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Motor Insurance in India – Quick Guide to Steps in Buying Cheap Car Insurance,Car Insurance Laws,Government and Private Insurers,Best Motor Insurance Company

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Motor Insurance Industry and Laws in India

Motor insurance is an essential requirement for all new vehicles. This applies for both commercial and personal use. Under the provisions of Motor Vehicles Act, all vehicles that ply in public places must have an insurance policy that at least covers “Third Party Liability” as specified under the Act. A Comprehensive Motor Insurance Cover in addition to the mandatory third-party cover also protects the car owner from financial losses, caused by loss or damage or theft of the vehicle.

In a Related topic don’t forget to read the Best Car Insurance in India Guide

Auto insurance includes loss or damage of the vehicle by any kind of accident, fire, lightning, self ignition, external explosion, burglary, or theft, or by any malicious act. Auto insurance companies also pay for grounds like riots, strikes, terrorist acts, and natural calamities like earthquake, cyclone, flood, and inundation. Most auto insurance companies in India have comprehensive policies to help their customers. Some of them have also tied up with top automobile manufacturers for a fast insurance process. Auto insurance companies have separate plans for two wheelers, four wheelers, commercial vehicles. Car Insurance Premium is calculated based on the car’s Model, Age and the Registration City. Due to this Pricing Model, in some cases, the premium for similar cars could be higher as well. Some of the biggest Insurance companies in India are listed below:

Government Car Insurance Companies in India

  1. United India Insurance Company ltd. – General Insurance Business in India was nationalized in 1972. 12 Indian Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General Insurance operations of southern region of Life Insurance Corporation of India were merged with United India Insurance Company Limited. After Nationalization United India has grown by leaps and bounds. United India has been in the forefront of designing and implementing complex covers to large customers, as in cases of ONGC Ltd , GMR- Hyderabad International Airport Ltd, Mumbai International Airport Ltd Tirumala-Tirupati Devasthanam etc.
  2. The Oriental Insurance Company Ltd.– The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company Ltd and was formed to carry out General Insurance business.  In 2003 all shares of our company held by the General Insurance Corporation of India has been transferred to Central Government.   The company has developed various types of insurance covers to cater to the needs of both the urban and rural population of India. From less than a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and during 2008-09 the figure stood at a Rs. 4078 crores.
  3. National Insurance – Consequent to passing of the General Insurance Business Nationalization Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India which is fully owned by the Government of India. National Insurance Company Ltd. is one of the leading public sector insurance companies of India, carrying out non life insurance business. It is the second largest non life insurer in India having a large market presence in Northern and Eastern India. The products cater to the diverse insurance requirements of its 14 million policyholders.
  4. The New India Assurance Co. Ltd. – It is a leading global insurance group, with offices and branches throughout India and various countries abroad. There are policies to cover all types of vehicles plying on public roads such as Scooters &Motorcycle, Private cars, all types of commercial vehicles, Motor Trade (vehicles in show rooms and garages). Liability is covered for an unlimited amount in respect of death or injury and damage to third party property for Rs.7.5 lacs under Commercial vehicle and private and Rs. 1 lakh for Scooters / Motor Cycles. The policy also pays for towing charges from the place of accident to the workshop. This policy covers loss or damage to the insured vehicle and its accessories due to fire, self-ignition, burglary, earthquake, flood, inundation, cyclone or while in transit.

