What is an Automobile Insurance Policy? Everything You Need to Know

Enjoying a long drive in the beautiful streets of India is always full of excitement. But even the best journeys come with risks. As per the Ministry of Road Transport and Highways, road accidents in India increased from 4.6 lakh in 2022 to 4.8 lakh in 2023.

This is why an automobile insurance policy can be your financial safety net, covering personal accidents and unexpected damages. Additionally, it is compulsory to have third-party liability coverage under the Motor Vehicle Act 1988.

So, continue reading to explore the complete details on this mandatory insurance policy.

What is an Automobile Insurance Policy?

An automobile insurance policy, also known as motor insurance or vehicle insurance, is a type of general insurance policy that gives compensation for damaged or stolen vehicles. Undoubtedly, it is the best form of security to prevent significant expenses that result from an accident.

In fact, the Government of India imposes a compulsion on automobile insurance policies to ensure the safety of vehicle owners and drivers.

To get this financial assistance, policyholders are required to pay a specific sum as insurance premiums. These premium amounts can vary across different insurance providers and also depend on the condition and type of vehicle.

Types of Automobile Insurance Policy in India

There are mainly two types of automobile insurance policies in India: a Comprehensive insurance policy and a third-party insurance policy. However, many reputable insurance providers in India, such as Bajaj General Insurance, have introduced other categories of motor insurance.

So, check below to discover the different types of automobile insurance policies you can find in India.

Third-party Insurance Policy

A third-party insurance policy is also known as ‘act-only’ insurance due to its mandatory requirement. It covered the policyholders from legal and financial liabilities arising from injuries or property damage caused to a third-party individual or their vehicles.

Standalone Own Damage Policy

Own damage cover provides financial coverage to the insured vehicle against damages caused by unforeseen events, such as accidental damage or theft. People who already have third-party liability cover can opt for it to get additional protection for their vehicle.

Comprehensive Insurance Policy

If you want to get the coverage benefits of both a standalone own damage and a third-party liability policy in one plan, this policy is ideal. Its all-round protection will let you have complete peace of mind on the road.

Pay As You Go

This specialised insurance plan under an automobile insurance policy is ideal for those looking for a cost-saving option. Under this new plan, policyholders have to pay premiums based on the kilometres they have driven.

Commercial Vehicle Insurance

With this automobile insurance policy, vehicles used for business purposes, such as taxis, goods carriers, and delivery vans, will receive financial coverage. This is why it is ideal for business owners who want to protect their vehicles from any commercial risk, including third-party liabilities and own damage.

What Does an Automobile Insurance Policy Cover?

The section below outlines the coverage inclusions in an automobile insurance policy:

Third Party Liability

If the policyholder’s vehicle causes physical or property damage to others, a comprehensive and third-party insurance policy will compensate for it. However, in the case of property damage, the insurer will pay compensation amount up to the sub-limit (maximum payable amount).

Coverage Against Natural & Man-Made Disasters

The comprehensive motor insurance policy protects a vehicle against damage caused by natural and man-made disasters. Natural disasters include calamities such as floods or earthquakes, while man-made disasters include riots, strikes, vandalism, and terrorist attacks.

Personal Accident Coverage

When an accident results in the death or disability of the vehicle owner or driver, this insurance plan gives compensation to financially support the victim and their family.

Theft

In case your vehicle gets stolen, the insurance provider will provide compensation based on the insured declared value (IDV). The IDV should be equivalent to the current market value of your car or bike.

In-Transit Damage

With this coverage benefit, you will receive protection against loss or damage to your vehicle occurring during transportation. It usually covers the repair cost of the damage.

Add-on Coverage

Most reputable insurance providers in India offer multiple additional benefits with the original coverage of a motor insurance policy. The add-on coverage mainly includes zero depreciation cover, conveyance benefit, engine Protection, breakdown assistance, and more.

Buy the comprehensive motor insurance policy of Bajaj General Insurance to receive all these coverage benefits by paying a single premium.

Key Exclusions in an Automobile Insurance Policy

Any automobile insurance policy does not offer coverage benefits under some specific conditions, which include,

1. Intentional damage
2. Mechanical or electrical breakdown
3. Normal wear and tear-related damage
4. Penalty for illegal activities (E.g. driving without a helmet or a licence)
5. Vehicle damage outside India
6. Wreckage due to unauthorised vehicle modifications
7. Damage while using a private vehicle for commercial purposes
8. War-related damage

Benefits of Buying a Motor Insurance Policy

A reliable motor insurance plan will offer you a wide range of benefits which can save you from numerous unforeseen risks. Check out the section below to identify the advantages:

Financial Protection

A motor insurance policy can be your ideal safety net against unforeseen risks. It covers expenses for repairs and legal liabilities resulting from an accident, protecting you from high and unexpected costs.

Compliance with the Law

Driving without the mandatory third-party liability coverage is a punishable offence that can lead to a penalty of at least ₹2,000 and even imprisonment for 3 years. Therefore, motor insurance not only ensures the protection of your car but also keeps you legally sound.

Protection Against Unpredictable Risks

With a reliable motor insurance policy, you can get coverage against a huge number of unforeseen risks. It includes damages caused to a vehicle by natural disasters, such as earthquakes, and man-made catastrophes like terrorism.

Compensation for Stolen and Damaged Vehicle

One of the major benefits of buying car insurance is that it offers compensation in case of theft or accidental damage to a vehicle. In fact, with an add-on coverage, a policyholder can also claim compensation for engine damage.

Cashless Repairs

Many reputable insurance providers in India have a large network of cashless garages. When you repair your car or bike in one of these garages, the insurer directly settles the bill. Therefore, it automatically reduces your immediate out-of-pocket cost.

