Written by
Inclusions and exclusions every motor policy has
Reviewed by
Your price in 2 minutes
Enter your car number to compare plans
Covers your own car
Kiwi Super NCB up to 90%
One Claims Specialist (industry first)
Introduction
A motor insurance policy does not cover everything. It has a fixed list of events it pays for, called inclusions, and an equally fixed list of events it will not pay for, called exclusions. Most car owners read the inclusions at the time of purchase and skip the exclusions. That is the part that costs them later, when a claim is not approved because the damage falls outside what the policy covers.
In this blog, we are going to cover what inclusions and exclusions actually mean, which events every comprehensive policy covers, which ones are always excluded, which ones depend on optional covers you may or may not have added, and which ones depend entirely on how the car was being used at the time.
Keep in mind
Every motor policy has 2 parts, inclusions tell you what is covered, exclusions tell you what is not
Exclusions apply even in a comprehensive policy, no policy covers every possible event
Some exclusions are permanent, meaning no optional cover can remove them
Some exclusions apply only if you were driving in a way that voids the policy, such as without a valid licence
Reading the exclusions in your policy document before a claim is always better than discovering them during one
What inclusions mean in a motor policy
An inclusion is any event or situation where your insurer is required to pay, either toward repairing your car, replacing it, or paying a third party on your behalf. Inclusions define the scope of the cover you have bought.
The Insurance Regulatory and Development Authority of India (IRDAI), which regulates all general insurers in India, sets minimum standards for what a motor policy must cover. Individual insurers can offer more than the minimum, but they cannot offer less.
A motor policy has 2 types of cover, each with its own set of inclusions.
The first is Third-Party (TP) cover, which is compulsory under Section 146 of the Motor Vehicles Act. This covers your legal liability for injury, death, or property damage caused to another person. Every car on Indian roads must carry at least Third-Party cover.
The second is Own Damage (OD) cover, which is optional but covers damage to your own car. A comprehensive car insurance policy bundles both together, Third-Party and Own Damage, in one plan.
Standard inclusions in a comprehensive car insurance policy
A comprehensive policy covers the following events under Own Damage cover:
- Accidents: Damage from a collision, a rollover, or any road accident, whether involving another vehicle or not.
- Theft: If the car is stolen and not recovered, the insurer pays the Insured Declared Value (IDV), the current market value of the car at the time of the policy
- Fire: Damage from fire, whether caused by a fuel leak, an electrical fault, or an external source.
- Natural calamities: Floods, cyclones, earthquakes, landslides, and lightning are all standard inclusions. India's Ministry of Earth Sciences classifies these as recognised natural hazards, and motor insurers treat them as covered situations.
- Man-made events: Riot damage, damage during a strike, and malicious vandalism by a third party.
- Transit damage: Damage while being transported, by rail, road, inland waterway, or air.
Under Third-Party cover, the policy includes:
- Third-party injury or death: Legal liability for injury or death caused to another person. Under Section 147 of the Motor Vehicles Act, this liability is unlimited, meaning there is no ceiling on what the insurer must pay toward third-party injury or death claims
- Third-party property damage: Damage to another person's vehicle or property, covered up to ₹1 lakh per incident under a standard Third-Party embedded plan
The compulsory Personal Accident (PA) cover of ₹15 lakhs for the owner-driver is also a standard inclusion, protecting against death or permanent disability from a car accident.
What exclusions mean in a motor policy
An exclusion is a situation or type of loss that your insurance policy does not cover. These are not hidden clauses meant to avoid paying claims; they are clearly defined limits of your policy that you agree to when you buy the cover.
There are 3 broad categories of exclusion in a motor policy:
Permanent exclusions
Permanent exclusions, no optional cover removes them
Conditional exclusions
Conditional exclusions, standard cover excludes them but an optional cover can bring them back in
Behaviour-based exclusions
Behaviour-based exclusions, the cover is void because of how the car was being used at the time
Permanent exclusions, these are never covered
These exclusions apply regardless of which plan you hold or which optional covers you have added. No insurer can cover these under a standard motor policy.
Age-related damage
Gradual deterioration from regular use is not an insurable event. Tyres that thin from use, brake pads that wear down, engine components that degrade over time, these are maintenance items and fall entirely outside the policy.
Mechanical or electrical breakdown
If the gearbox fails, the engine stops working due to overheating, or the battery dies from age, that is a mechanical failure, not an accident. The policy does not cover repair costs from breakdown unrelated to a covered event.
Damage from depreciation
The natural loss in value of the car and its parts over time is not a covered loss. This is distinct from the depreciation deduction applied during a claim, that is a calculation issue.
Consequential loss
If a flooded road is driven through despite clear risk and the engine seizes as a result of water ingress, the insurer may treat the engine damage as a consequential loss caused by the driver's own decision, not by the flood itself. This is a common cause of declined OD claims after heavy rain.
