Motor insurance, commonly known as car insurance, is more than just a legal formality. It is a financial safeguard that protects you from sudden expenses caused by accidents, theft, or damage to your vehicle. However, many people buy or renew their car insurance policies without clearly understanding what is included and what is not. This often leads to confusion and disappointment during claim time.

To help you make better decisions, here are five essential things you should know about car insurance before choosing or renewing your policy.

1. Understanding the Right Type of Coverage Is Crucial

Motor insurance policies mainly come in two forms:

Third-Party Insurance
This is the minimum insurance required by law. It covers injury, death, or property damage caused to another person. However, it does not cover damage to your own vehicle or theft.

Comprehensive Insurance
This policy includes third-party coverage along with protection for your own vehicle against accidents, fire, theft, and natural or man-made disasters.

Choosing only third-party insurance may seem cheaper, but it can become costly if your own vehicle gets damaged. For better overall protection, comprehensive insurance is usually the safer choice, especially for newer or high-value vehicles.

2. Add-On Covers Provide Extra Protection When You Need It Most

Add-ons are optional benefits that can be added to your comprehensive policy for wider coverage. Though they increase the premium slightly, they can significantly reduce your expenses during repairs.

Some commonly chosen add-ons include:

· Zero Depreciation Cover: Ensures full claim amount without depreciation deduction on parts.

· Engine Protect Cover: Covers engine damage due to waterlogging or oil leakage.

· Roadside Assistance: Helps in case of breakdown, towing, or minor repairs.

· Return to Invoice Cover: Pays the original purchase price if the vehicle is stolen or totally damaged.

Selecting add-ons based on your driving conditions and vehicle age can offer strong financial protection during emergencies.

3. Several Factors Decide How Much Premium You Pay

Motor insurance premiums are calculated based on risk-related factors such as:

· Vehicle make, model, and age

· Engine capacity and fuel type

· City of registration

· Claim history

· Selected add-ons

· Insured Declared Value (IDV)

IDV is the maximum amount you will receive if your vehicle is stolen or declared a total loss. A higher IDV increases premium, while a lower IDV reduces both premium and claim amount.

It is important to select a realistic IDV that balances premium savings and adequate compensation.

4. No Claim Bonus Can Help You Save Every Year

If you do not make any claim during your policy period, you become eligible for a No Claim Bonus (NCB). This bonus is given as a discount on your next year’s premium and increases with each claim-free year.

Key points about NCB:

· It belongs to the policyholder, not the vehicle

· It can be transferred when you buy a new car

· It is lost if you make a claim

Avoiding small claims can help you preserve your NCB and reduce your premium significantly over time.

5. Claim Process and Policy Conditions Should Never Be Ignored

Many people focus only on premium while buying insurance, but claim experience depends on policy terms and service process.

Before purchasing, check:

· Availability of cashless garages

· Claim reporting time limits

· Required documents

· Policy exclusions such as drunk driving or delayed reporting

Following proper claim procedures and keeping documents ready helps in faster settlement and avoids rejection due to technical reasons.

Conclusion

Motor insurance plays an important role in protecting both your vehicle and your finances. By understanding coverage types, selecting useful add-ons, maintaining a good claim record, choosing the right IDV, and knowing the claim process, you can avoid common mistakes and enjoy better protection.

With platforms like Square Insurance, vehicle owners can compare policies easily, understand coverage clearly, and choose plans that match their budget and protection needs. Making informed insurance decisions today can save you from major financial stress tomorrow.

Frequently Asked Questions

1. Is motor insurance mandatory in India?
Yes, third-party motor insurance is legally required for all vehicles on Indian roads.

2. Which motor insurance is better: third-party or comprehensive?
Comprehensive insurance offers wider protection, including damage to your own vehicle, making it more suitable for most vehicle owners.

3. What is IDV in motor insurance?
IDV is the maximum amount payable by the insurer if your vehicle is stolen or completely damaged.

4. Can I keep my No Claim Bonus when changing my car?
Yes, NCB can be transferred to your new vehicle as it belongs to the policyholder.

5. Do add-ons really make a difference in claims?
Yes, add-ons like zero depreciation and engine protect can significantly increase claim payouts and reduce repair costs.