Introduction: How Manisha from Chennai Clarified Her Car Insurance Doubts
Manisha, a 29-year-old teacher in Chennai, was confused about car insurance basics when she bought her first car. Questions about coverage, cost, and claims overwhelmed her. Through conversations with experts and research, she gathered clear answers to common queries, helping her confidently choose and manage her car insurance policy. This FAQ guide shares those practical answers to help every Indian driver confidently understand car insurance in 2025.
Frequently Asked Questions (FAQs) About Car Insurance in India
1. What is car insurance?
Car insurance, also called motor insurance, is a contract between the vehicle owner and the insurer to protect against financial loss due to accidents, theft, or third-party liabilities while driving.
2. Is car insurance mandatory in India?
Yes, as per the Motor Vehicles Act, 1988, every vehicle on Indian roads must have at least third-party liability insurance.
3. What types of car insurance are available?
- Third-Party Insurance: Covers damages or injuries to others only.
- Comprehensive Insurance: Covers third party plus damages to your own vehicle due to accidents, theft, natural disasters, fire, and vandalism.
- Personal Accident Cover: For driver’s injury or death during accidents.
- Optional add-ons can customize coverage.
4. What is a premium?
Premium is the amount you pay the insurer yearly to maintain coverage. It depends on the car’s value (Insured Declared Value – IDV), location, driver profile, and add-ons chosen.
5. Can I pay the premium in installments?
No, currently in India, car insurance premiums must be paid in full before coverage starts.
6. What is No Claim Bonus (NCB)?
NCB is a discount on your premium offered for claim-free years. For every claim-free year, you can get up to 50% discount on premium renewal.
7. How do I file a claim?
- Immediately inform your insurer with documents like FIR (if police reported), photos, and repair estimates.
- Choose cashless or reimbursement claim based on your preference and insurer’s service.
- Follow insurer instructions and approve estimates for repair work.
8. What is the difference between cashless and reimbursement claims?
- Cashless: Repairs at network garages billed directly to insurer, minimal upfront cost.
- Reimbursement: You pay first, then claim back from insurer by submitting bills.
9. Does car insurance cover natural disasters or theft?
Comprehensive policies usually cover damages from floods, storms, fire, and theft. Third-party does not cover these for your vehicle.
10. What is the Insured Declared Value (IDV)?
IDV represents the car’s current market value and determines maximum claim amount for total loss. IDV affects your premium, so choose it carefully — too low means less claim payout, too high means higher premium.
11. Can I transfer my insurance policy to a new vehicle?
No, insurance is specific to the vehicle. You must buy a new policy for the new car.
12. How long does car insurance last?
Usually one year, needing renewal before expiry. Some companies offer multi-year policies for 3-5 years.
13. Can I switch insurers during my policy tenure?
No, switching or porting is only allowed at the time of renewal.
14. Is comprehensive car insurance worth it?
Yes, if your vehicle is new, costly, or you want broad protection beyond third-party liabilities.
15. What documents are needed for car insurance purchase?
- Vehicle registration certificate (RC)
- Driver’s license
- Previous insurance documents (for renewals)
- ID proof, address proof
- PAN card (for some cases)
Real-Life Insight: Manisha’s First Claim Experience
When Manisha’s car had a minor collision, she used her comprehensive policy’s cashless claim option. The insurer guided her to a network garage, reducing upfront expenses. The claim was hassle-free within a week. Her positive experience boosted her confidence in comprehensive insurance benefits.
Summary Table: Key Car Insurance Terms Made Simple
| Term | Meaning |
|---|---|
| Premium | Annual cost to purchase insurance |
| Insured Declared Value (IDV) | Market value of insured vehicle |
| No Claim Bonus (NCB) | Discount earned for no claim in previous years |
| Third-Party Insurance | Covers legal liability to others only |
| Comprehensive Insurance | Covers third-party liability plus damage to own vehicle |
| Cashless Claim | Repair expenses paid directly by insurer at network garage |
| Reimbursement Claim | Expenses paid by owner and claimed back from insurer |
Conclusion: Understanding Car Insurance Empowers Smarter Choices
Manisha’s learning journey shows that knowing basic car insurance terms, types, and claim procedures makes buying and using insurance stress-free and beneficial. With clear knowledge, Indian drivers can safeguard themselves, comply with law, enjoy hassle-free repairs, and effectively protect their valuable assets on the road.