Summary of this article
A comprehensive policy covers Own Damage (OD) and Third-Party (TP) liabilities, but not every risk is included.
Standard exclusions include driving under the influence, using the car without a valid licence, and consequential damages.
Add-ons like zero depreciation, engine protection, and roadside assistance can strengthen your coverage.
New vehicle owners must renew their OD cover annually, even if the TP policy lasts longer.
With car prices seeing some relief after the recent GST cuts, new car purchases have picked up across dealerships. But even as buyers drive out of showrooms with a sense of relief, one key detail often might be missed, which is related to what your motor insurance actually ‘does not cover’.
A standard motor insurance policy in India comes with two parts: Own Damage (OD) and Third Party (TP) cover. While a TP policy is legally mandatory, it only protects you against liabilities arising from damage or injury caused to others. The OD component, on the other hand, safeguards your vehicle against accidents, theft, fire, or natural disasters.
According to Mayur Kacholiya, Head, Motor Product and Actuarial at Digit General Insurance, a comprehensive policy usually includes one-year OD plus three-year TP for cars (and five years for two-wheelers). Some insurers also offer bundled options such as three-year OD and TP together for longer-term coverage.
However, even with comprehensive protection, policyholders are often caught off guard when claims get rejected. That’s because there are standard exclusions that every owner should be aware of before assuming “everything” is covered.
For instance, your insurer will not entertain claims if you were driving under the influence of alcohol or drugs, or without a valid driving licence. Some consequential damages, like a secondary damage that occurred due to improper handling after an accident might also be excluded.
Kacholiya explains this with an example: if your car’s engine gets damaged after you try to start it post-collision, the resulting engine damage may not be covered since it was caused by negligence after the initial incident.
Similarly, if you drive through floodwater despite warnings and your engine suffers hydrostatic lock, it may fall under contributory negligence, another standard exclusion.
Many new vehicle owners, especially those buying after the GST price cut, are opting for the standard package that includes a long-term third-party cover and one-year OD cover.
But what’s often overlooked is the need to renew the OD component every year to maintain protection for the vehicle itself. “The long-term TP may give an impression of complete coverage, but your own damage protection needs annual renewal,” Kacholiya cautions.
Now, to bridge such insurance gaps, the insurers extend many add-ons that enhance the overall coverage of your vehicle, such as:
Zero Depreciation Cover would ensure that depreciation is not deducted when parts are replaced after an accident.
Engine and Gear Box Protect Cover helps cover high-cost engine repairs, sometimes amounting to 40 per cent of a vehicle’s value.
Return to Invoice Cover is helpful to ensure you get the car’s full invoice value, including taxes and registration costs, in case of total loss or theft.
Some other useful and popular add-on coverage options are:
Roadside Assistance Cover that offers help in case of breakdowns, and
Tyre Protect Cover for punctures or bursts
For electric vehicle owners, an EV Shield add-on can cover losses to the battery and charger - components that make up more than half of an EV’s cost.
As car prices adjust after tax relief, it is tempting to rush through the insurance paperwork. However, understanding what is not included in your motor policy could save you from financial shocks later.
A few extra minutes spent reading exclusions and choosing the right add-ons can make a world of difference when it actually matters.
