The law makes it imperative for every vehicle plying on Indian roads to be insured. However, buying motor insurance is just more than complying with the rules. It doubles up as a financial backup in case of an untoward incident. Read on to know as to why you need motor insurance.

Financial coverage against natural disasters

A motor insurance plan reimburses the costs incurred while repairing your vehicle from the damages suffered due to natural disasters such as floods, earthquake, fire and lightning among others. All these calamities can cause extensive damage to your vehicle, repairing which can take a toll on your finances.

However, with motor insurance in place your insurer compensates for the losses, thus reducing your expenses.

Coverage against man-made damages

Your vehicle is susceptible to theft, riots, terrorist attacks, etc., which are damages inflicted by humans. Motor insurance provides you with financial coverage against losses suffered due to these events. However, with motor insurance in place, the insurer compensates for the damages, thus preventing out-of-pocket expenses.

Cushion against third-party liability.

Often there are cases when your vehicle causes losses to a third-party. These can be in the form of bodily injury, death and even property damage. In such a scenario, it’s your legal liability to compensate for the damages suffered by a third-party.

This liability can be huge. However, a motor insurance plan safeguards you against financial liabilities arising due to losses suffered by a third-party involving your vehicle. In other words, the insurer compensates the aggrieved party for the damages incurred.

Personal accident (PA) cover

While recent diktat of the Insurance Regulatory Authority of India (IRDA) has resulted in insurers unbundling PA cover from motor insurance policy, you need to opt for it, in case you don’t have a standalone PA cover. The minimum amount for PA cover has been raised to Rs. 15 lakh.

This cover comes in handy when you sustain bodily injuries in an accident. It gives you and your family the financial muscle to cope up with the losses arising due to a mishap. Note that in case you already have a standalone PA cover, you need not buy it while availing a motor insurance plan.

To sum up

A motor insurance gives you the peace of mind in hours of distress. Apart from being handy in the above situations, add-ons in policy offer an extra layer of cushion. For instance, a zero-depreciation cover ensures you are compensated for the losses without depreciation being taken into account. Similarly, an engine cover add-on reimburses the costs for repairing a damaged engine.

Prior to buying a motor insurance plan, compare offerings from different insurers, check the inclusions, exclusions and the add-ons offered to make an informed choice.

Click here to calculate your motor insurance premium.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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