Buying car insurance for the first time could be a challenging situation for many car owners, considering the vast number of insurance products offered by numerous insurance providers. However, in reality, it is very easy to choose the right car insurance policy which can cover different needs such as vehicle-specific, driver-specific, third-party-specific, driving-conditions-specific, etc. To choose the right car insurance policy, you need to have a clear idea of the different types of car insurance policies on the market. 

Customers who buy insurance coverage must note that as the total cover increases, so does the premium amount. Hence, it makes sense to include only the most essential features and leave out the unwanted features while customizing the insurance plan. For this you need to understand the different types of car insurance policies in India. Let’s get started. 

Types of Car Insurance Covers

Car insurance covers can be broadly classified under two categories. One - based on the type of vehicle insured and two - based on the coverage offered. 

  1. Plans based on the vehicle covered

Depending on the type of vehicle covered under the policy, there are three main categories of motor insurance covers available in India. Here are the details –

Motor insurance policy

Brief Description 

Private car insurance policy

Covers privately owned cars

Two-wheeler insurance policy

Covers two-wheelers that are owned and used privately 

Commercial vehicle insurance policy

Covers vehicles meant for commercial use. It is further subdivided into the two categories –

  1. Passenger carrying vehicles insurance – covers passenger-carrying vehicles such as bus, taxis, bikes, etc.
  2. Goods carrying vehicles insurance – covers vehicles used for the transportation of goods mainly trucks, lorries, trailers, etc.


2. Plans based on coverage

The type of coverage is another mode of differentiating car insurance plans. Some of the cover varieties available under this category are –

A.Third-party liability-only policy

A third-party insurance policy is compulsorily required as per the provisions stated under the Motor Vehicles Act, 1988. All vehicles in India must have this basic insurance cover to ensure that there is compensation for third-party harm due to the vehicle. Simply put, this is the minimum insurance cover required for your vehicle by law. 

The coverage offered under this policy includes third party financial liabilities which may be required in the following circumstances –

  • In case of death of any individual by your vehicle
  • Physical injury of any individual by your vehicle
  • Damage of any property by your vehicle 

Due to any of the above-mentioned circumstances, you may incur a financial liability because of the loss incurred by the third party. A third-party liability insurance policy provides cover for such financial liability and directly compensates the third party on your behalf. 

B.Comprehensive insurance policy

In case of the damage or theft of your vehicle, you may have to bear the substantial financial loss. This is when a comprehensive policy comes to your rescue and helps to cover against the damages your vehicle may have suffered. It is also known as “own damage cover”. A comprehensive car insurance policy also covers the third-party liability and the financial loss in the following circumstances 

  • If a vehicle is damaged due to natural occurrences like earthquakes, floods, hurricanes, cyclones, etc.
  • If the vehicle is damaged due to reasons like fire, strikes, malicious damage, riots, etc.
  • If the vehicle is damaged because of transportation through air, land or water
  • If the vehicle is stolen.

Thus, a comprehensive policy acts as an all-round coverage for the vehicle.

C.Standalone own damage insurance policy

This is a recently introduced motor insurance plan meant for vehicles bought on or post 1st September 2018. The policy offers damage cover which includes the damages to the vehicle or due to theft. The plan does not have a third-party cover. The plan is meant only for those vehicles that have valid third-party insurance. This policy is ideal if you have bought a third-party cover and wish to add “own damage cover.”

Additional Reading: What Are the Different Types of Insurance?

Common Terms Associated with Car Insurance Policy Types

Motor insurance policy

What it Means 

Annual third-party liability policy

Includes third-party liability cover for one year

Annual comprehensive policy

Includes third-party liability along with damage and theft cover for the vehicle for one year

Long-term third-party policy

This is a mandatory policy for vehicles bought on or after 1st September 2018. The policy covers a long-term continuous insurance for vehicles. The coverage duration is dependent on the type of vehicle:

  1. Two-wheelers – cover for 5 years
  2. Four-wheelers – cover for 3 years

Long-term comprehensive policy

It provides a long-term continuous cover for both third-party liability and damage/theft of the vehicle. The tenure of long-term comprehensive plans varies as per type of vehicle:

  1. For two-wheelers bought before 1st September 2018 – valid for 2 or 3 continuous years
  2. For two-wheelers bought on or after 1st September 2018 – tenure is 5 years
  3. For four-wheelers bought on or after 1st September 2018 – policy tenure is 3 years

Bundled policy

Can be bought for vehicles purchased on or after 1st September 2018. It covers mandatory third-party liability and the own damage cover is for one year. Bundled plans come with different tenures as per the types of vehicles. 

  1. For two-wheelers – Covers 5-year third party insurance and 1-year own damage cover
  2. For four-wheelers –3-year third party insurance and 1-year own damage cover


Although a third-party insurance policy helps to meet the legal requirement of vehicle insurance cover, the coverage is often limited. Therefore, you must always invest in a comprehensive car insurance policy.

Vehicle insurance can also be segregated based on the purpose of use. So, you can buy a private motor insurance policy if you own a personal vehicle. Similarly, a commercial motor insurance plan can be purchased to get insurance coverage for the vehicle used for business purposes. 

Top Car Insurance Providers in India

Here are the top car insurance companies in India: 

  • Bajaj Allianz Car Insurance
  • Bharti AXA Car Insurance
  • Chola MS Car Insurance
  • Digit Car Insurance
  • Edelweiss Car Insurance
  • Future Generali Car Insurance
  • HDFC ERGO Car Insurance
  • IFFCO Tokio Car Insurance
  • Kotak Mahindra Car Insurance
  • Liberty Car Insurance
  • National Car Insurance
  • New India Assurance Car Insurance
  • Oriental Car Insurance
  • Raheja QBE Car Insurance
  • Reliance Car Insurance
  • Royal Sundaram Car Insurance
  • SBI Car Insurance
  • Shriram Car Insurance
  • Tata AIG Car Insurance
  • United India Car Insurance
  • Universal Sompo Car Insurance

As discussed above, motor insurance in India comes in several forms. While purchasing one, you must know the specific insurance needs and choose a policy which best suits your requirements. You may buy motor insurance online if you are looking for convenient options. 


It is important to have a motor insurance policy for using your vehicle on Indian roads. So, make sure to understand the various types of motor insurance plans offered by insurance providers and choose a policy which offers the best terms and exhaustive coverage for your vehicle. This is essential to avoid any financial loss or get duly compensated for it by the vehicle insurance policy.