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Car Insurance
What do you understand by the term “Car Insurance”?
A protection that moves with you every mile and every turn.
As per the Indian Express, about 67,933 accidents took place on National Highways in the first half of 2025. These numbers show how unpredictable the roads can be! In just a few seconds, an accident can lead to heavy repair costs, damage to someone else’s vehicle or property, injuries, and emotional stress for families. While we cannot control every situation on the road, we can definitely prepare for the financial impact that follows. This is where car insurance becomes essential.
What is Car Insurance?
Car insurance is a protection plan that covers damage, theft, and accident-related costs of your vehicle. It also pays for third-party losses, which helps you to stay financially secure on the road. As per Section 146 of the Motor Vehicles Act, 1988, having car insurance is a legal requirement for every car owner. This mandatory insurance is called Third-Party Car Insurance. Driving without third-party insurance is a punishable offence under the law.
A good car insurance policy manages expenses related to repair, third-party liabilities, and supports you during accidents. It also protects you from unexpected losses and ensures peace of mind during tough moments on the road.
Why Is Car Insurance Important?
A car insurance policy is not a luxury but an essential safety net for every car owner. It protects you from unexpected financial and legal liabilities that arise due to accidents. Whether it is damage to your car, injuries to the rider, or damage to a third party, a car insurance policy acts as a reliable shield in every manner.
Here are the points explaining the same:
- 01
Essential for Every Driver
Car insurance is a fundamental requirement that provides you with financial protection on the road.
- 02
Reduces Sudden Expenses
It helps you manage unexpected repair costs and medical bills that may arise after an accident.
- 03
Covers Legal Liabilities
Your policy handles legal and financial responsibilities if you cause third-party injury or damage.
- 04
Protects Your Vehicle
From minor scratches to major damage, your car and the rider stay safeguarded.
- 05
Supports Third-Party Claims
If someone else’s property or vehicle is harmed, the policy covers their loss.
- 06
Peace of Mind While Driving
With a car insurance policy, you can drive confidently and stress-free.
Top 10 Car Insurance Plans
Types of Car Insurance Policies in India
Depending on the coverage and protection offered, a car insurance policy is categorized into three types. Here are the names with proper explanation:
CP Comprehensive Car Insurance Policy
A Comprehensive Car Insurance Policy offers complete protection for both you and your vehicle. Along with third-party insurance, this policy also covers any loss or damage to your car. It protects your vehicle from a wide range of risks such as accidents, theft, fire, natural disasters (like floods or storms), riots, and vandalism.
In simple terms, a Comprehensive Car Insurance Policy is your all-in-one safety package. It safeguards both your car and your financial stability from almost every major risk you may face while driving.
SI Stand-Alone Car Insurance
A Stand-Alone Car Insurance Policy, also known as Standalone Own-Damage (OD) Insurance, offers protection only for your own car. It does not include third-party liability cover, which is legally mandatory. This policy covers damage caused by accidents, fire, theft, natural disasters, and man-made events to your car. It is a good choice for people who already have an active third-party policy and want additional safety for their own vehicle.
In simple terms, Stand-Alone Car Insurance ensures your vehicle stays protected, even if someone else causes the damage, and gives you financial confidence every time you drive.
TP Third Party Car Insurance
Third-party car insurance is the most basic and mandatory type of motor insurance required by law in India. It protects you if your car accidentally causes injury, death, or property damage to any person. This policy does not cover damage to your own vehicle. Instead, it focuses on safeguarding you from legal and financial liabilities that arise when a third party is affected because of your vehicle.
