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How to Buy an Auto Insurance?

Updated on : Oct 25, 2023 10:55 AM
How to Buy an Auto Insurance?

What is auto insurance?

Auto insurance is kind of a cover, bought by automobile owners to reduce expenses in case of an accident. Rather than paying their own money for vehicle accidents, individuals pay yearly premiums to an auto insurance provider. In case of accident, the provider pays all or a majority of the expenses associated with a vehicle accident or other automobile damage.

Auto Insurance in India

In India, auto insurance copes with the insurance policies for loss or damage to the vehicle or its components because of natural and fabricated calamities. It offers accident coverage for individual owners of the motor vehicle while driving or for the third party legitimate liability, as well. Some general insurance providers offer their insurance services online.

In India, auto insurance is an obligatory constraint for all new motor vehicles, irrespective for personal or commercial use. The insurance providers will have tie-ups with most important automobile manufacturers. They provide their customers with instant auto insurance quotes. These quotes inform vehicle owners about a fixed sum to be paid to the insurance provider for their vehicle, which is known as premium. This premium  depends on several factors and the amount of the auto premium increases with the increase in the cost of the vehicle.

Procedure for Insurance claims in India

In India, the claims of the auto Insurance can be accidental, third party claims, or theft claims. Vehicle owners in India have to submit some essential documents to the concerned insurance provider in order to raise an insurance claim for their vehicle. These documents include appropriately signed claim form, a copy of the driving license of the driver, RC copy of the vehicle, FIR copy, original quotation, and a copy of the auto insurance policy.

Types of auto insurance policies in India

In India, there are variety of auto insurance policies in force. Some of these policies include:

  1. Private auto insurance – Every vehicle owner is supposed to possess an auto insurance policy to drive their vehicle on public roads. Each vehicle owner pays a fixed sum, known as a premium to an auto insurance provider on a monthly basis, quarterly basis, half-yearly basis, or annual basis according to his or her convenience and preference. The amount of car insurance premium depends on the value, make, and the year of manufacture of the vehicle, and according to the state where the vehicle has been registered.
  2. Two-wheeler insurance – In India, it is compulsory that all two-wheeler holders have a valid insurance policy under the Indian Vehicle Insurance Act. The policy will offer the necessary coverage to both the vehicle and its driver in case of accidents. The premium amount of a two wheeler is decided by the insurance provider according to the present showroom price, which is multiplied by the downgrading rate set by the Tariff Advisory Committee during the starting period of the insurance policy.
  3. Commercial Vehicle Insurance – The commercial vehicle insurance under the Auto Insurance Act offers coverage for all the vehicles, such as heavy motor vehicles, trucks, etc. which are not used for personal reasons. The premium amount for these types of auto insurance policies depends on the showroom cost of the vehicle during the commencement period of the policy, make of the vehicle and the state of registration of the vehicle.

Coverage offered by the auto insurance policy in India

All insurance providers in India offer a variety of coverage options according to the premium paid to the policy. Most insurance providers offer coverage for –

  • Damage of the vehicle during an accident, lightning, fire, self-ignition, burglary, external explosion, housebreaking or robbery, malicious act, etc.
  • Legal responsibility for third party bereavement, third party belongings and liability to the compensated driver.
  • On disbursement of suitable extra premium, loss or damage to electrical and electronic accessories.

What does the auto insurance not cover?

In India, an auto insurance policy does not offer coverage for incidents, such as:

  • Momentous loss, downgrading, electrical and mechanical breakdown, breakage or failure of a vehicle.
  • When the vehicle is driven outside the geological area.
  • Nuclear or war hazards.
  • Accidents that occur when the driver is under the influence of alcohol and/or drugs.


In several countries, it is obligatory to have auto insurance before using a vehicle on public roads. Most countries link auto insurance with both the vehicle and the driver, but the ratio varies. Several countries have pay-while-you-drive insurance arrangement, which is compensated through a petrol tax. This would tackle problems of uninsured vehicle owners and the charge derived from the distance driven, which could boost the efficiency of the insurance theoretically, through modernized collection.