Written by
Kiwi Content Team
Car insurance, explained simply
Understand car insurance policies, compare IRDAI Third-Party insurance rates, and buy or renew your policy online in minutes. Third-Party insurance is legally mandatory, while Comprehensive insurance also protects your own car.
Reviewed by
Chief Product Officer
What is car insurance?
Car insurance is a contract between you and an insurer that covers damage to your car and your legal liability to others on Indian roads. Third-Party car insurance is mandatory by law. A Comprehensive car insurance plan goes beyond that by covering damage to your own car caused by accidents, theft, fire, natural calamities, and more. You pay a fixed yearly premium, and your insurer pays for eligible losses if your car is damaged or if you injure someone or damage their property while driving. In effect, it swaps a large, unpredictable bill for a small, predictable one. A car insurance plan has two sides. One side covers your liability to other people: the injury, death, or property damage you could cause to others on the road. The other side covers your own car against accidents, theft, fire, natural calamities and more. The plans on the market differ mainly in how much of each side they include. The financial case is simple. A single serious accident can run to lakhs in repairs, and far more if someone is badly hurt, all payable from your own pocket if you are uninsured. Car insurance exists so that one bad day on the road does not turn into a lasting financial setback.
Car insurance terms, explained
The words you will read on this page, in plain language. Worth a quick read before diving into the details.
Third-Party
The legal-minimum cover. Pays for injury or damage you cause to others, not to your own car.
Comprehensive
Third-Party cover plus damage to your own car from accidents, theft, fire, natural calamities and more.
Own Damage
The part of your car insurance plan that pays for damage to your own car, as opposed to someone else’s car or property.
Insured Declared Value (IDV)
Insured Declared Value: the most your insurer pays if your car is stolen or damaged beyond repair.
Premium
The yearly amount you pay to keep your car insured and your insurance policy active.
Deductible
The part of a claim you pay yourself. Example: on a ₹20,000 repair with a ₹2,000 deductible, you pay ₹2,000 and the insurer will pay the remaining ₹18,000.
No Claim Bonus (NCB)
A renewal discount you earn for each claim-free year, up to 50%.
Super NCB
A Kiwi industry-first optional cover that rewards each claim-free year on a higher scale, building up to 90% discount, and does not reset to zero after a claim.
Cashless claim
The insurer pays the cashless partner garage directly, so you pay nothing out of your pocket.
PayFirst
Kiwi pays your claim amount into your bank account before you pay the garage, at any garage you choose.
Zone
Your city’s pricing category. Zone A is the 8 largest metros; Zone B is the rest of India.
Endorsement
A change added to your policy, such as updating your name or address, adding a CNG-kit cover, etc.
The car insurance cover you must have by law in India
At a minimum, the law requires a Third-Party car insurance plan. In practice, most owners need a Comprehensive car insurance plan with the Insured Declared Value (IDV) set to the car’s market value, plus a few optional covers chosen for the car’s age and where it is driven. A Personal Accident cover of up to ₹15 lakhs for the owner-driver is compulsory.
Third-Party car insurance is mandatory because a single crash can cause unlimited financial harm to someone else, and the law guarantees that victims are compensated even when the at-fault driver cannot pay. But unlike comprehensive insurance, Third-Party cover does not have a fixed Insured Declared Value (IDV) or an upper limit on the insurer’s liability for third-party injury or death claims. The Motor Vehicles Act, 1988 made it compulsory, and claims for injury or death are decided by Motor Accident Claims Tribunals.
Penalties for driving without insurance
Driving without at least a valid Third-Party plan is an offence under the Motor Vehicles Act. The penalties are:
- A fine of ₹2,000 for a first offence
- ₹4,000 for a repeat offence, with possible imprisonment
- Personal liability for the full cost of any injury or damage you cause, which can run far higher than any premium
3 types of car insurance
There are 3 types of car insurance in India: Third-Party, Own Damage, and Comprehensive. Third-Party is the legal minimum, Own Damage covers only your own car, and Comprehensive combines both.
- Required by law
Third-Party
Covers injury or damage you cause to other people, their vehicle, or their property. This is mandatory by law.
Learn more - Most popular
Comprehensive
Covers your own car plus Third-Party liability. Add optional covers for customised protection.
Learn more - Pairs with Third-Party
Own Damage
Covers only your own car. Pairs with an active Third-Party plan. Useful if you already hold valid liability cover.
