Over 50% of Vehicles in India Run Without Insurance: What You Need to Know

Motor Insurance: A Critical Financial Shield
Millions of vehicles on Indian roads operate without third-party insurance. In the event of an accident, the owner of an uninsured vehicle is personally liable for damages to other people, vehicles, or property. Such costs can run into lakhs or even crores of rupees, making motor insurance a vital financial safeguard.

According to Niharika Singh, ED of IFCO Tokio General Insurance Company Limited, despite the legal requirement, more than 50% of vehicles in India still run without insurance. Third-party motor insurance provides essential protection against unexpected expenses such as vehicle repair, medical costs, and legal liabilities.

Types of Motor Insurance
Motor insurance is of two main types:

1. Comprehensive Insurance – Covers both damages to your own vehicle and liabilities to third parties.
2. Third-Party Insurance – Covers only damages, injury, or death caused to others or their property by your vehicle.

While comprehensive insurance is optional, third-party insurance is mandatory under Indian law before operating a vehicle on public roads.

What is Third-Party Insurance?
As the name suggests, a “third party” refers to anyone other than the vehicle owner or driver affected by an accident—pedestrians, other drivers, or passengers in other vehicles. In a third-party insurance policy, the insurance company compensates the third party for damages, protecting the vehicle owner from direct financial liability. Given India’s high road accident rates, such coverage ensures victims receive timely financial support.

Why Third-Party Insurance is Mandatory
Under the Motor Vehicle Act, 1988, third-party insurance is compulsory. Driving without it is a punishable offense, with provisions for fines, imprisonment, and vehicle confiscation. Without insurance, vehicle owners are personally liable for claims, which can escalate to several lakhs or even crores of rupees.

Costs of Third-Party Insurance
The base premiums for third-party insurance are standardized and regulated:

• Two-wheelers:
• Up to 75 cc: ~₹538/year
• 75–150 cc: ~₹714/year
• 150–350 cc: ~₹1,366/year
• Above 350 cc: ~₹2,804/year
• Four-wheelers:
• Up to 1000 cc: ~₹2,094/year
• 1000–1500 cc: ~₹3,416/year
• Above 1500 cc: ~₹7,897/year

These premiums cover unlimited liability to third parties for injury, death, or property damage. Comprehensive policies, which also cover the owner’s vehicle, cost more due to additional coverage beyond the statutory minimum.

Long-Term Policies
Insurance companies also offer long-term third-party policies, such as three-year cover for cars and five-year cover for two-wheelers. These provide regulatory compliance and cost stability over several years, often at a lower total cost than renewing annual policies every year.

Disclaimer: The information provided is based on insights from insurance analysts and companies, not Navbharat Times. Readers are advised to consult certified experts before making any decisions.