Car insurance (also known as motor insurance, vehicle insurance or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles.

Its primary use of motor insurance is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise therefrom. The specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree, vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions, such as keying and damage sustained by colliding with stationary objects.

Broadly, there are two types of motor insurance – the ‘Act only’ policy and a comprehensive policy. The scope of the ‘Act only’ policy is to pay compensation for death or any bodily injuries and for damage to property of third parties.
The scope of the ‘Act only’ policy is to pay compensation for death or any bodily injuries and for damage to property of third parties. While the insured is treated as the first party and the insurance company as the second party, all others would be third parties.

In case the vehicle is purchased under a hire-purchase agreement, the financiers insist upon a comprehensive policy to take care of their interest as collateral security. The perils covered under the comprehensive policy are fire or theft or both fire and theft in combination with the minimum requirements of the act (i.e. third party liability). The perils covered under the comprehensive policy are fire or theft or both fire and theft in combination with the minimum requirements of the act (i.e. third party liability).

Comprehensively, these include damage to the vehicle by accidental external means. They are fire, lightning, explosion, self-ignition, burglary, housebreaking, riot and strike, malicious acts. Also include terrorist acts, earthquake, flood, inundation, cyclone, landslide/rock slide, etc. while in transit by rail, road, air, inland waterways, lift or elevator. Discounts can be availed if the insured chooses to exclude the following covers: earthquake cover, flood, cyclone and inundation cover, riot, strikes, etc. Discounts can also be availed for every claim-free year.

All the states in India require a minimum amount of insurance. Car insurance can help offset the loss of huge sum in the following manner

1. Provides benefits to survivors when an accident results in death.
2. It covers lawsuits, including legal fees brought against you as the result of an accident.
3. Covers the bills of vehicle repairs due to damage caused in an accident.
4. Covers damage caused by other than an accident, for example, theft, fire, etc.
5. Additional discounts: Car insurance policies allow premium discounts for theft or for owning more than one policy with the same insurer. It also provides added advantage to extend coverage to others driving your car with your permission.

No Claim Bonus: If you do not make a claim during the policy period, a No Claim Bonus is offered on renewals provided you fulfill certain terms and conditions.