Types of Car Insurance
There are mainly 3 types of car insurance policies in India, third-party insurance, standalone own damage insurance, and comprehensive car insurance. Choosing the right type of car insurance is one of the most essential steps when buying a car policy in 2025. Each type of car insurance offers different levels of protection to suit your needs, providing coverage against various risks and damages that may occur on the road. Read on to know about different types of motor insurance in detail and find the one that best meets your car insurance coverage and needs.
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Why is Car Insurance Important?
A car insurance policy safeguards you and your vehicle from various unforeseen incidents. These include accidents, natural disasters, man-made calamities, theft, fire, etc. It covers any expenses related to your vehicle repair or part replacement. Additionally, car insurance also protects you legally and financially from any liability associated with a third party. There are different types of car insurance policies in India based on coverage, usage, and more.
What are the Different Types of Car Insurance?
Car insurance companies primarily offer the following 5 types of car insurance policies:
- Third Party Liability Insurance Coverage
Third party car insurance or liability only policy is the minimum coverage required by motor laws in India. It covers bodily injuries/death and property damages caused to others in an accident involving your insured vehicle.
The third party car insurance policy pays for hospital bills and treatment of third parties, repairs for their damaged vehicle, and death liabilities. - Own Damage Car Insurance Coverage
A standalone own damage (OD) car insurance policy offers coverage for damages to your own car in an accident. You can opt for the standalone OD insurance along with a third party liability policy to cover damages to your own vehicle. - Comprehensive Car Insurance Coverage
Comprehensive car insurance offers the most exhaustive coverage for car owners. It covers both damages to your car and third party liabilities. This type of motor insurance policy offers complete protection against financial and legal responsibilities associated with operating a car. - Pay-As-You-Drive
The Pay-As-You-Drive (PAYD) is a flexible type of car insurance wherein the premium is calculated based on the total distance you drive in a specified policy tenure. Insurers adjust the premium, and if you drive less, you pay less. It is ideal for people who drive less or only use their cars for short commutes. - Zero Depreciation Car Insurance
This type of car insurance is also known as bumper to bumper cover or nil depreciation cover. It offers complete protection and claim settlement without considering any depreciation costs incurred by the insured car or its parts. With the zero dep cover, all repaired or replaced parts, such as nylon, plastic, glass, rubber, etc., are covered at 100% costs, whereas tyre, tube and battery costs are covered at 50% while the insurance company is settling an accidental claim
Types of Car Insurance Add-on Covers
Add-ons in car insurance are additional covers that enhance the protection of your insured car. You can choose among the following types of car insurance add-ons for an extra premium and expand your coverage:
- Engine Protection Cover
The Engine Protection add-on protects your car's engine against damage from water ingression, oil spill, and electrical or mechanical breakdown. This type of car insurance add-on covers the replacement cost of the car's engine or its parts. - Roadside Assistance Cover
Roadside Assistance add-on cover provides 24x7 emergency services to car owners in the event of a breakdown. It offers services such as flat tyre changes, minor repairs, towing, fuel delivery, key or lock replacement, and battery jumpstarts. - Return to Invoice (RTI) Cover
The RTI cover in a car insurance policy enables vehicle owners to receive the original invoice value of their car in case of total loss or theft. - Consumables Cover
The consumables add-on in four-wheeler insurance covers the replacement cost of items damaged in an accident. These include nuts & bolts, lubricants, washers, engine oil, brake oil, oil filters, and other small parts. - Compulsory Personal Accident Insurance
A personal accident cover in car insurance protects the vehicle owner in case of an accident by covering any medical expenses (up to Rs. 15 Lakh) incurred due to the accidental injury. In the unfortunate event of accidental death, the insurer also pays a lump sum to the deceased's policyholder family.
