5 Reasons Why Car Insurance Is Mandatory in India

05 Aug 2021

If there is one thing that is always placed securely in the glove box of your car, it is your set of car insurance papers. Whether it is a brand-new car or your parents’ old sedan which you were gifted when you turned 18, you are definitely going to have valid car insurance.
So, why is car insurance so important in India?
This article will highlight the car insurance mandate by the government, the reasons behind it, and how to buy car insurance online in India.

The car insurance mandate in India

There are three types of car insurance in India:

• Third-party cover:-This car insurance covers any damages caused to a third party in case of an accident caused by your car. According to The Motor Vehicles Act, 1988, it is mandatory for all vehicles in India to have at least third-party insurance.
• Standalone own-damage cover:-This covers any damage to your car. The damage or loss could be due to an accident, natural calamity, or theft.
• Comprehensive cover:-As the name suggests, this cover includes any damages or losses to the third party or your car.
• Personal accident cover:-As per the General Regulation (`GR`)-6 of India Motor Tariff, 2002[1], it is mandated that every general insurance company provide a personal accident cover for the owner-driver as part of their third-party or comprehensive package car insurance policy. This personal accident cover provides a certain monetary compensation to the owner-driver in case of bodily injuries, permanent disability or death caused by being in a car accident. However, as per the Insurance Regulatory and Development Authority, as of January 1, 2019, the owner-driver doesn’t need to get a personal accident cover with their car insurance if they have a standalone personal accident policy of Rs.15,00,000.

You must be wondering why is car insurance mandatory in India, right? Why driving without valid car insurance can land you a hefty fine or even a jail term? Let’s explore the reasons for it being so.

Reasons car insurance is mandatory

Most people take the utmost care while driving. However, under some very unfortunate circumstances, mere caution isn't enough. Road accidents, natural calamities, or theft can occur and result in damages to you, your car, or a third party. The implications of such mishaps can have short-term to far-reaching effects on the owner-driver of the car, and the third party. Let’s take a more detailed look:

• Ensure medical care for injured third-party:-In case of a car accident where a third person gets injured, the hospital treatment can be costly. When you have third-party cover, the insurance company pays for the treatment, ensuring that the third party gets the care they need. Plus, it absolves the car owner-driver from any financial obligation to pay for the treatment.
• Ensure repair of damaged property:-What happens when the car owner-driver has to swerve at the last minute to save a stray dog in the middle of the road and rams into a parked car instead? There will be possible damage to the other car for which the owner-driver of the first car can be held liable. However, when they have a third-party cover, their insurance company will pay for the repair costs incurred by the third party.
• Provide a financial safety net to owner-driver:-In the unfortunate scenario that the owner-driver sustains injuries that lead to a permanent disability, the immediate implication is that they will not be able to earn a livelihood. In such a scenario, the car insurance company provides monetary compensation to the owner-driver. With Car insurance in India being mandatory, a dignified life for the owner-driver is ensured.
• Provide financial compensation to next of kin:-Thousands of people die in car accidents every year. While death itself brings immense grief to loved ones, the implications of the person passing away are also profound. If the owner-driver is the sole breadwinner of the family, their death can bring about financial pressure and insecurity to the family. A personal accident cover ensures that the surviving kin of the owner-driver can sustain themselves. The car insurance company provides monetary compensation to the next of kin as part of the personal accident cover.
• Provide peace of mind:-Today, a hospital visit for even minor issues can lead to a big bill. That's why, when the third-party's hospital expenses are covered by your car insurance, it ensures that the focus can be on recovery and not the financial costs of healthcare. In case of comprehensive coverage, the owner-driver can also be assured of their medical treatment without worrying about how to pay for it. The personal accident cover ensures that the owner-driver and their family can focus on the future and have enough to meet their everyday needs in case the owner-driver meets with a car accident and is permanently disabled or dies.

As you may conclude, making car insurance mandatory in India ensures that anyone directly involved and impacted by a car-related mishap is financially covered and has the means to get medically treated if needed.

Buying car insurance in India

Now that you know the reasons car insurance is mandatory in India, your next thought naturally be to ensure that you have valid car insurance for your beloved car. In case you already have one, great. In case you do not, you need not worry either. Buying car insurance in India is simple; all you need is your car’s registered number, an internet connection and a computer.

You can head to a car insurance provider’s website and check out the various insurance plans available for your car. Choose the one that best suits your needs.

The best part of buying car insurance online in India is that you will be done with the whole process in just a few minutes, right from the comfort of your couch! There is no hassle of going to a physical office or filling tedious forms.

With car insurance in India being so accessible, you can ensure that you, your car, and any third party on the road are financially secured.

Disclaimer: For more details on risk factors, terms & conditions please read sales brochure carefully before concluding a sale. *The discount amount will vary subject to vehicle specification and place of registration