Here is the table showing the latest Car Insurance 3rd Party Price given by IRDAI:
| Private Petrol Car - Engine Capacity | Annual TP Premium |
|---|---|
| Up to 1000 cc | Rs. 2,094 |
| 1000 cc – 1500 cc | Rs. 3,416 |
| Above 1500 cc | Rs. 7,897 |
| Electric Cars - Battery Capacity | Third-Party Premium Rates |
|---|---|
| Not exceeding 30 kW | Rs. 1,780 |
| Exceeding 30 kW but not exceeding 65 kW | Rs. 2,904 |
| Exceeding 65 kW | Rs. 6,712 |
Note: Car insurance prices vary across insurers based on vehicle details, risk factors, and company pricing guidelines. The premiums for comprehensive and standalone car insurance are not fixed by IRDAI. Only Third-Party premiums are regulated by IRDAI.
Difference Between Third-Party, Standalone, and Comprehensive Car Insurance
Here is the table showing the difference between third-party, standalone, and comprehensive car insurance policies in a very simple way:
| Key Features and Inclusions | Third-Party Insurance | Comprehensive Insurance | Standalone Own-Damage Insurance |
|---|---|---|---|
| Own-Damage Cover | ✘ | ✓ | ✓ |
| Third-Party Liability Cover | ✓ | ✓ | ✘ |
| Theft of a Car | ✘ | ✓ | ✓ |
| Fire Damage | ✘ | ✓ | ✓ |
| Accidental Damage to Own Car | ✘ | ✓ | ✓ |
| Natural Calamities (Flood, Storm, etc.) | ✘ | ✓ | ✓ |
| Man-Made Disasters (Riots, Vandalism) | ✘ | ✓ | ✓ |
| Add-on Compatibility (Zero Dep, Engine Protect, etc.) | ✘ | ✓ | ✓ |
| Legal Requirement | ✓ | ✓(Includes TP) | ✘(Needs TP cover separately) |
| Overall Protection | Low | High | Medium |
What Your Car Insurance Cover & Does Not Cover?
Inclusions:
Have you ever thought about what your car insurance truly covers? If yes, then this section is truly going to help you!
Third-Party Liabilities
Including injury, death, or property damage caused to another person by your vehicle.
Own-Damage to Your Car
Accidental damage related to your own vehicle.
Theft or Total Loss
Loss of your car if it is stolen or completely damaged beyond repair is also covered.
Fire and Explosion Damage
Loss caused by fire, explosion, or similar hazards.
Natural Calamities
Any damage from floods, earthquakes, storms, and other natural disasters.
Man-Made Disasters
Damage from riots, vandalism, strikes, and other human-caused events.
Injuries to the Owner-Driver
Personal accident cover for the owner-driver as per regulatory requirements.
Optional Add-ons
Enhances coverage with options like Zero Depreciation, Engine Protect, Roadside Assistance, Consumables Cover, and more.
Exclusions:
There are certain things that a car insurance policy does not cover. It is always advisable to check for all the exclusions when you buy car insurance online.
Driving Without a Valid Licence
Any damage caused when the driver does not hold a valid driving licence.
Driving Under the Influence of Alcohol or Drugs
Accidents due to intoxicated driving.
Mechanical or Electrical Breakdown
Any kind of mechanical failure, and electrical breakdowns.
Regular Wear and Tear
Tyre wear, engine ageing, or routine maintenance.
Damage Outside the Policy’s Geographical Limits
Claims are not accepted if the car is driven beyond the regions allowed in the policy.
Using the Car for Illegal Activities
Damage caused while using the vehicle for unlawful purposes.
Using a Private Car for Commercial Purposes
If a private vehicle is used as a taxi or for goods transport without a permit, the claim is not valid.
Consequential Loss
Secondary damage that happens after the accident (like driving the car after an oil leak).
Note: The above inclusions and exclusions mainly apply to Comprehensive Car Insurance, as it offers the widest coverage. Third-party and Standalone Own-Damage policies have limited and specific coverage, which may not include all the points listed. Please refer to your policy document for exact details.
Popular Car Insurance Add-Ons
Every car owner has different needs, and add-ons help to customise the policy to match those requirements. However, adding these extra covers can increase the overall car insurance price to some extent.
