Motor insurance offers financial protection against loss or damages caused to the motor vehicle because of
an accident, theft, a natural calamity, etc. It provides cover to you, the insured vehicle, a third-party
person and their property.
As per the Motor Vehicles Act, 1988, it is mandatory to purchase third-party motor
insurance. Driving a motor vehicle without insurance in a public place is a punishable offense.
Irrespective of whether you're purchasing motor insurance online or offline, it is important that
you purchase it from a company authorized by the IRDAI.
Legal Requirement
Every person who owns a motor vehicle must buy a third-party motor insurance policy under the
Motor Vehicles Act, 1988. Failure to do so is a punishable offense with a fine of
₹2,000 for first offense and ₹4,000 for subsequent offenses.
Digital Insurance Accepted
A digital copy of your insurance policy stored on DigiLocker or the
mParivahan app is legally accepted by traffic police in India.
KYC Mandatory
IRDAI requires KYC authentication for all motor insurance customers effective January 1, 2023.
Methods include Aadhaar-based KYC, Digital KYC, Video KYC and CKYC.
Benefits
Why Should You Purchase Motor Insurance?
Motor insurance is not just a legal necessity, but a critical financial safeguard for every vehicle owner in
India.
Legal Compulsion
Driving without insurance attracts fines of ₹2,000 for first offence and ₹4,000 for subsequent
offences, along with possible imprisonment up to 3 months. Fines increase 10% annually from April
1st.
Financial Security
Vehicle repair costs are extremely high today. A motor insurance policy provides financial
protection against accidents, theft, or any other serious damage to your motor vehicle.
Covers Wide Range of Risks
From thefts to accidents, from manmade disasters to natural calamities — motor insurance covers them
all. It also protects against legal liabilities for damages caused to third parties.
Regulatory
Key IRDAI Regulatory Updates (2024–2026)
The IRDAI has introduced several important regulatory changes in recent years that affect how motor
insurance works in India.
1
IRDAI (Insurance Products) Regulations, 2024
Effective April 1, 2024, these mandate wider product variety, clearer policy prospectuses and
electronic issuance. A "Customer Information Sheet" must now accompany every policy document
explaining key features in plain language.
2
IRDAI (Protection of Policyholders' Interests) Regulations, 2024
Insurers must have board-approved, transparent claim-settlement policies. All deductions must be
documented. Motor insurance complaints dropped from 26.18% in FY 2023-24 to 24.8% in FY 2024-25.
3
Mandatory KYC for Motor Insurance (effective Jan 1, 2023)
KYC authentication required for all motor insurance customers. Accepted methods: Aadhaar-based
KYC, Digital KYC, Video KYC and Central KYC (CKYC).
4
Digital Insurance Acceptance
A digital copy of your motor insurance certificate stored on DigiLocker or the mParivahan app is
now legally accepted by traffic police across India.
Online
Benefits of Buying Motor Insurance Policy Online
Simpler Process
No need to stand in long queues or fill out paper forms. The entire buying process is digital and
hassle-free.
Easy Comparison
Research and compare various options available from multiple insurers and make an informed decision.
Discounts & Offers
Avail exclusive discounts and special offers on the premium amount available only on online
platforms.
Buy Anytime, Anywhere
Purchase and renew your policy from anywhere at any time — in just a few clicks.
Quick Issuance
Policy issuance is immediate. Receive your policy document directly to your registered email in
minutes.
The most complete coverage — covers both third-party liability and damages caused to your own
vehicle. The best of both worlds!
Mandatory by Law
Third-Party Insurance Policy
The most basic vehicle insurance and a statutory requirement. Covers injury/losses caused to a third
party individual or property by your insured vehicle.
Vehicle Protection
Own-Damage Insurance Cover
Covers damages to your own vehicle due to fire, rain, theft, etc. Raise a claim to get compensation
for repair expenses incurred.
Current Third-Party Premium Rates
(MoRTH Notification, March 2024)
Engine Capacity
Annual TP Premium
Notes
Up to 1,000 cc
₹2,100
Standard rate
1,000 cc to 1,500 cc
₹3,400
Standard rate
Above 1,500 cc
₹7,897
FY24 base rate
Electric Vehicles (EVs)
15% Discount
On TP premium — green mobility incentive
Hybrid Electric Vehicles
7.5% Discount
On TP premium
2026 Update: IRDAI has recommended an average 18–25% upward revision in TP
premiums. MoRTH is reviewing this proposal. Always check the latest rates at
www.irdai.gov.in before purchasing or
renewing.
EV Insurance
Electric Vehicle (EV) Insurance — What You Need to Know
With the rapid growth of electric vehicles in India, EV-specific insurance has become an important
consideration with unique features and government-mandated discounts.