Private Car Insurance Companies in India

  1. TATA AIG – Tata AIG General Insurance Company Limited is a joint venture company, formed by the Tata Group and American International Group, Inc. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG General Insurance Company, which started its operations in India in 2001, provides insurance solutions to individuals and corporates. It offers a complete range of general insurance products including insurance for automobile, home, personal accident, travel, energy, marine, property and casualty as well as several specialized financial lines. Some of the car insurance features offered are Instant buy / renew online, Free Car Pick up, Warranty on repairs, Direct Settlement at garages & Unique Add On covers.
  2. ICICI Lombard – ICICI Lombard is the largest private sector general insurance company in India with a Gross Written Premium over Rs.3,695 crore as of March 2010. The company issued over 44 lakh policies  ICICI Lombard GIC Ltd. is a 74:26 joint venture between ICICI Bank Limited, India’s second largest bank and Fairfax Financial Holdings Limited,a Canada based USD 30 billion diversified financial services company. C
  3. Bajaj Allianz – Bajaj Allianz General Insurance  is a joint venture between Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited) and Allianz SE.  Bajaj Allianz has made a profit before tax of Rs. 180 crores and has become the only private insurer to cross the Rs.100 crore mark in profit before tax in the last four years. As a registered Indian Insurance Company and a capital base of Rs. 110 crores, the company is fully licensed to underwrite all lines of general insurance business.  Bajaj Allianz offers towing facility in case of a breakdown or accident. The users can also transfer their existing ‘No Claim Bonus’ from any car insurance provider and the bonus may range from 20% – 50%.
  4. Chola MS – Cholamandalam MS General Insurance  is a Joint Venture between the USD 3 billion Murugappa Group, one of India’s leading business conglomerates and Mitsui Sumitomo Insurance Company Limited, which is part of the Mitsui Sumitomo Insurance Group of Japan, the largest General Insurance Company in Japan.  Some of the Motor Insurance features are that it is a complete comprehensive policy that offers both Third Party Cover and Own Damage Cover. A personal Accident Cover is provided for both owner-driver and passengers. Protection against losses or damages due to accidental external means, burglary, theft and various other perils is provided.
  5. IIFCO TOKIO –  It is a joint venture between the Indian Farmers Fertilizer Co-operative (IFFCO) and its associates and Tokio Marine and Nichido Fire Group, the largest listed insurance group in Japan. From a modest Rs 213 Crores of GWP (Gross Written Premium) in 2001-02, it has achieved Rs 1640 Crores in 2009-10, thereby becoming one of India’s leading private players. It is the first company in India to underwrite mega policies for a fertilizer and an automobile company. It offers various policies covering Health, Travel, Car, Retail etc.One of the best private , , Car Insurance Companies in my View
  6. Maruti Insurance – Maruti isone of the oldest car manufacturers in India, Maruti has achieved the status one of the reliable car brands. Maruti was established in 1981 and was known as Maruti Udyog. In the early 1990s’, Maruti Udyog and automobile giant Suzuki began a joint venture and Maruti Udyog was renamed as Maruti Suzuki India Ltd. Maruti then, introduced compact car models to the Indian market. Maruti automobiles, Maruti insurance, Maruti finance were some of the new initiatives taken by the company. The company has ties up with Bajaj Allianz, National Insurance Company, Royal Sundaram, and New India Assurance for its insurance business. Maruti provides motor insurance for Maruti vehicles only, which excludes Third Party policies. It is available to customers only through Maruti dealer network all over India. Maruti Insurance provides insurance for Maruti vehicles up to 7 years old.
  7. Reliance General Insurance Ltd. – Reliance General Insurance is one of India’s leading private general insurance companies with over 94 customized insurance products catering to the corporate, SME and individual customers.  It covers the car against accidents, burglaries, natural calamities etc. It also gives personal accident insurance cover and third party liability cover.

Cheap and Best Car Insurance Company

Steps in Buying the Cheapest Car Insurance

1) Try to avoid Private Companies as they make a lot of promises and advantages but disappear once the time to pay comes up.Insurance being such a critical service I did not want a private company irrespective of their glitzy new features etc.

2) Forget the Fancy Features that are being offered to raise the premium like zero depreciation,towing,24/7 helplines etc.Most of them are just ways to raise premiums and lure customers.Try and get the bare bone policy with the lowest premium

3) Compare Quotes from different Insurance Aggregators without buying from them – I used 3 Insurance Comparison Websites  This gave me a general idea about the prices being charged by various insurance companies.I could quickly shortlist Iffco-Tokio as one of the cheapest insurance providers with government general insurance companies oriental insurance,national insurance being slightly expensive than these.I could not find anything great or cheap about Icici Lombard,Bajaj Allianz and tata Aig which use a heavy amount of TV advertising and had a good recall.

4)  Private Companies make Consumer Lives Such a Pain that they would wish they never had bought a Car – Note applying and managing to pass a claim from a private insurance company is such a pain in the ass that you would wish that you had not ever bought a car.You can read about the customer travails with companies like tata-aig,icici-lombard and others in various consumer websites.The measly amount of claim that they give you after a harrowing experience is not worth the pain of applying.I think that is the general strategy for these companies.Make the customer go to such pains that he does not claim any insurance.

5) Shortlisting the Insurance Company and Policy- After finding all these things out,I decided to buy a policy that I would never have to use unless in  an extreme case like it getting stolen,destroyed or burnt.So I picked the cheapest company (Iffco Tokio) which had a quasi government connection as well.I went to its website and did not use the consumer aggregator,got the cheapest option (by making the highest possible deductible and leaving every frill).You can play around with different options to see the premium.This made my insurance premium approximately half of what it was earlier.I could have bought only 3rd party coverage ( which is mandatory by Indian law) which would have made it even cheaper but I decided to use the complete coverage so that I could use the policy in case of extreme cases.


Claiming Insurance in India from Private Insurance companies is a Harrowing Experience most of the times.The customer care employees are rude beyond measure while the marketing guys are like angels.While Insurance Companies are showing spectacular growth on the back of customers but their long term growth is a question.Government companies are the best bet as you can easily check from the success of insurance claims figures given by the Insurance Regulator (IRDA).If you decide on a private company,then try to pick up the cheapest policy possible which you do intent to use unless in a case of an extreme event.


Abhishek Shah

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