Car and Bike Insurance in India: Third-Party vs Comprehensive, IDV, No-Claim Bonus and Claim Steps
A practical guide to vehicle insurance in India: what is mandatory, comprehensive cover, IDV, add-ons, no-claim bonus, how premiums are decided, claim process and renewal tips.
Driving an uninsured vehicle on Indian roads is illegal and financially dangerous. Motor insurance covers the cost of damage to others and, with the right policy, to your own vehicle. Yet most buyers pick a policy by price alone and discover gaps at claim time. This guide explains the choices in plain language.
This is general information, not financial, tax or legal advice. Rules, rates and limits change, so confirm current details with the official source or a qualified professional.
Types of policies
| Policy | Covers |
|---|---|
| Third-party liability | Mandatory under the Motor Vehicles Act. Covers injury or death of others and damage to their property. Does not cover your own vehicle. |
| Comprehensive | Third-party cover plus own-damage cover for accidents, fire, theft, natural calamities and more. |
| Standalone own-damage | Available if you already hold a long-term third-party policy. |
New cars and two-wheelers often have to be bought with multi-year third-party cover. Check the current rules at purchase.
What is IDV?
The insured declared value is the maximum amount the insurer will pay if the vehicle is stolen or damaged beyond repair. It is based on the manufacturer's listed price minus depreciation for the age of the vehicle. A higher IDV means a higher premium. Do not choose a low IDV to cut the premium, because you will be underpaid at claim time. Keep it near the vehicle's fair market value.
What drives the premium?
- Vehicle make, model, engine capacity and age.
- IDV and city of registration.
- No-claim bonus (NCB) and claim history.
- Add-ons chosen and the deductible you accept.
The third-party part of the premium is set by IRDAI and is the same across insurers. Competition is mainly on the own-damage part and add-ons.
No-claim bonus
For each claim-free year, you get a discount on the own-damage premium, starting around 20% and rising by steps to a maximum of 50% after five claim-free years. NCB belongs to you, not the vehicle, so you can transfer it when you buy a new vehicle or change insurer, with proof. Making small claims may cost you the bonus, so for minor scratches, consider paying yourself.
Useful add-ons
| Add-on | What it does |
|---|---|
| Zero depreciation | Pays full cost of parts without deducting depreciation. Valuable for new cars. |
| Engine protection | Covers engine damage from water ingress or oil leakage, which standard policies exclude. |
| Roadside assistance | Towing and minor repairs. |
| Return to invoice | Pays the invoice value if the car is stolen or written off. |
| Consumables cover | Pays for nuts, bolts, oil and similar items. |
| Personal accident cover | Mandatory for owner-drivers, covering death or disability. |
Add only those that fit your vehicle's age and use. Each adds to the premium.
How to claim
- After an accident: ensure safety, take photos, note the details of other parties and inform the police for theft, third-party injury or major damage. Do not admit liability at the spot.
- Inform the insurer immediately, using the helpline or app, and register the claim.
- Do not move the vehicle for major damage, unless required for safety. Insurers send a surveyor.
- Cashless repair: take the vehicle to a network garage. You pay the deductible and non-covered items. Otherwise, pay and claim reimbursement.
- Submit documents: claim form, RC, driving licence, policy, estimate, bills and FIR if needed.
Why claims get rejected
- Driving without a valid licence or under the influence.
- Policy expired at the time of the accident.
- Using the vehicle commercially under a private policy.
- Late intimation or tampering with the accident scene.
- Consequential damage, such as driving a flooded car and damaging the engine.
Renewal tips
- Renew before expiry. A gap loses your NCB and needs an inspection.
- Compare quotes from several insurers online, but weigh the claim settlement record and garage network, not only price.
- Check that the personal details, registration number and IDV are right in the policy.
- Pollution under control (PUC) certificate must be valid.
If you drive a lot, estimate running costs with the fuel cost calculator. For electric vehicles, see the EV charging guide. Compare with other cover in types of insurance.
A worked example of premium and IDV
Suppose your three-year-old hatchback was listed at ₹7,00,000 when new. After depreciation, the IDV might be around ₹4,50,000 to ₹5,00,000. If it is totally damaged or stolen, the insurer pays up to the IDV. Choosing an IDV of ₹3,00,000 would save a little on premium but cost you ₹1.5 lakh or more in a total-loss claim. With a 35% no-claim bonus on an own-damage premium of ₹12,000, you pay about ₹7,800 for that part plus the fixed third-party premium and add-ons. Compare these elements separately when you shop, rather than only the total.
Frequently asked questions
Is third-party insurance enough?
It meets the legal requirement but does not cover your own vehicle damage.
What is IDV?
The insured declared value, the maximum your insurer pays for total loss or theft.
What is no-claim bonus?
A discount on own-damage premium for each claim-free year, up to 50%.
Can I transfer NCB?
Yes, to a new vehicle or insurer with proof.
Is zero depreciation worth it?
Often yes for newer cars, because it avoids deductions on parts.
What if my policy expired?
Claims may be rejected, and you lose NCB. Renew on time.
Last reviewed 8 November 2026. Rates, limits and rules change, so confirm figures with the official source before you act.
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Information on AMTools is for general guidance and is not professional financial, tax, legal or medical advice. Rules, rates and limits change, so check the latest official source before acting.