Business Standard has reported on new motor insurance norms. The report explains which covers are mandatory and which protections are optional.
For you, the message is simple. Third-party cover is compulsory by law. Everything else is your choice, so pick it with care.
Key takeaways
- Third-party liability cover is a legal must for every vehicle on the road.
- Own-damage cover and add-ons are optional, but they protect your own wallet.
- The more add-ons you pick, the higher your yearly premium.
- Check your renewal quote line by line before you pay.
- The full details of the new norms are in the original report.
How motor insurance cover works
A motor policy has a few parts. Each part covers a different kind of loss. Knowing the parts helps you see what you're paying for.
Third-party liability is the first part. It pays if your vehicle hurts someone else or damages their property. The Motor Vehicles Act makes it compulsory. Driving without it can bring fines.
The second part is personal accident cover for the owner-driver. It pays if you're hurt or die in an accident while driving your own vehicle. This is also required for owners under standard policies.
The third part is own-damage cover. It pays to repair your own vehicle after an accident, fire, theft or flood. A policy with both third-party and own-damage cover is called comprehensive. It is not compulsory by law.
Then come add-ons. These are extra protections you buy on top. Common ones are zero depreciation, engine protection, roadside help and return to invoice.
Mandatory vs optional covers at a glance
The table below shows how the parts compare. The costs are only examples for a small car. Your actual quote will differ.
| Cover | Compulsory? | What it pays for | Example yearly cost |
|---|---|---|---|
| Third-party liability | Yes | Injury or damage to others | ₹3,000 |
| Owner-driver personal accident | Yes, for the owner | Your own injury or death | ₹750 |
| Own damage | No | Repairs to your vehicle | ₹8,000 |
| Zero depreciation add-on | No | Full parts cost, no age cut | ₹2,500 |
| Roadside assistance | No | Towing and breakdown help | ₹500 |
What changes for you: a worked example
Imagine you own a small hatchback. Use the example costs from the table.
With every cover, you'd pay ₹3,000 plus ₹750 plus ₹8,000 plus ₹2,500 plus ₹500. That's ₹14,750 a year.
With only the legal minimum, you'd pay ₹3,000 plus ₹750. That's ₹3,750 a year. The gap is ₹11,000.
It looks like a big saving. But the minimum covers nobody's repair bill but the other person's. If your car is damaged in an accident, you pay for it yourself. One bumper-and-headlamp job can easily cost ₹20,000 or more.
So the question isn't which policy is cheapest. It's which risk you can afford to carry alone.
Who is affected
Every vehicle owner in India is affected in some way. Some groups should look closer.
- New car buyers: Lenders usually ask for comprehensive cover on a financed car. Check your loan terms and use the EMI calculator to see your full monthly cost.
- Owners of older cars: Zero depreciation matters less when the car's value is low. You may skip it.
- Two-wheeler riders: The same split applies. Third-party cover is a must, and the rest is optional.
- Daily city drivers: Small dents are common. Own-damage and zero depreciation can pay for themselves.
What to do now
You don't need to panic. A few simple steps will help you stay covered and avoid overpaying.
- Find your current policy and check its end date.
- Confirm it includes third-party and owner-driver personal accident cover.
- List the add-ons you have. Ask yourself if you've ever needed each one.
- Compare at least three quotes for the same cover, not just the lowest price.
- Read the exclusions before you buy. Some claims are rejected for reasons people miss.
Never let a policy lapse. A gap can mean losing your no-claim bonus. It can also leave you fully exposed to a third-party claim.
For more money news that affects your wallet, visit our news hub. Insurance rules are overseen by IRDAI, so use its official site for policyholder rights.
Frequently asked questions
Is comprehensive motor insurance compulsory in India?
No. Only third-party liability cover is required by law. Comprehensive cover is your choice, though your lender may ask for it on a car loan.
Should I buy every add-on my insurer offers?
Not always. Pick add-ons that match how you drive and how old your car is. Skip the ones you're unlikely to use.
What happens if I drive without valid insurance?
You can face a fine under the Motor Vehicles Act. You'd also pay any accident costs from your own pocket. Renew on time to stay safe.
BankCreds analysis
The headline sounds big, but your basic duty hasn't changed. Third-party cover has long been compulsory in India. If you already hold a valid policy, you don't need to rush anywhere this week.
The real money is in the optional part. Take a car owner paying about ₹14,750 a year in our example. Dropping two add-ons they never use could save ₹3,000 or more. Yet one claim without zero depreciation can cost far more than that.
Don't over-read it
Optional doesn't mean useless. It also doesn't mean you must buy everything. Match each add-on to how you use your car. A city commuter needs different cover than a highway driver. Check your renewal quote line by line before you pay.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Business Standard — originating report https://www.business-standard.com/finance/personal-finance/new-motor-insurance-norms-know-mandatory-covers-and-optional-protections-126111000866_1.html
- IRDAI — insurance regulator that oversees motor insurance products and policyholder rights https://irdai.gov.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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