Third-party discount — EV
15%
Discount on third-party insurance premium for electric vehicles compared to petrol/diesel
IRDAI mandated
Third-party discount — Hybrid
7.5%
Third-party premium discount available for Hybrid Electric Vehicles (HEV) under IRDAI guidelines
Hybrid EV
Battery share of vehicle value
40–60%
Battery pack typically accounts for nearly half the total EV value — making battery cover essential
15% TP Discount
Battery Protection Cover
Zero Depreciation Add-on
Return to Invoice
Charging Equipment Cover
15%TP discount for full electric vehicles
7.5%TP discount for hybrid electric vehicles
Key EV insurance cover types explained
Battery protection
Covers damage, degradation, and replacement of the EV battery pack — essential given high replacement costs
Charging equipment
Protects your home charger and portable cables from theft, fire, and accidental damage
Zero depreciation
Get full claim value without deductions for part depreciation — especially valuable for EVs with expensive parts
Categories
Categories of Motor Insurance Policies in India
There are three main categories of motor insurance in India based on the type of vehicle and its purpose.
Private Car Insurance
Covers motor vehicles used for private or personal purposes against burglary, accidents, man-made
disasters, natural calamities, and more.
Two-Wheeler Insurance
Covers bikes, scooters and other two-wheelers. Offers protection against accidents, fire, theft, and
other mishaps.
Commercial Vehicle Insurance
Covers all types of vehicles used for commercial purposes — buses, cabs, auto-rickshaws, trucks,
ambulances, agricultural vehicles, etc.
Add-ons
Add-ons available with motor insurance plans
Motor insurance add-ons provide extra protection beyond standard policies. Here is a concise breakdown of available covers.
Vehicle & mechanical protection
01
Zero / nil depreciation cover— Ensures full claim amount for repairs without deductions for age-related wear and tear. Typically available for cars up to 3–7 years old.
02
Engine protector— Covers repair costs for engine or gearbox damage caused by water ingression (hydrostatic lock) or oil leakages.
03
Consumable cover— Reimburses one-time use items like engine oil, coolants, nuts and bolts, usually excluded from standard claims.
04
Tyre protection— Covers the cost of repairing or replacing tyres, including labour charges.
Financial & asset protection
05
Return to invoice (RTI)— On theft or total loss, pays the original invoice value of the car rather than current market value.
06
NCB protect— Keeps your no claim bonus (up to 50% discount) intact even if you make a claim during the policy year.
07
Key replacement— Reimburses the cost of replacing lost, stolen, or damaged keys and lock-sets.
08
Loss of personal belongings— Compensation for personal items damaged or stolen from inside the vehicle.
Assistance & safety
09
Roadside assistance— 24/7 emergency support for breakdowns including towing, fuel delivery, flat tyre changes, battery jump-starts and minor repairs.
10
Personal accident cover— Financial compensation for death or disability resulting from an accident. Tailored for:
Owner-driver — Mandatory protection for the vehicle owner.
Passengers — Coverage for occupants in the vehicle.
Paid driver — Protection for hired drivers.
Note: Motor insurance is vital even if your vehicle is rarely used. Always review policy details to select the add-ons that best suit your specific driving needs.
Usage-Based
Usage-Based Insurance — Pay As You Drive / Pay How You Drive
IRDAI has permitted general insurance companies to offer telematics-based motor insurance policies — ideal
for low-mileage or safety-conscious drivers.
Pay As You Drive (PAYD)
Premium Based on Distance
Premium is calculated based on the number of kilometres driven. You declare your expected annual
mileage and pay accordingly — ideal for people who primarily use public transport and drive their
vehicle sparingly.
Best for:
City dwellers who use public transport daily and only take their car out on weekends.
Pay How You Drive (PHYD)
Premium Based on Driving Behavior
A telematics device monitors your driving behaviour — speed, braking, acceleration, time of day —
and adjusts your premium based on how safely you drive. Good drivers get rewarded with lower
premiums.
Best for:
Careful drivers who maintain low speeds, brake smoothly and avoid late-night driving.
Coverage
Type of Coverage
Motor insurance coverage is subject to specific terms and conditions. Here is a breakdown of what is
typically included and excluded.
Driving under influence of alcohol/drugs/narcotics
Improper usage (e.g., private car used as commercial taxi)
War and nuclear risks
Geographical limits (outside India)
Claims after policy expiry
IDV
Insured Declared Value — Overview
IDV is the maximum sum assured fixed by the insurer, representing the current market value of your vehicle.
It determines the payout in case of total loss or theft.
Higher IDV: More premium but better coverage.
