What is a car insurance plan and what are the different types of car insurance plans available in India


24 Jul 2023

Read about what is car insurance & types of car insurance plans

In India, individuals are required by law to have motor insurance coverage for their vehicles. It means when purchasing a car, be that brand new or second-hand, individuals will also need to get car insurance coverage for it. This article goes over the topics of what is car insurance and the types of car insurance available in India.

What is car insurance?

Car insurance is a contract between the policyholder and the insurance company where the latter offers coverage for damages or losses caused to and by the insured car, and the former pays periodic premiums for the benefits. Having at least third-party liability car insurance for both personal and commercial-use vehicles in India is mandatory. It acts as a financial safeguard against unforeseen circumstances involving your car that may happen. Now that you have gone through what is car insurance, check out its types and other related topics in the following sections.

Types of car insurance plans in India:

Based on coverage type, there are two types of car insurance policies that you can choose in India:

1. Third-party car insurance policy-

It is the most basic yet commonly picked car insurance coverage option in India. It only covers the damages or losses caused to a third-party individual, vehicle, or property by the insured vehicle. Due to its limited protection, it is available at a low price point which is determined by the regulator.

2. Comprehensive car insurance policy-

This type of policy offers many things under its coverage, including damages caused to the insured vehicle, damages caused to a third party, and the death of the passenger or driver. So, comprehensive plans offer third-party liability coverage and own-damage coverage of the insured vehicle.

3. Standalone own-damage car insurance policy-

If there is a valid third-party car insurance plan, then the car owner can opt for a standalone own-damage car insurance policy for his vehicle to provide coverage for all damages to his own vehicle, which is not provided by a standalone third-party-only car insurance plan.

What affects the premium of car insurance?

A lot of factors are considered when deciding the premium of your car insurance policy. Usually, the two main factors that influence your car insurance premium are;

1. Location-

If you live in an area with high traffic and are more prone to vehicle thefts and accidents, it increases the insurer’s liability. This may affect the premium of your car insurance policy.

2. Factors related to the vehicles-

Certain car-related factors, like it’s make, model, age, fuel type, etc., also affect the car insurance premium.

3. Type of insurance plan-

The type of insurance plan that you choose also affects the overall premium outflow.

In addition, if you go with a comprehensive car insurance policy and pick add-ons, your final payable premium value will depend on the total selected coverage.

Advantages of having a car insurance plan:

Here are some advantages of owning a car insurance policy:

1. It is mandated by the Government of India to have a valid third-party car insurance plan to ply your vehicle on Indian roads. Thus, this covers all third-party liabilities as well.

2. It covers damages or losses of the insured vehicle, other than a standalone third-party-only car insurance plan.

3. It offers cashless repair service through network garages under the insurer.

4. It gives peace of mind to the owner while driving on the road.

5. It offers additional useful features like the zero-depreciation cover, roadside assistance cover, consumables cover, etc., if added.


Car insurance is a very useful policy to have in order to protect both you and your car against unanticipated damages or losses that may happen on the road. Make sure to go with comprehensive type car insurance coverage for the most benefits.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.