Different Types of Car Insurance in India

Choosing a new car insurance plan can be a stressful and time-consuming task, so it's important to understand how many options are available, and which plan suits your needs best.

There are three different types of car insurance available to drivers in India. Third party car insurance only covers damages to third party property and injuries to third party individuals; it does not provide coverage for damages to yourself as the owner or driver, or your car. Standalone own damage car insurance is just the opposite. It only covers damages to the insured car and the insured owner or driver, and does not protect against damages to third parties.

Comprehensive insurance is the most complete type of car insurance in India, as it is a combination of third party and standalone insurance. Comprehensive policies provide coverage for the insured vehicle, the owner or driver of the insured vehicle, and any damages to third party individuals or property.

Comprehensive Car Insurance Policy

Comprehensive insurance is the most complete type of car insurance offered in India. It's a combination of the country's two other car insurance plans - third party and standalone insurance - but is the most expensive type of policy because of the expanded scope of coverage.

Inclusions and Exclusions

All comprehensive car insurance plans cover for damages to third party property and individuals as a result of an accident, and cover for damages to the insured car from natural and man-made accidents up to Rs. 15 lakhs. Personal accident coverage, which compensates for injuries to the owner or driver of the insured car in an accident, is also included.

Comprehensive policies exclude coverage for damages incurred from:

  • Driving outside of India
  • Speeding, racing, motor trade, staged accidents, using a private car for commercial purposes
  • Driving under the influence of drugs or alcohol
  • Driving without a valid license
  • Consequential loss
  • Depreciation, wear and tear
  • Mechanical, electrical, tyre and tube failures and breakages

Comprehensive policy premiums are usually billed annually, carry a one-year term, and must be renewed each year to avoid a lapse in coverage.

Policy Cost

Comprehensive car insurance prices vary from insurer to insurer, and fluctuate based on the make and model of your car, where your car is registered, how old your car is, the What is IDV For Car Insurance, and any add-on features or discounts that have been applied.

Used cars are normally the cheapest to insure, since their value has depreciated over time. On average, annual premiums for a used Honda Amaze start at Rs. 13,162, 40% cheaper than premiums for a new Honda Amaze. Sedans are the cheapest model of new car to insure, with the average annual premium starting at Rs. 21,200 for a new Honda Amaze.

Bar graph showing premium prices for a new Honda Amaze
Bar graph showing premium prices for a new Honda Amaze

SUVs are typically slightly more expensive than sedans, as they are higher-risk vehicles, while luxury cars are the most expensive to insure since they are the most expensive to drive and own. Annual premiums for comprehensive car insurance plans are also more expensive if your car is registered and is being operated in a large city, like Mumbai or Delhi, because the risk of an accident is much greater than if you do most of your driving in a rural town.

When purchasing a new policy online, the majority of insurers allow you to view a premium detailed breakup of your quote. You can see each feature of your comprehensive plan and how much it costs, which is extremely beneficial when deciding between multiple companies.

Add-Ons and Discounts

Two of the most popular aspects of comprehensive car insurance plans in India are the add-on coverages that increase the scope of your coverage, and the potential discounts that can help reduce the price of your annual premium.

Add-ons are features that do not come standard with your comprehensive plan, but are potentially extremely important coverages. The average number of optional add-ons among the 16 Indian car insurers we studied is 14, and consumers can add as many or a few as they'd like, in exchange for an increased premium price.

The most popular add-on options are:

  • Personal accident coverage for the passengers of the insured car
  • Roadside assistance
  • Depreciation coverage
  • Engine and gearbox protection
  • Consumable expense coverage

Some of the more unique add-ons include a daily cash allowance if your car is being repaired in a network garage - like the option offered by Reliance General Insurance-, small repair claims, and personal belongings protection.

The average car insurer that we analysed offers five discounts that can be applied to their comprehensive plan options. The most commonly used among policyholders are:

  • Claims free discount
  • Membership with approved automobile associations in India
  • Car equipped with an approved anti-theft device

Certain insurers like Cholamandalam MS offer a unique 10% discount for female policyholders and another discount for a strong credit score, while others like HDFC Ergo offer a multi-vehicle discount, where policyholders receive a reduced rate for each additional car added to their plan.