Essential for newer or expensive vehicles.
Lower IDV: Saves on premium but leads to
undercompensation if vehicle is stolen or totaled.
Pro Tip: Find the second-hand value of your car
from a credible source and fix IDV around that value.
Understanding IDV — Real Example
Harsh purchased a luxury car worth ₹30 lakhs. After two years, the car's IDV is ₹21 lakhs (30%
depreciation).
❌ Scenario 1 — Underinsured
Harsh set IDV at ₹12 lakhs to save on premium. When his car was stolen, he received only
₹12 lakhs instead of ₹21 lakhs — a loss of ₹9 lakhs. Premium
savings cost him dearly.
✅ Scenario 2 — Correctly Insured
Harsh checked the second-hand market, discovered similar cars sell for ₹22 lakhs, and set IDV at
₹21 lakhs. In case of theft or total loss, he receives the correct
compensation.
Premiums
How to Calculate Motor Insurance Premiums
Two people with the same car may pay different premiums because insurance pricing is personalized based on
risk. Here are the key factors that determine your premium.
Core Vehicle Factors
• Make, model & variant
(sports/luxury = higher)
• Age of the vehicle (newer = higher
premium)
• Fuel type (CNG-fitted higher than
petrol/diesel)
Lower your premium costs without compromising on essential coverage by following these strategic steps.
Compare Policies
Evaluate different insurers and online platforms for the most competitive rates for the same
benefits.
Select Add-ons Wisely
Only pay for extra covers that are truly essential for your specific driving needs.
Opt for Voluntary Deductibles
Choosing a higher voluntary deductible reduces your premium. Pay more out-of-pocket per claim
but save on annual premiums.
Avoid Minor Claims
Pay small repairs yourself to preserve your No Claim Bonus (NCB) — which can save 20%–50% at
renewal.
Install Anti-Theft Devices
Fitting ARAI-certified devices reduces theft risk and insurers reward this with premium
discounts.
Join Automobile Associations
Membership in recognized bodies like AAI or WIAA qualifies you for additional premium discounts.
Renewal
How Do You Renew Your Motor Insurance?
1
Get Insurer Reminders — The insurance company generally sends you reminders when
your policy is about to expire via email, SMS or WhatsApp.
2
Contact Your Insurer — Inform your insurer by phone or email that you wish to
renew. Share all details about the current condition of your vehicle.
3
Physical Inspection (If Required) — An inspection is needed if your current policy
has expired, or if any addition has been made to the car (like a CNG kit).
4
Submit Documents — Provide your car insurance documents to the Inspection Inspector
during the scheduled appointment.
5
Review & Pay Premium — The insurer shares the renewal premium amount. Review,
confirm and make the payment.
6
Receive Policy Papers — Once payment is done, you receive all policy papers from
your insurer electronically. You can also switch insurers at renewal time.
Buy Online
How to Buy Motor Insurance on SMC Insurance
1
Visit SMC Insurance Website
Go to the SMC Insurance website and click on the insurance category you want — Car Insurance or
Bike Insurance.
2
Enter Vehicle Number
Enter your registered vehicle number and click "View Quotes" to get instant quotes from multiple
insurers.
3
Fill Vehicle Details
Provide your vehicle details — brand, model, fuel type, variant and respective RTO. Confirm NCB
details and policy dates.
4
Compare Quotes
SMC displays a list of available plans from partner insurers. Compare coverage, benefits,
inclusions, exclusions, add-ons and IDV.
5
Select Plan & Fill Details
Click "Buy Now" on your chosen plan. Fill in personal details — owner name, address, contact,
driving licence and RTO info.
6
Pay & Get Policy
Complete payment via online gateway. Receive your policy document electronically via email. Keep
a digital copy for reference.
Checklist
What Should You Consider While Purchasing Motor Insurance?
Identify Your Coverage Type
Third-Party Only: Suitable if you drive infrequently or want minimum legal
compliance at lowest premium.
Comprehensive: Recommended for most drivers — covers third-party liabilities and
damage to your own vehicle.
Evaluate IDV Carefully
A lower IDV reduces your premium but can leave you with a massive financial gap if the vehicle is
lost. Always set IDV to reflect the actual market worth.
Customize with Add-Ons
Tailor your base policy with Zero Depreciation, NCB Protector and Roadside Assistance — based on
your specific driving habits and risk exposure.
Check Network Garages
Cashless claim facility is only available at the insurer's Network Garages. Verify that quality
network garages are near your home and workplace before buying.
Claims
How to Apply for a Motor Insurance Claim?
A seamless claim process depends upon following the correct steps. Failing to do so may result in your claim
being declined.