War and nuclear events
Damage from war, invasion, civil commotion beyond standard riot cover, and nuclear or radiation events are universally excluded across all general insurance policies in India.
Loss outside India
A standard motor policy covers the car only within the geographical limits of India. Damage that occurs outside India is not covered.
Conditional exclusions, covered only with the right optional cover
These events are excluded under a standard comprehensive policy but can be brought back in by adding the relevant optional cover. Whether they apply to your policy depends on what you purchased.
Depreciation on parts
When a claim is paid, the insurer deducts depreciation on certain parts, plastic, rubber, fibre, and metal components, based on the age of the car. This deduction can reduce the payout considerably on older vehicles. A Zero Depreciation optional cover waives this deduction, so you receive the full repair cost without a depreciation cut.
Engine damage from water
If rainwater or floodwater enters the engine and causes damage, the standard policy excludes it, especially if the car was driven into the water knowingly. An Engine Protect optional cover covers this specific type of damage.
Tyre damage
Tyres are excluded from standard Own Damage cover unless they are damaged as a direct result of an accident that also damaged the car. Standalone tyre damage, a burst on a rough road, for example, requires a Tyre Secure optional cover.
Key loss or damage
Loss of the car key, a lockout, or damage to the locking mechanism is not covered under the base policy. A Key Secure optional cover covers key replacement and locksmith costs.
Return to invoice gap
If the car is stolen or damaged beyond repair, the insurer pays the IDV, the current market value, which is always lower than the original on-road price after depreciation. A Return to Invoice optional cover closes that gap and pays the original purchase price, including registration and road tax.
Personal accident for passengers: The compulsory ₹15 lakh PA cover applies only to the owner-driver. Passengers have no cover under the standard policy. A Passenger Cover optional cover extends protection to named or unnamed passengers.
Exclusions that depend on how the car was being used
Some exclusions are not about what happened but about the circumstances at the time it happened. In these cases, your cover may not apply because the car was being used against the policy's terms.
Driving without a valid licence: If the driver does not hold a valid driving licence for the category of vehicle at the time of the accident, the Own Damage claim will not be approved. This is an explicit requirement under Section 3 of the Motor Vehicles Act. The Third-Party liability may still be settled by the insurer, but the insurer can then recover that cost from the owner.
Driving under the influence
An accident caused while the driver is under the influence of alcohol or drugs voids the Own Damage cover. The compulsory Third-Party cover may still respond to the third party's claim, subject to the insurer's right of recovery.
Use outside the policy terms
A private car insured for personal use that is being used commercially, as a taxi or a delivery vehicle, at the time of the accident falls outside the policy terms. The claim will not be approved because the use was not what the policy was issued for.
Overloading
If the car was carrying more passengers or weight than the registration allows at the time of the incident, the claim may be excluded on the grounds that the overloading contributed to the loss.
Driving under a learner's licence without a supervising adult
A learner's licence requires a valid licence holder to be present in the front passenger seat. An accident that occurs while a learner is driving without that supervision voids the cover.
What Kiwi Insurance does differently
When a claim is declined, understanding why can be just as important as knowing the outcome. Policy exclusions and claim documents can be difficult to understand, especially when you are dealing with an accident at the same time. With Kiwi Insurance, a dedicated Claims Specialist helps you understand the process and what your policy means for your specific claim.
- Only with Kiwi Insurance, once you register your claim, a dedicated Claims Specialist is assigned to you, one personal point of contact who explains the process and documents needed.
- Your Claims Specialist stays reachable through the Kiwi app throughout the claim. You do not repeat your situation to a different agent every time you follow up.
- The specialist explains what the policy covers in your specific case, so you understand what is happening at every stage, not just the outcome.
The Claims Specialist is assigned after you register a claim, not when you buy the policy.
Conclusion
Every motor policy has a defined set of inclusions and exclusions, and both matter equally. The inclusions tell you what your comprehensive policy pays for, and the exclusions tell you what it does not pay for. The conditional exclusions sit in between, excluded by default but removable with the right optional cover. With Kiwi Insurance, a dedicated Claims Specialist is assigned once you register a claim to guide you through the paperwork and explain exactly where your policy stands.
Head to Kiwi Insurance to review your policy, raise a claim, or speak to someone who can walk you through it.
Written by
Reuben Solomon
Lead Content Writer
Reviewed by
Rupinderjit Singh
Head - Tech Product & Digital Business
Frequently asked questions
Car insurance exclusions are events or situations where the insurer is not required to pay a claim. They are written into every policy document and agreed to at the time of purchase. Common exclusions include age-related damage, mechanical breakdown, damage from driving without a licence, and events that occur outside the geographical limits of the policy.