You can choose add-ons to make your car insurance stronger and more useful in real-life situations. Here are some of the most popular options:
Zero Depreciation Cover
Get the maximum claim amount without worrying about the depreciation cut on replaced parts with zero depreciation
1Engine Protect Cover
Ideal for flood-prone areas, the engine protect add-on protects your engine and gearbox from damage due to water or oil leakage.
2Roadside Assistance
Whether it is a sudden breakdown, flat tyre, or an empty fuel tank, roadside assistance ensures that help is just a call away.
3Return to Invoice (RTI)
If your car is stolen or completely damaged, the return to invoice add-on helps you receive the original invoice value of your vehicle.
4Consumables Cover
The Consumables add-on covers small but essential items like engine oil, nuts, bolts, brake fluid, and AC gas used during repairs.
5Tyre Protect Cover
Take care of tyre repair or replacement costs caused by accidental damage with tyre protect cover.
6Passenger Cover
Passenger add-on offers added protection to passengers travelling with you. Ensuring their safety is also important.
7Key and Lock Replacement Cover
This key replacement add-on supports you if your keys are lost, damaged, or stolen by covering replacement costs.
8Personal Accident Cover
Per add-on provides financial protection to the owner-driver in case of accidental injury or death.
9Electrical and Non-Electrical Cover
There is also a need for electrical and non-electrical cover for a car while purchasing insurance. These add-ons make the insurance more effective.
10
How is Car Insurance Premium Calculated?
One of the most important concerns while buying car insurance is knowing how to calculate the insurance premium. Before learning about the way to calculate insurance premiums, let’s understand what factors affect car insurance premiums.
Factors Affecting Car Insurance Policy Premium
A car insurance premium is based on multiple factors that help insurers assess risk. Key elements include:
- Type of Policy: Premium differs for Third-Party, Standalone OD, and Comprehensive plans.
- Car Make, Model & Variant: Costlier cars attract higher premiums due to expensive repairs.
- Vehicle Age: New cars have higher premiums, and older cars cost less due to depreciation.
- Location: Cars in metro or high-risk areas have higher premiums.
- Engine Capacity (cc): A Higher engine capacity increases the third-party premium.
- Add-ons Selected: More add-ons mean a higher total premium.
- No Claim Bonus (NCB): Claim-free years reduce your premium.
- Usage Type: Commercial-use vehicles usually have higher premiums.
- Security Features: Anti-theft devices may lower the premium.
In short, your premium depends on the car’s risk profile, your coverage choice, and the extras you add. Although your third-party car insurance price is determined by IRDAI.
Method to Calculate Car Insurance Policy Premium Online
1 Using a Car Insurance Price Calculator
This is the easiest way to find your car insurance premium. You simply enter your car details, and the online calculator shows:
- The estimated premium
- The IDV (Insured Declared Value) of your car
You can also calculate the Own-Damage (OD) premium manually using this formula: OD Premium = (Car’s IDV × Premium Rate set by insurer) + Add-ons – Discounts (like NCB, anti-theft, etc.)
Insured Declared Value or IDV represents the current market value of your car. It is calculated as: IDV = (Current Market Value – Depreciation) + (Value of Accessories – Their Depreciation)
Factors Affecting IDV in Car Insurance
The Insured Declared Value(IDV) is the maximum amount your insurer will pay if your car is stolen or totally damaged. Think of it as your car’s current market value. Several factors influence this value:
1 Age of the Car
The older your car, the higher the depreciation, and the lower the IDV.
Example:
- A 1-year-old car may have 15% depreciation.
- A 5-year-old car may have 40–50% depreciation. So, the IDV drops as the car gets older.
2 Car’s Make, Model & Variant
Premium cars naturally have a higher IDV because their market value is higher.
Example:
- A Maruti Alto will have a lower IDV than a Hyundai Creta of the same year.
- A Creta SX (Top Model) will have a higher IDV than the Creta E (Base Model).
3 Depreciation Rate Applied by Insurers
Insurers follow standard IRDAI depreciation slabs based on age.