Own Damage
Third-Party
Theft
1
Inform the Insurer — Notify your insurance company within 48 hours. Provide a
transparent description of the damage incurred.
2
File an FIR — Mandatory if the accident involves a third party, accidental
death, or if theft is suspected.
3
Evaluation — Claims under ₹50,000 can be assessed via AI-driven digital
methods. Claims above ₹50,000 require a licensed surveyor's physical inspection.
4
Submit Documents — Provide claim form, policy copy, RC, driving license, PUC,
Aadhaar/PAN and repair estimates/invoices.
5
Settlement — Insurer approves repair cost. Pay applicable deductibles and
depreciation unless covered by add-ons.
1
File an FIR — Mandatory. Obtain a copy of the charge sheet from the police
station near the accident site.
2
Submit Documents — Similar to own damage claim, including the FIR and repair
estimates for the third-party property.
3
Visit the MACT — Claims are settled in the Motor Accident Claims Tribunal
(MACT) near your residence or accident site.
4
Settlement — Property damage is capped at ₹7.5 lakh. Injury/death compensation
has no upper limit and is determined by the Tribunal.
1
File an FIR Immediately — Provide details like chassis/engine number, color,
and specific identifiers to the police.
2
Inform Insurer & RTO — Notify your insurer immediately. Inform the RTO to
prevent unauthorized ownership transfer of your stolen vehicle.
3
Submit Documents — Submit policy, RC, RTO forms (28, 29, 30), duplicate keys
and a letter of subrogation to your insurer.
4
Police Investigation — If vehicle not found within six months, the police issue
a "No-Trace Report."
5
RC Transfer & Payout — Present the No-Trace Report to the insurer. RC is
transferred to insurer and they pay out the IDV to you.
General Mandatory Documents Checklist
Duly filled and signed Claim Form
Registration Certificate (RC) — Original
Driving License — Original for verification
Insurance Policy copy and Tax Receipt
PUC Certificate
PAN Card and Aadhaar Card
Cancelled Cheque (for reimbursement claims)
FIR copy (where applicable)
FAQs
Frequently Asked Questions
What is motor insurance and how does it work in India?
Motor insurance is a contract between you and an insurer that protects you from financial loss if
your vehicle is damaged, stolen, or involved in an accident. In India, it also covers your legal
responsibility if you injure someone or damage their property while driving, depending on the type
of policy you choose.
Is motor insurance mandatory for all vehicles in India?
Yes, motor insurance is legally required. Under the Motor Vehicles Act, 1988, every vehicle must
have at least third-party insurance before it is driven on public roads. Not having valid insurance
can lead to fines, penalties and even legal action.
What is IDV in motor insurance and why does it matter?
IDV, or Insured Declared Value, represents the current market value of your vehicle. It determines
the maximum amount you will receive if your vehicle is stolen or declared a total loss. Setting the
right IDV is important because a lower value reduces your premium but can lead to a financial
shortfall during a claim.
What is No Claim Bonus (NCB) and how can you benefit from it?
No Claim Bonus is a discount you earn for not making any claims during a policy year. Over time,
this discount can significantly reduce your renewal premium. However, if you make a claim, the
accumulated bonus may be reduced or reset unless you have an NCB protection add-on.
Is a digital copy of motor insurance valid in India?
Yes, digital insurance documents are fully valid. You can store and show your policy through apps
like DigiLocker or mParivahan and they are accepted by traffic authorities across the country.
What is usage-based motor insurance and who should opt for it?
Usage-based insurance is a newer model where your premium depends on how much or how safely you
drive. It is useful for people who drive less frequently or follow safe driving habits, as it can
help lower overall insurance costs.
What are the common exclusions in motor insurance policies?
Most policies do not cover damage caused by regular wear and tear, mechanical or electrical
breakdowns, or negligence. Claims can also be rejected if the driver does not have a valid licence
or is under the influence of alcohol. It is important to read the policy wording to understand these
limits.
How can you reduce your motor insurance premium without losing coverage?
You can reduce your premium by maintaining a claim-free record, choosing a reasonable deductible and
installing safety devices in your vehicle. Comparing policies online and selecting only relevant
add-ons also helps you balance cost with adequate coverage.
Disclaimer: The information provided on this platform is intended for general awareness and
educational purposes. While every effort is made to ensure accuracy, some details may change with policy
updates, regulatory revisions, or insurer-specific modifications. Readers should verify current terms and
conditions directly with relevant insurers or through professional consultation before making any decision.
All views and analyses presented are based on publicly available data, internal research and other sources
considered reliable at the time of writing. Customers are advised to review official sales brochures, policy
documents and disclosures before proceeding with any purchase or commitment.
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