Factors to Consider Before Buying a Motor Insurance Policy

Before purchasing an insurance policy of vehicle, you should always analyse the factors given below,

Add-on Benefits

A good number of add-on options in a motor insurance policy will help you expand the coverage benefits as per your preference. This is why you should always verify if your insurance provider includes add-on coverages, such as 24/7 roadside assistance, to help you get all-around protection.

Insured Declared Value (IDV)

Insured declared value, or IDV, represents the current market value of your vehicle, which your insurer will pay in case it has irreplaceable damage or gets stolen. Since every provider uses different methods to calculate it, select one where you get the best value.

Claim Settlement Ratio

The claim settlement ratio demonstrates the percentage of claims an insurer successfully pays out annually of the total claims filed. Therefore, if you choose a provider who has a high claim settlement ratio, it will automatically increase your chances of receiving easy claims in times of accidents and emergencies.

Number of Network Garages

You can only receive the cashless repair facility at the network garages. So, before purchasing an automobile insurance policy, check if your provider is associated with a wide network of garages in your local area.

No Claim Bonus (NCB)

A no-claim bonus is a reward a policyholder receives for every claim-free year. In fact, this bonus can be as high as 50%. Thus, verify the no-claim bonus clause in your automobile policy documents or ask your provider about this discount to accumulate a good value for the premium.

8 Easy Steps to Apply for an Automobile Insurance Policy Online

After comparing and choosing a reliable insurance provider, you easily apply for an automobile using a mobile phone or a laptop with the following steps:

Step 1: Visit the official website of your insurance provider to initiate the purchasing process.

Step 2: Once you land on the website, decide whether you want a comprehensive policy or only the third-party liability coverage.

Step 3: Enter your vehicle details such as Vehicle Registration Number, your personal information and mobile details.

Step 4: Select your preferred add-ons such as zero depreciation, engine protection, roadside assistance, or more.

Step 5: After submitting the details, you will see a premium quote based on the inputs.

Step 6: Upload the required documents, such as the registration certificate copy.

Step 7: Pay through secure online options such as net banking, UPI, credit/debit card, or wallet.

Step 8: After successfully navigating through all of these steps, you’ll receive a digital copy of your policy via email and can download it immediately.

Why Should You Choose an Automobile Insurance Policy from Bajaj General Insurance?

If you are planning to buy motor insurance, choosing Bajaj General Insurance can be a smart choice to obtain comprehensive coverage with a wide range of benefits. In case you have any doubt, check out these reasons we stand out as the best insurance provider in India.

Easy Claim and Renewal Process

Automobile insurance policy renewal and claim process is extremely easy and smooth under Bajaj General Insurance. You can raise a claim and apply for the renewal of a motor insurance policy from our official website or via our Caringly Yours app in just a few easy steps. 

Zero Paperwork

While purchasing an insurance policy from us, you do not have to go through the hassle of dealing with multiple paperwork. With a complete digital method, you can purchase it easily just by filling in the necessary details online.

Long list of Network Garages

We have over 7,200 cashless garages where you can easily repair your vehicle without any out-of-pocket expense. So, you do have to wait a long time to get back to your usual routine with your car or two-wheeler.

Note: The cashless garage network is subject to change. Please use discretion.

Wide Range of Products

Our wide range of motor insurance products fulfils the needs of every type of policyholder. Whether you want commercial motor insurance to secure your business vehicle or only want the mandatory third-party liability cover, we have it all. In fact, you can also extend your coverage benefits with the add-on cover and receive facilities like return to invoice (RTI) cover.

Specialised Device

From Bajaj General Insurance, you can get the special OBD device Drivesmart telematics. By plugging this device into your car’s OBD-II port, you can receive valuable insights about your car’s health, real-time location, and performance. This way, you and your family will be completely safe on the roads.

24/7 Assistance

Our 24/7 customer assistants are always available for your service. If you face any issues or have a query related to your automobile insurance plans, you will get instant help whenever you need. So, contact us at our toll-free number, 18002095858, or email us at careforyou@bajajgeneral.com.

Final Words

An Automobile insurance policy is more than just a mandatory requirement. It’s your ideal companion during unpredictable risks such as a road accident. With its financial assistance, you can keep yourself and your vehicle safe on the bustling streets of India.

However, in case you haven’t purchased a motor insurance plan, contact Bajaj General Insurance now to get some of the best benefits with a whopping discount.

Frequently Asked Questions

What documents are required to purchase automobile insurance?

To buy auto insurance, you typically require documents including your driving license and the Vehicle Registration Certificate (RC). Additionally, you will be required to provide proof of identity and address with documents, such as an Aadhaar card, a PAN card, a passport or a utility bill. If you are renewing your policy, previous policy details may be needed.

Is it possible to add multiple drivers to a motor insurance policy?

Yes, you can add multiple drivers to your motor insurance policy. However, the coverage for additional drivers may vary across different insurance providers. Moreover, you will be required to provide the necessary details of each driver, including their identity proof and driving history. This will also affect your premium depending on the risk profile of the additional drivers.

Can I check my car insurance details online?

Yes, you can easily check your car insurance details online through the government portal, VAHAN or Parivahan, as well as through your insurer’s website.

What can affect the premium amount on the automobile insurance policy?

Your car insurance premium can be affected by numerous factors, such as your vehicle’s features (make, model, age, engine type), your location, as the metro area has a high risk, and policy choices (coverage type, deductibles, add-ons, discounts).

How to register a claim for an automobile insurance policy?

To register an auto insurance claim, instantly notify your insurer. At the same time, gather evidence related to your vehicle damage and file a police report (FIR) in case of accidents, theft and apply for a claim from your provider’s website. For instance, many reputable insurance providers in India, like Bajaj General Insurance, have dedicated apps to streamline the claim process.

*Standard T&C apply.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.