Difference Between Types of Car Insurance
The table below shows the coverage offered under the three primary types of car insurance in India:
| Car Insurance Coverage Offered | Own Damage Car Insurance | Comprehensive Car Insurance | Third Party Car Insurance |
| Damages to third party property | Only covers own damages and can be purchased along with an existing third party insurance | Up to Rs. 7.5 Lakh compensation for property damage | Compensation up to Rs. 7.5 Lakh for property damage |
| Injury/death of the third-party | Third-party liabilities are not covered, so no compensation is offered. | Unlimited compensation as per MACT for death and disability of a third person by the insured car | Unlimited compensation for death and disability of a third person by the insured car |
| Damages to own vehicle | Covers damages caused by accidents, collisions, theft, calamities, fire, etc. | Own damages arising from accidents, theft, fire, natural or man-made calamities, etc. | Only covers third-party liabilities |
| Insurance Premium | Higher than third-party insurance but lower than comprehensive | Highest. Covers both third party and own damages | Least. Decided by IRDAI as per car’s engine capacity |
| Vehicle theft | Losses arising out of theft or burglary are covered | Covers partial or total loss from theft up to the car's IDV | No coverage for the insured's car theft |
| Personal accident (PA) cover | You can purchase PA cover if not already with the TP plan | PA cover is provided to the driver/owner. | Yes. You can opt for this cover (up to Rs. 15 Lakh) with this policy |
| Add-ons | You can customize this cover with add-ons like Zero Depreciation, NCB Protect, Roadside Assistance, etc. | You can choose different add-ons like zero dep, NCB Protect, Consumables cover, etc. | Add-ons are not available |
FAQs on Types of Car Insurance
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Q1: What are the three types of car insurance that i can buy in 2025?
Ans: The three main types of car insurance that you can buy this year are third-party liability cover, own damage vehicle coverage, and comprehensive car insurance. Top car insurance companies in India offer these car insurance plans online on Policybazaar.com that you can compare and buy after checking the premium rates and policy coverage. -
Q2: What type of car insurance is best?
Ans: The best type of car insurance depends on your coverage requirements and budget. However, a comprehensive policy offers a more exhaustive level of protection than other types of car insurance as it covers both own damages and third party liabilities. -
Q3: How can I buy car insurance online?
Ans: To purchase online car insurance, visit Policybazaar.com and choose 'Car Insurance.' Enter your car number and contact information to see different car insurance plans. Select the one that fits your budget and needs, and securely pay your car insurance price. Upon payment, you will receive your four-wheeler insurance policy via email. -
Q4: What is the most common type of car insurance in India?
Ans: Third party car insurance is the most common type of car insurance coverage that most people opt for in India. It provides the minimum protection to car owners, covering third party injury, death, or property damage, while fulfilling the minimum legal requirements. -
Q5: Which type of car insurance is compulsory in India?
Ans: In India, a third-party car insurance policy is mandatory for car owners to drive legally on roads. You could face hefty fines and even potential imprisonment if you don't have this basic coverage. -
Q6: Is it better to buy third-party or comprehensive car insurance?
Ans: You can buy either of the two types of car insurance based on the type of coverage, location, make and model of your vehicle, budget, and other factors. However, even though the third-party insurance is legally mandatory, it is strongly recommended to buy a comprehensive policy for an enhanced protection. -
Q7: How much does car insurance cost?
Ans: The cost of a motor insurance policy depends on several factors, such as the type of car insurance, location, make and model of your vehicle, age, etc. The premium for a third-party insurance is decided by the IRDAI and stays the same across all insurers. You can use a car insurance premium calculator to estimate the own-damage premium. -
Q8: What type of car insurance protects the driver fully?
Ans: You can opt for a comprehensive car insurance with the necessary add-ons to protect the driver, third-party, and the insured vehicle completely. You can choose the zero depreciation cover to avoid the depreciation costs, along with the RSA, engine protection cover, etc. -
Q9: Which type of car insurance is suitable for old vehicles?
Ans: You can opt for a comprehensive car insurance for both old and new vehicles as it offers an extended protection and reduces the policyholder’s out-of-the-pocket expenses. -
Q10: How to select the perfect type of car insurance?
Ans: To select the perfect type of car insurance, you must consider several factors, such as make, model, age, type of insurance (third-party or comprehensive), budget, usage, add-ons, and more. -
Q11: What is usage-based type of car insurance?
Ans: Usage-based insurance is a type of car insurance that is tailored to your driving habits, rather than relying on traditional factors such as age or location. They are flexible and suitable for people who drive short distances. Some common usage based car insurance policies are pay as you drive, pay how you drive, and more.
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#Rs 2094/- per annum is the price for third-party motor insurance for private cars (non-commercial) of not more than 1000cc
*Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB. Actual time for transaction may vary subject to additional data requirements and operational processes.
+Savings are based on the maximum discount on own damage premium as offered by our insurer partners.
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