Motor Insurance in India

Motor Insurance in India is of two types normally - The basic one which satisfies the statutory obligation of the vehicle owner and called Act Insurance or Third Party Insurance and the more expensive one which includes the insurance for the vehicle as well.

Third Party Insurance, much unlike in western countries, is very cheap. For example, the premium component of third party insurance in a full insurance policy comes to about 5% only. This makes it more popular form of insurance taken by many. A great part of the motor third party insurance premium is being subsidised by the Own Damage Premium collected.

Comprehensive insurance rates hover between 1.50% to 3.50% depending on the type of vehicle that is being insured and are of inexplicable logic at times. While the private car insurance costs a little over 3% for the own damage portion, the model of car when insured as a tourist taxi costs slightly higher at only 0.15% more in certain cases. This is despite the fact that a tourist taxi is used more extensively than a private car and as such a greater risk.

The Own Damage premium rates are greatly reduced good driving record proven by NIL Claims. The No Claim discount is as high as 65% in case of cars and are transferable from one car to another car of the same owner. No Claim discounts go with the owner and not the vehicle in case of sale of the vehicle.