Add-On FeatureDescription
Depreciation CoverageMaintains the original IDV of your car and does not factor in depreciation in case of a claim
Engine & Gearbox ProtectionCovers damages to the engine and gears
Consumables CoverageCovers accessories not covered under the basic scope
Conveyance BenefitReimbursement for inconveniences if your car is being repaired
Key & Lock ReplacementReplaces your key and/or locks if lost or damaged in an accident
Personal Baggage CoverageReimbursement if your personal belongings are damaged in an accident
Roadside assistanceSends a repair truck to the location your car has broken down or been damaged
Invoice Price CoverageCovers charges that exceed the IDV of your car
Electrical Accessories CoverageCovers damages to electrical parts of the car
Non-Electrical Accessories CoverageCovers damages to non-electrical parts of the car
Personal Accident Coverage (Passenger)Covers any injuries to passengers in the insured car
CNG Kit CoverageCovers damages to the installed CNG kit
EMI ProtectionReimbursement for your monthly car payment for the time it was being repaired
Road Tax CoverageReimbursement for any incurred taxes
Legal Liability for Paid WorkerCovers injuries to anyone injured in an accident who was being paid to operate the car
Ambulance Charge CoverageReimbursement for ambulance fees if the insured needs to be transported to a hospital after an accident
Hospital CashProvides an allowance for each day the insured is in the hospital to treat injuries stemming from an accident
Medical ExpensesProvides payment for medical procedures caused by an accident
NCB ProtectionLocks in your No Claims Bonus if applicable at the start of your policy
Loss of License or RegistrationIf your license or registration was lost, damaged or stolen, you will be reimbursed for a new copy
Small Repairs ClaimsWill cover small repairs to your car that are not the result of an accident
Daily Cash AllowanceProvides cash each day you are inconvenienced by car repairs
DiscountDescription
Claims FreeIf you haven't submitted a previous car insurance claim
Voluntarily Increased DeductibleProvides a reduced rate on your annual premium in exchange for an increased deductible cost in case of an accident
Auto Association MembershipIf you and your car are members of an approved automobile association in India
Anti-Theft KitIf your car is equipped with an anti-theft device
Vintage CarFor an approved vintage car only
Handicapped Vehicle ModificationAny car that is equipped with features to assist handicapped individuals
Personal InformationCertain personal features like gender, occupation, average distance driven per day
Specific LocationFor any car being driven only in a specific city, geographic location, state
Credit ScoreThe stronger your credit score, the more substantial your discount
Multi-VehicleReduce your annual premium price for each additional vehicle you add to your policy

Online Purchasing and Claims Process

Most car insurers in India allow policyholders to purchase and renew their comprehensive policies online, which, as opposed to working directly with an agent, is the preferred method among Indian consumers. Buying a new plan online is easy and convenient, and in most cases can be completed in just a few minutes.

To buy an online policy, you'll need the make and model of your car, when and where it was registered, and the IDV. Once you enter this information, you'll be prompted to add any optional coverages and apply for any discounts. You will be presented with a final annual price, and if satisfied, you can take the next step and complete your purchase.

Companies like Reliance provide an online quoting tool that is smooth and easy-to-navigate, and offer their policyholders a car insurance portal with many useful tools, like a car insurance calculator and a cashless garage and office branch locator.

The most common claims submission method for comprehensive policyholders is via phone, email or through an online portal. However, some companies like Bajaj Allianz provide an app where consumers can submit instant video claims and receive settlements within the same day.

It's beneficial for consumers to seek out insurers with a strong online presence and a modern platform, as it reduces frustration and makes it easy to handle all your car insurance needs without having to involve a dedicated agent.

Third Party Car Insurance Policy

Third party car insurance is the minimum level of insurance required in India. The Indian government regulates pricing for third party policies, and in most cases, add-ons and discounts cannot be applied.

Inclusions and Exclusions

Third party car insurance plans only protect against damages to third party property and injuries to third party individuals. They do not cover any damages to your car or any injuries to yourself as the owner driver.

Third party plans are offered for one, three or five year terms. The Indian government was set to outlaw the single-year option and raise annual premium costs on April 1, 2020, but the COVID-19 pandemic caused them to postpone these changes to provide financial relief.

