Most people renew their car or bike insurance in a hurry — a reminder pops up, they pay, and the policy goes into the glovebox. But motor insurance has a few decisions that make a real difference when something goes wrong: the type of cover, the Insured Declared Value (IDV), your No Claim Bonus, and the add-ons. This guide explains each in plain language, for both car insurance and two-wheeler insurance in India.

The three types of motor insurance

Third-party Comprehensive Standalone own-damage
Damage you cause to others (injury, death, property) Yes Yes No
Damage to your own vehicle No Yes Yes
Theft, fire, natural calamities to your vehicle No Yes Yes
Mandatory by law Yes Includes third-party Only valid with a separate active third-party policy

Third-party insurance (mandatory)

Under the Motor Vehicles Act, every vehicle on a public road in India must have at least third-party liability insurance. It pays for injury, death or property damage you cause to other people. It does not pay for damage to your own vehicle.

Driving without valid cover can lead to fines and legal trouble.

Comprehensive insurance

A comprehensive policy combines third-party liability with own-damage cover for your vehicle — accidents, theft, fire, floods, riots and similar events, subject to the policy wording. For most cars and newer bikes, this is what people mean by "full insurance".

Standalone own-damage (OD) insurance

New cars are sold with long-term third-party cover (three years for cars, five for two-wheelers). During that period, you can buy own-damage cover separately each year — from the same insurer or a different one. A standalone OD policy is only valid alongside an active third-party policy.

IDV: what your vehicle is insured for

The Insured Declared Value (IDV) is the maximum the insurer will pay if your vehicle is stolen or declared a total loss. It is roughly the manufacturer's listed price minus depreciation based on the vehicle's age, plus fitted accessories if declared.

  • A higher IDV means a higher payout in a total loss, and a slightly higher premium.
  • A lower IDV reduces the premium, but you may receive much less than the vehicle's actual value if it is stolen.

Don't cut your IDV to save a few hundred rupees on premium. If your car is stolen, the IDV is what you get — not what the car was worth to you.

For older vehicles (typically above five years), the IDV is agreed between you and the insurer based on the vehicle's condition and market value.

No Claim Bonus (NCB)

NCB is a discount on the own-damage premium for each claim-free year. It typically builds up in steps — starting at 20% after the first claim-free year and rising to a maximum of 50% after five consecutive claim-free years. Check your policy for the exact scale.

Things worth knowing:

  • NCB belongs to you, not the car. When you sell your vehicle and buy a new one, you can transfer the NCB to your new policy. Ask for an NCB retention letter or certificate when you sell.
  • A claim usually resets NCB to zero, unless you have an NCB protection add-on.
  • Renew on time. If your policy lapses for longer than the allowed window after expiry (commonly 90 days), the NCB can be lost.
  • Small claims may not be worth it if they cost you a high NCB.

Add-ons worth understanding

Add-ons extend comprehensive or OD cover for an extra premium. The useful ones depend on your vehicle's age and how you use it.

  • Zero depreciation (nil depreciation): In a normal claim, the insurer deducts depreciation on replaced parts like plastic, rubber and fibre. Zero dep removes most of that deduction, so you pay much less from your pocket. Usually available for newer vehicles, often with a limit on the number of claims per year.
  • Engine protection: Standard policies may not cover engine damage caused by water entering the engine (hydrostatic lock) or oil leakage. In flood-prone areas, this add-on matters.
  • Return to invoice (RTI): In case of theft or total loss, RTI pays the gap between the IDV and the original invoice value (often including registration and road tax). Most useful in the first few years.
  • NCB protection: Lets you make a limited number of claims without losing your NCB.
  • Roadside assistance: Towing, flat-tyre and battery help.
  • Consumables cover: Pays for items like nuts, bolts, engine oil and coolant that are otherwise excluded.
  • Personal accident cover: A compulsory personal accident cover for the owner-driver is required unless you already hold a qualifying accident policy. Check current rules when you buy.

How to make a motor insurance claim

For accident damage to your vehicle:

  1. Make sure everyone is safe. Take photos and videos of the vehicle, the location and any other vehicles involved.
  2. Inform your insurer promptly through the helpline or app. Delays can complicate the claim.
  3. If there are injuries, third-party damage or a dispute, file a police report (FIR).
  4. Take the vehicle to a network garage for cashless repair, or any garage for reimbursement.
  5. The insurer's surveyor inspects the damage and approves the estimate.
  6. After repairs, pay your share — compulsory deductible, depreciation (if no zero-dep), and non-covered items — and collect the vehicle.

For theft:

  1. File an FIR immediately and inform the insurer.
  2. Submit documents: FIR copy, RC, keys, policy copy, and the final police report.
  3. The claim is typically settled after the police issue a non-traceable report, and the RC is transferred to the insurer.

Documents to keep ready: policy copy, RC, driving licence, FIR (where required), photos, repair estimate and bills, and a cancelled cheque for reimbursement.

If you've been through a health claim before, many of the same habits apply — see our claim process guide.

Frequently asked questions

Is third-party insurance enough for an old bike or car?

It meets the legal requirement, but it won't pay for damage to or theft of your vehicle. Weigh the vehicle's value against what you could afford to lose.

Is zero depreciation worth it for a five-year-old car?

It depends on the insurer's age limit and the premium. For newer vehicles it is usually more valuable; for older ones, compare the cost with likely savings.

Can I switch insurers at renewal?

Yes. You can move to a different insurer and carry your NCB with you, as long as the policy hasn't lapsed beyond the allowed period.

How our team helps

Our team compares motor policies and add-ons from multiple insurers, checks your IDV and NCB at renewal, and helps you through claims with the insurer and garage. See our insurance services or contact us.

Insurance is the subject matter of solicitation. Please read the policy wording carefully before buying.

Key takeaways

  • Third-party cover is mandatory; comprehensive adds protection for your own vehicle.
  • Standalone OD works only alongside an active third-party policy.
  • Don't under-declare IDV to save premium.
  • NCB belongs to you — renew on time and transfer it when you change vehicles.
  • Zero dep, engine protect and RTI are the add-ons most people should evaluate.