Example: If the showroom price is Rs. 8 lakh and the depreciation for its age is 20%,
- The IDV is Rs. 6.4 lakh.
4 Condition of the Car (For vehicles older than 5 years)
Older cars require physical inspection. Their IDV depends on:
Example: Two 7-year-old Swifts may have different IDVs depending on maintenance and wear & tear.
- Body condition
- Engine health
- Market sales value
Important Documents for Buying a Car Insurance Policy Online
To buy a car insurance policy smoothly, you need a few basic documents. These help the insurer verify your identity, vehicle details, and ownership:
- Car Registration Certificate (RC)
- Identity Proof such as Aadhaar Card, PAN Card, Passport, or any valid government-issued ID.
- Address Proof like Aadhaar, Driving Licence, Passport, Voter ID, or utility bills.
- Driving Licence
- Car invoice (for new vehicles)
How to Buy Car Insurance Online Through Square Insurance?
Want to buy car insurance for a new car? Or just safeguarding your old car from financial uncertainties? Reach out to your insurer or broker and get your car protected. Here you get to know about the steps to buy car insurance online from the Square Insurance website:
- 1
Begin by navigating to the car insurance section on the Square Insurance website.
- 2
Type your registered car number. If you have a new vehicle, click on “Got a New Car”.
- 3
Select the make, model, variant, fuel type, and registration date of your car.
- 4
Enter the required personal and vehicle details, then proceed to the next step.
- 5
Review the car insurance plans offered. Then, choose the one that suits your needs and budget.
- 6
If you are opting for a comprehensive policy, enhance your coverage by choosing add-ons.
- 7
Complete the purchase using UPI, debit/credit card, or net banking.
- 8
Check your email inbox for the policy documents sent by the insurer.
Important Documents for Car Insurance Renewal Online
Renewing your car insurance is simple and requires only a few basic details:
- 1
Previous Car Insurance Policy (to check expiry date and coverage)
- 2
Car Registration Certificate (RC)
- 3
Identity Proof (Aadhaar, PAN, etc.)
- 4
Address Proof
- 5
Vehicle Inspection Report (only if required for break-in or expired policies)
- 6
Driving Licence
Easy Steps for Car Insurance Renewal Online
Renewal of car insurance is as important as buying a new one. If your car insurance has expired, then you are at financial and legal risk while driving on the road. To continue with the benefit of car insurance for your car, always keep your policy active and updated.
Here are the simple steps for car insurance renewal that will make your experience hassle-free:
- 1
Visit the car insurance renewal page on the insurer’s website.
- 2
Enter your details like policy number, mobile number, and date of birth, then submit.
- 3
Select the plan that fits your needs.
- 4
Add or remove extra covers (add-ons) if you want to customize your policy.
- 5
Check the premium amount shown on the screen.
- 6
Pay online using a debit card, credit card, or net banking.
- 7
Your policy will be renewed instantly after the payment is completed.
Documents Required for Car Insurance Claim Process
Here are the documents required for claiming car insurance online:
- A copy of your car insurance policy
- A completed and signed claim form
- Your KYC documents
- A copy of the vehicle’s Registration Certificate (RC)
- A copy of the driver’s licence of the person driving at the time of the incident.
- A copy of the police FIR (required for theft claims)
- Estimated repair bills
- Original repair bills and payment receipts
What is a Car Insurance Claim Settlement?
An insurance claim is a formal request you make to your insurance company asking them to pay for a loss or damage covered under your policy. Raising an insurance claim may affect your No Claim Bonus (NCB).
Types of Claim Settlement in a Car Insurance Policy
Here are mainly two types of the car insurance claim process:
- 1
Cashless Claims
In a cashless claim, you can get your car repaired at any network garage without paying the repair bill upfront. The insurer directly settles the approved amount with the garage, making the process faster and more convenient.
