Definition
Motor Insurance
Motor insurance covers financial liabilities and damages arising from owning and using a vehicle, and is mandatory in India for at least third-party liability.
Under the Motor Vehicles Act, every vehicle plying on Indian roads must carry valid third-party insurance; driving without it is a punishable offence. Policies are regulated by IRDAI, with third-party premiums set by the regulator and own-damage premiums priced by insurers.
Motor cover comes as standalone third-party, standalone own-damage, or comprehensive (both combined). The Supreme Court mandated long-term third-party cover for new vehicles (multi-year for new cars and two-wheelers) at the time of purchase. Add-ons like zero-depreciation, engine protection and roadside assistance enhance the base own-damage cover.
Related terms
- Third-Party InsuranceThird-party motor insurance covers the policyholder's legal liability for injury, death or property damage caused to others, but not damage to the insured's own vehicle.
- Own-Damage CoverOwn-damage (OD) cover compensates for damage to or loss of the insured's own vehicle from accidents, theft, fire and natural calamities.
- Comprehensive Motor InsuranceComprehensive motor insurance combines mandatory third-party liability cover with own-damage protection for the insured's vehicle in a single policy.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.