage insurance or OD insurance covers accidental damages and losses to your own vehicle.
• Personal Accident (PA) Cover: The mandatory PA cover under car insurance policy provides accidental coverage to the insured in the unfortunate event of permanent disability or death from accidents.
• Convenience: Buying your four-wheeler insurance online is a convenient process as it lets you buy a car policy in just a few minutes without any hassle of hefty paperwork.

Important Car Insurance Terminologies You Must Know

Check out some of the commonly-used car insurance terminologies:

1. IDV

   IDV or Insured Declared Value is the current market value of the insured four-wheeler. If it suffers total loss, IDV is the maximum compensation that the insured person will get from the insurer.

2. Premium

   Premium is the amount the vehicle owner pays to the insurer in exchange for the financial protection of the four-wheeler.

3. No Claim Bonus

   No Claim Bonus or NCB is a discount on the motor insurance renewal premium. This reward is given by the insurer to the policyholder for safe driving and not raising any claims in the previous policy year.

4. Zero Depreciation Cover

   Zero depreciation is an add-on cover in car insurance that prevents the depreciation deduction on the four-wheeler and its parts during claims.

5. Own Damages

   Damages from an accident, natural calamity, fire, man-made disaster or burglary.

6. Personal Accident Cover

   Personal accident cover in car insurance provides compensation to the owner-driver in case he/she becomes disabled or dies in an accident.

7. Cashless Claims

   These claims are filed when the insured 4-wheeler is taken for repair at a network garage authorised by your insurer.

8. Voluntary Deductible

   A voluntary deductible is the amount the policyholder chooses to pay out of pocket when making a car insurance claim.