Policy Cost

The Indian government, since it requires each driver to have at least third party insurance, regulates third party policy pricing across the industry. Regardless of the insurer, your annual premiums will cost the same, depending on the make and model of your car.

Pricing is broken up into three tiers, and your car's cylinder capacity determines which pricing tier you'll be a part of.

Engine Capacity (cc)Annual Premium
< 1,000cc₹2,072
1,000cc - 1,500cc₹3,221
1,500cc+₹7,890

Add-Ons and Discounts

Some insurers, like Bharti Axa, allow their policyholders to include personal accident coverage as an add-on, but the majority of companies do not support any add-on features for their third party policies. Additionally, discounts generally cannot be applied to third party plans because of the government-mandated pricing structure.

Online Purchasing

Most car insurers in India allow consumers to purchase third party insurance online, since the pricing is already established and since few, if any, additional features are permitted.

To purchase a third party plan online, you'll have to follow the same process as those consumers who are purchasing a comprehensive plan. You'll need the make and model of your car, when and where it was registered, and the IDV. Instead of choosing a comprehensive plan, choose the third party policy option, bypass the add-on and discount step, and proceed to payment.

Third party policyholders will submit claims using the same methods as comprehensive policyholders. Depending on your insurer, you'll have the option to start the claims process by phone, email, online or from your smartphone.

Standalone Own Damage Policy

Standalone own damage plans are offered by fewer than half of the insurers we studied. They only cover damages to your car and yourself as the owner or driver, and exclude third party coverage.

Inclusions and Exclusions

Standalone own damage insurance is the exact opposite of third party insurance. Standalone plans only cover damages to the insured car, and yourself as the owner or driver. They do not provide any coverage for third party damages or injuries.

Since third party insurance is required by law in India, you must have an active third party plan to purchase a standalone own damage plan. You cannot simply have an own damage plan without any level of third party protection. Standalone plans are offered for terms of one year.

Policy Cost

Pricing for standalone own damage policies tends to be cheaper than fully comprehensive plans, because there is significantly less coverage, but still more expensive than third party plans.

On average, standalone plans are 35% cheaper than standard comprehensive plans, but nearly five times more expensive than third party policies. Consumers should compare comprehensive plan pricing against buying separate third party and standalone plans to determine which option better suits their budget.

Add-Ons and Discounts

Most insurers we studied allow their policyholders to apply discounts and add-ons to standalone own damage plans, since pricing is not regulated by the Indian government. While the majority of companies reduce the number of available discounts and add-ons from the comprehensive policy options to the standalone policy options, there are still plenty available for consumers to take advantage of.

Online Purchasing

One of the drawbacks of standalone insurance is that many companies in our study do not permit consumers to purchase these plans online. They require you to work with an agent, so they can verify that you meet the legal requirements of having an active third party insurance plan before being approved to purchase a standalone plan.

If your insurer allows standalone own damage plans to be bought online, you'll have to follow the same process as those consumers who are purchasing a comprehensive plan. You'll need the make and model of your car, when and where it was registered, and the IDV. Instead of choosing a comprehensive plan, choose the standalone option, proceed to selecting your add-ons and applying for discounts, and process payment.

Standalone own damage policyholders will submit claims using the same methods as comprehensive policyholders. Depending on your insurer, you'll have the option to start the claims process by phone, email, online or from your smartphone.

Methodology

To complete our guide to third party insurance policies in India, we analysed and explored 16 insurer websites and collected pricing, benefits and inclusions data from over 300 car insurance quotes. We gathered quotes for both a new and used Honda Amaze, the Maruti Vitara Brezza and the Mercedes-Benz E-350 to analyse annual costs for new and used sedans, SUVs and luxury cars.

To further study, we gathered quotes for these car models across three cities: Mumbai, New Delhi and Bengaluru. We also conducted research from the India General Insurance Council and the Insurance Regulatory and Development Authority (IRDAI) to analyse the rules and regulations for each level of car insurance.


Mike Wagenman

Mike is a Senior Research Analyst at ValueChampion India, specializing in insurance. He holds a Bachelor of Arts degree from Rider University, and his prior work experience includes data and revenue analysis in the international travel market.