- 2
Reimbursement Claims
In a reimbursement claim, you first pay for the car repairs on your own. After submitting the bills and required documents, the insurer reimburses you for the approved repair amount.
- 1
Steps for Claim Settlement for Car Insurance Online
Here are the steps to claim car insurance online:
- 1
Start a Claim
Inform your insurance company immediately after the accident. Provide basic details of the incident and submit clear photos of the damage as proof.
- 2
Car Inspection
The insurer will assign a surveyor to inspect the vehicle. Keep all required documents ready so the surveyor can verify the claim quickly.
- 3
Repair Your Car
Once the inspection is approved, take your vehicle to an authorised network garage for repairs.
- 4
Settle the Claim
Now, settle the claim based on its type with the insurer.
- Cashless Claim: The insurer directly pays the garage for all approved repair costs.
- Reimbursement Claim: You pay the repair bill first and then submit the receipts to get reimbursed by the insurer.
- 1
Note: Square Insurance Brokers Pvt. Ltd. claim specialists are available to guide and support you for Car Insurance claims through 18001205430 and claimsupport@squareinsurance.in.
Tips to Choose the Best Car Insurance Policy Online in India
Choosing the right car insurance can feel confusing, especially with so many plans and add-ons available. But with a few smart tips and checks, you can easily find a policy that fits your needs and budget.
01Know What You Want
First, decide whether you need basic third-party cover or full protection through a comprehensive plan.
02Compare Coverage, Not Just Price
A cheap premium may look attractive, but make sure the plan actually covers the risks you are concerned about.
03Check the Add-Ons
Add-ons like Zero Depreciation, Engine Protect, and Roadside Assistance can make your coverage stronger. Choose only what you truly need.
04Look at the Insurer’s Claim Process
A smooth and quick claim settlement process matters more than anything else. Check reviews and settlement ratios.
05Consider Cashless Network Garages
More network garages mean easier and faster cashless repairs when you need them.
06Check for NCB Benefits
Make sure the policy offers a good No Claim Bonus structure so you can save more on renewals if you drive safely.
- 07
Read the Inclusions and Exclusions Carefully
Understanding what is covered and what is not helps you avoid surprises during claims.
Best Car Insurance Companies in India 2025
Here is the list of the top car insurance companies in India:
| Public Car Insurance Company Name | Claim Settlement Ratio | Network Garages |
|---|---|---|
| New India Assurance | 92.43% | 3000+ |
| United India Insurance | 81.63% | 3100+ |
| National Insurance | 84.03% | 3100+ |
| Oriental Insurance | 88.05% | 3000+ |
| Private Car Insurance Company Name | Claim Settlement Ratio | Network Garages |
|---|---|---|
| HDFC ERGO General Insurance Co. Ltd. | 88.22% | 7700+ |
| Universal SOMPO Car Insurance | 90.72% | 3500+ |
| Future Generali | 94.29% | 3500+ |
| Raheja QBE | 92.63% | 1300+ |
| Go Digit Car Insurance | 90.72% | 10,000+ |
| IFFCO TOKIO General Insurance Co. Ltd. | 89.09% | 4300+ |
| Liberty General Insurance | 90.10% | 4500+ |
| SBI General Insurance | 90.15% | 16000+ |
| ICICI Lombard General Insurance Co. Ltd. | 85.45% | 12000+ |
| Royal Sundaram General Insurance | 91.56% | 3300+ |
Note: The above-mentioned CSR (Claim Settlement Ratio) is published in the 8th edition of General Insight by IBAI (Insurance Broker Association of India).
How to Reduce Your Car Insurance Premium?
Looking to save on your car insurance? A few smart choices can help you lower your premium without compromising on essential protection. Here are some tips by which you can easily reduce your car insurance premiums:
- 01
Maintain a Claim-Free Year
Avoid small or unnecessary claims so you can earn a higher No Claim Bonus (NCB), which reduces your premium at renewal.
- 02
Choose Only Necessary Add-Ons
Add-ons increase the premium. Pick only the ones that truly match your driving needs and avoid anything you will not use.