Learn more
Electric cars use the same three plans, priced a little differently. See the electric car insurance section for how EV pricing and cover work.
A Comprehensive or Own Damage plan can be extended with optional covers such as Zero Depreciation, Engine Secure, and Return to Invoice. It can also include standard endorsements for features such as a CNG kit. See all optional covers.
Third-Party vs Own Damage vs Comprehensive
Our take: if your car is newer than about 7 years or worth protecting, choose Comprehensive. Own Damage works only if you already hold a valid Third-Party plan. Third-Party alone is the bare legal minimum.
What a Comprehensive car insurance plan covers
A Comprehensive car insurance plan covers damage to your own car caused by accidents, theft, fire, riots, and natural calamities such as floods and storms. It also includes Third-Party cover for injury or damage caused to others. In comparison, a Third-Party plan only covers injury or damage you cause to others.
What's covered
Accidents and collisions
Theft and burglary
What's not covered
Regular wear and tear, and ageing
Driving without a valid licence
Why choose Kiwi car insurance?
Electric car insurance explained
What is different about insuring an EV?
- Third-Party premium is set by motor power in kilowatts (kW), not engine cc
- EVs often pay a little less than a petrol car of similar value, thanks to a government discount on the own-damage premium
- The own-damage premium is still based on the car's IDV
Third-Party premium for electric cars (set by IRDAI)
The battery is usually the costliest part of an EV, so a Comprehensive car insurance plan is the most useful starting point. EV cover for the battery, the charging cable or wall charger, and water damage in flood-prone cities is not always included by default. You can add these through optional covers, explained in full on the optional covers page.
New-age car insurance for your new-age EV
What is IDV (Insured Declared Value) in car insurance?
IDV (Insured Declared Value) is the most your insurer will pay if your car is stolen or damaged to an extent that it is considered a total loss. It is set close to your car's current market value, and it falls as the car ages.
A higher IDV gives you a bigger payout if the worst happens, but it also raises your premium a little. Set it close to your car's real market value, so you are neither overpaying nor underprotected.
How IDV drops with car age
What affects your car insurance price?
IDV
A high IDV increases the premium
Make and model
Pricier parts cost more to insure
City/zone
Metro zones cost more
Car age
Older cars have a lower IDV
Engine/battery size
Sets the Third-Party part
Optional covers
Choose customised protection
No Claim Bonus
Claim-free years reduce price
Deductible
A higher deductible lowers premium
Unlike some countries, Indian car insurance does not price on traffic violations or a points system. What matters is your claims history, captured through your No Claim Bonus: claim-free years lower your premium, and claims raise it. So your record matters through claims, not challans.
The own-damage premium is set by zone. Zone A covers the 8 largest metros - Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Pune - and carries slightly higher rates. The rest of India falls in Zone B, which is a little cheaper, owing to lower traffic density and claim costs.
How car insurance prices are decided
A car insurance premium has two parts. The Third-Party part is fixed by IRDAI and is the same across every insurer. The Own Damage part is set by the insurer, based mainly on your car's IDV, with the rest depending on your city, car age, engine size, and the covers you choose.
As a rough guide, the own-damage base premium works out to about 3% to 3.7% of your car's IDV before any discount, with metro cities at the higher end. Your No Claim Bonus and other discounts then bring the final figure down. In plain terms: Comprehensive premium = Own Damage minus (No Claim Bonus + discounts) + Third-Party.
How to buy car insurance
You can buy car insurance online directly from an insurer, through a comparisonsite, or from an agent. Buying online directly is usually the fastest and simplest, with the policy issued in minutes.
- 1
Enter your car number
Or pick your make and model if it is a new car
- 2
Choose your plan and covers
Compare Third-Party, Own Damage, and Comprehensive. Then choose optional covers if eligible.
- 3
Pay online
Pay by UPI, card, or net banking, with no paperwork
- 4
Get your policy instantly
Your policy lands in your inbox in minutes
How to renew car insurance
- 1
Enter your car number
We pull up your existing plan details
Car insurance FAQs
Yes. At a minimum, every vehicle on an Indian road must hold a valid Third-Party car insurance plan under the Motor Vehicles Act, 1988. Driving without it is a punishable offence with fines starting at ₹2,000 for a first offence and ₹4,000 for a repeat offence, with possible imprisonment. The law makes it compulsory to ensure that victims of road accidents are always compensated, even when the at-fault driver cannot pay.