Types of Motor Insurance Policy
Every motor policy is built from two blocks: compulsory third-party cover and optional own damage cover.
Every motor policy in India is built from two blocks. The third-party (TP) block covers your legal liability to other people for death, injury and property damage, and the Motor Vehicles Act makes it compulsory. The own damage (OD) block covers your own vehicle against accident, fire, theft and natural perils, and is optional.
The policy types are combinations of those two blocks, sold for different terms. A trainee who knows which block each one contains can answer most "type of policy" questions.
You save ₹300
- Full 100-question mocks
- Chapter-wise practice
- Section-wise sets
One payment, no subscription
The Policy Types
Third-party only (liability only, "Act only")
Third-party block
Yes
Own damage block
No
Who buys it
Owners of older, low-value vehicles; the legal minimum
Package (comprehensive)
Third-party block
Yes
Own damage block
Yes
Who buys it
Most private car owners, and anyone with a vehicle loan
Standalone own damage (SAOD)
Third-party block
No: must already exist separately
Own damage block
Yes
Who buys it
An owner whose long-term TP cover is still running
Package plus add-ons
Third-party block
Yes
Own damage block
Yes, widened
Who buys it
Owners wanting zero depreciation, engine protection, roadside assistance and similar
| Type | Third-party block | Own damage block | Who buys it |
|---|---|---|---|
| Third-party only (liability only, "Act only") | Yes | No | Owners of older, low-value vehicles; the legal minimum |
| Package (comprehensive) | Yes | Yes | Most private car owners, and anyone with a vehicle loan |
| Standalone own damage (SAOD) | No: must already exist separately | Yes | An owner whose long-term TP cover is still running |
| Package plus add-ons | Yes | Yes, widened | Owners wanting zero depreciation, engine protection, roadside assistance and similar |
Annual, Long-Term and Short-Term
IRDAI's 2024 master circular on general insurance allows all three terms, with two limits.
- check_circleMotor policies may be annual, long-term or short-term, but a standalone TP policy can only be annual or long-term.
- check_circleA standalone own damage policy can be sold only if a TP policy is already in force or bought at the same time, and its expiry cannot go beyond the TP policy's expiry.
- check_circleLong-term TP cover for new cars and new two-wheelers came out of a Supreme Court order of 20 July 2018; IRDAI's circulars implementing it remain in force. A new car buyer typically has multi-year TP and buys own damage cover separately each year, which is why SAOD exists.
- check_circlePay-as-you-drive (usage-based) cover is one of the options IRDAI asks insurers to offer retail motor customers.
Documents the Law Requires
- 1
Certificate of insurance
Section 147(3) says a policy has no effect until the insurer issues a certificate of insurance in the prescribed form. It is the document the police and the transport office accept as proof of cover.
- 2
Cover note
Section 145(b) treats a cover note as a certificate of insurance. If it is not followed by a policy in time, the insurer must notify the registering authority within seven days of the cover note's expiry (s.147(5)).
- 3
Public liability policy for hazardous goods
A vehicle carrying dangerous or hazardous goods also needs a policy under the Public Liability Insurance Act 1991 (s.146 proviso).
- 4
Who is exempt
Government vehicles used for non-commercial purposes do not need TP cover, and some public-sector fleets can be exempted if they maintain a fund (s.146(2) and (3)).
Quick practice on risk inspection and hazards. No signup.
What Changed Since the Tariff Days
The courseware describes the tariff-era policy forms (a liability-only form and a package form) and India Motor Tariff endorsements. IRDAI's 2024 product regime de-notified the tariffs and their wordings, so each insurer now files its own motor products. The old tariff products must still be offered to any customer who wants them, and insurers cannot cancel statutory TP cover except for double insurance or total loss of the vehicle.
How IC-11 Tests This
Expect "which document is the only acceptable evidence of motor insurance" (the certificate of insurance), "which form is the comprehensive policy", and limitations as to use (a private car certificate excludes hire or reward, carriage of goods and racing). The trap is treating the policy schedule as the legal proof of cover, or thinking own damage is compulsory.
FAQs
What are the types of motor insurance in India?expand_more
Third-party only, package (comprehensive, which combines third-party and own damage), and standalone own damage, each sold on an annual, long-term or short-term basis, with add-ons on top of own damage cover.
Is comprehensive car insurance compulsory?expand_more
No. Only third-party cover is compulsory under section 146 of the Motor Vehicles Act. Own damage cover is optional, though lenders usually insist on it.
Can I buy standalone own damage insurance without third-party cover?expand_more
No. IRDAI allows standalone own damage cover only when a third-party policy is already in force or bought at the same time, and it cannot run beyond the third-party policy's expiry.
What is the certificate of insurance in motor insurance?expand_more
The document in the form prescribed under the Motor Vehicles Act that proves compulsory cover. Under section 147(3), a motor policy has no effect until it is issued.
Next steps
- Motor Third Partyarrow_forward
- IDVarrow_forward
- No Claim Bonusarrow_forward
- Proposal form and cover note (IC-01)arrow_forward
Full-length IC-11 practice, timed to 2 hours and scored.