- 03
Install ARAI-Approved Security Devices
Anti-theft devices can lower your premium because they reduce the risk of theft.
- 04
Opt for a Higher Voluntary Deductible
Choosing to pay a small amount during claims (voluntary deductible) can reduce your premium, but choose wisely.
- 05
Compare Plans Before Buying
Do not go with the first option you see. Compare coverage, benefits, and pricing to find the best value.
- 06
Renew Your Policy on Time
Late renewal may impact your NCB and might lead to a vehicle inspection, increasing costs.
- 07
Avoid Modifications That Increase Risk
Fancy accessories or performance-related modifications can increase your premium.
By following these simple steps, you can keep your car insurance premium affordable while still enjoying solid protection on the road.
Common Mistakes to Avoid When Buying Car Insurance
Here are the common mistakes that you should avoid when buying a car insurance policy:
- 1
Choosing a policy only because it is cheap.
- 2
Ignoring add-ons that you actually need.
- 3
Not checking exclusions and conditions properly.
- 4
Skipping comparison between insurers.
- 5
Forgetting to verify the insurer’s claim process.
- 6
Providing incorrect or incomplete details.
- 7
Not checking customer reviews and claim settlement ratio.
Car Insurance for New Vs Old Cars
Buying insurance for a new car and a used car may look similar, but the coverage needs, premium rates, and benefits often differ. Understanding these differences helps you choose the right protection for your vehicle.
| Feature | New Cars | Used Cars |
|---|---|---|
| IDV (Value) | High | Low |
| Premium | Higher | Lower |
| Recommended Plan | Comprehensive | Comprehensive or Third-Party |
| Add-on Options | Wide (Zero Dep, RTI, Engine Protect) | Limited to older cars |
| Claim Payout | Higher | Moderate |
Car Insurance for Electric Cars in India
Electric cars are gaining popularity in India, mainly due to lower running costs and government incentives. Just like any other vehicle, EVs must have valid car insurance. EV insurance works the same way as regular car insurance. It covers third-party liabilities and own-damage risks like accidents, fire, theft, and natural disasters. However, insurers also consider EV-specific components such as the high-value battery, electric motor, and charging equipment, which can be expensive to repair. Many insurers now offer EV-friendly features like:
Battery protection
Coverage for charging cables and home charging units
Roadside assistance for battery discharge
Protection from electrical short-circuits
Why is Square Insurance Your Trusted Companion?
Square Insurance Broker Private Ltd, a one-shot solution for all your car insurance needs. Ever wondered what really makes Square Insurance “trustworthy”? Here are the key points that will help you understand:
You deserve real guidance, not confusion
Square Insurance helps you understand policies clearly so you can choose what truly fits your needs.
Comparing plans should be easy
They offer unbiased comparisons across multiple insurers, saving you time and effort.
Support matters the most during claims
Their dedicated claim assistance team stays by your side, helping you through every step.
You want transparency, not hidden surprises
Square Insurance keeps everything clear, including coverage, prices, add-ons, and benefits
You want options
With access to multiple insurance companies, you get more choices and better value.
Customer care should be responsive
The customer care team is responsive, friendly, and always ready to guide you. No matter the time.
FAQs
You can compare multiple car insurance plans online by checking coverage, add-ons, claim settlement ratio, and premium prices on a trusted comparison platform or broker website.
Visit an insurer’s or broker’s website, enter your car number or basic vehicle details, and you can instantly view your policy details. This information includes status, coverage, and expiry date.
Go to the car insurance renewal section, enter your policy number and vehicle details. Then, choose a plan, and make the payment online. Your policy gets renewed instantly.
Your renewal price depends on factors like car age, claim history (NCB), coverage type, add-ons, and insurer’s pricing. Claim-free years can help lower your premium.
The cheapest car insurance varies for each person depending on car model, location, and coverage. Comparing plans online is the best way to find the lowest premium.