Q.I am 30 years old. I recently bought a car. I drive daily to work and often go on long road trips. I want to financially protect my vehicle against unforeseen damages like accidents, theft and natural disasters. How do I determine the right motor vehicle insurance coverage? What should I keep in mind while choosing a policy?

-Rahul

Dear Rahul,

Motor vehicle insurance is essential for protecting your vehicle against unexpected events that could otherwise lead to significant financial stress. Whether it’s minor damage or a major accident, the right insurance coverage ensures you’re not caught off guard by repair costs, liabilities, or loss. For individuals like you who drive regularly and cover long distances, opting for a comprehensive motor insurance policy is a smart choice. It not only covers third party liabilities but also provides protection against damages caused by accidents, theft, fire, and natural calamities.

If your vehicle breaks down or is involved in an accident, your policy will ideally provide roadside assistance add-on cover which is available at minimal cost, which includes towing and mechanical assistance. In case of theft, an accident, or a natural calamity, damage or loss protection covers the expenses for your vehicle, the driver, and any third parties involved. Similarly under the personal accident coverage, you will receive financial support in the event of death or serious disability, and also get additional protection for passengers. If your vehicle injures or damages someone else’s property, third party liability helps you with the associated legal and financial expenses.

If you don’t currently have insurance, it’s important to know that third party Insurance is mandatory under the Motor Vehicles Act, 1988, in India. This covers legal liabilities in case your vehicle causes injury or property damage to a third party, but it doesn’t cover damages to your own vehicle. Driving without valid insurance can result in hefty fines, legal consequences, or even suspension of your driving licence.

Motor insurance premiums and coverage depend on several factors, including your car’s age, model, usage patterns, and location. It’s advisable to review your policy annually to make sure it aligns with your evolving financial and usage needs. For instance, adjusting the Insured Declared Value (IDV) based on the car’s current market value can help manage premium costs without compromising on protection.

By evaluating your driving habits and potential risks, and by selecting suitable add-ons, you can build a well-rounded motor insurance policy that ensures peace of mind every time you are on the road.

The writer is Chief Operating Officer, SBI General Insurance

Published on June 28, 2025