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What factors should we consider while renewing a motor insurance policy in India?

Author: Team Finpage
Factors to consider while renewing a motor insurance policy in India
Saturday, December 23, 2023

Motor insurance is an essential aspect of owning a motor vehicle in India. It not only provides financial protection against unforeseen events but is also mandated by the Motor Vehicle Act. A vehicle insurance policy acts as a safety net by covering the costs of repairs or replacement, saving you from bearing the burden entirely on your own. It ensures that you are protected from sudden and unexpected financial setbacks.

When renewing your motor insurance policy, it's important to consider various factors to ensure adequate coverage and value for your money.

Evaluate your Insurance Coverage Requirements

The first step in renewing your motor insurance policy is to evaluate your coverage needs. Consider your current policy type and assess whether it meets your requirements. 

India has two main types of motor insurance policies: third-party liability insurance and comprehensive insurance. Third-party liability insurance covers damages or injuries caused to third parties, while comprehensive insurance also provides coverage for damages to your vehicle.

Suppose you have a third-party liability insurance policy but recently purchased a new car. In this case, switching to a comprehensive insurance policy to protect your vehicle against damages and theft would be prudent.

Check the Insured Declared Value (IDV)

The Insured Declared Value (IDV) is the maximum amount you can claim in case of total loss or theft of your vehicle. While renewing your motor insurance policy, verifying whether the IDV offered by the insurer is appropriate for your vehicle is crucial. A sufficient IDV can receive lower compensation during a claim, while an overestimated IDV can lead to higher premiums.

Let's say you own a five-year-old car. If the IDV offered by the insurer is based on the current market value of a new car, it might be overestimated. As a result, you may end up paying higher premiums for coverage that exceeds the actual value of your vehicle.

Consider Add-On Covers

Add-on covers, also known as riders or endorsements, provide additional protection beyond the standard coverage offered by your motor insurance policy. While renewing your policy, carefully evaluate the available add-ons and assess their relevance to your needs. Common add-on covers for bike insurance include zero depreciation cover, engine protection, roadside assistance, and consumables cover.

Suppose you reside in an area prone to floods. In such a case, opting for an engine protection add-on can be beneficial, as it covers damages caused by water ingress into the engine.

Review the Insurer's Claim Settlement Ratio

The claim settlement ratio is essential to consider while renewing your motor insurance policy. It represents the percentage of claims settled by the insurer against the total number of claims received. A higher claim settlement ratio indicates a higher likelihood of a hassle-free claim settlement experience.

Let's say Insurer A has a claim settlement ratio of 95%, and Insurer B has a ratio of 85%. In this scenario, Insurer A is more likely to settle claims efficiently and promptly, making them a preferable choice during policy renewal.

Compare Premiums and Discounts

While renewing your motor insurance policy, comparing premiums and discounts offered by different insurers is essential. Request quotes from multiple insurers to understand the prevailing market rates and discounts available. Additionally, check if you are eligible for discounts based on your claim history, installation of anti-theft devices, or membership in certain automobile associations.

Consider two insurers offering similar coverage for your vehicle. If Insurer A provides a substantial no-claim bonus for every claim-free year, while Insurer B does not, renewing your policy with Insurer A might be more cost-effective.

Assess the Insurer's Customer Service and Reputation

While renewing your motor insurance policy, assessing the insurer's customer service and reputation is important. A reliable and customer-centric insurer can significantly impact your overall experience during policy renewal and claim settlement. Look for insurers with a good reputation for prompt customer support, hassle-free claim processing, and transparent communication.

Suppose you have a friend who recently had a positive experience with a particular insurer during a claim settlement process. Considering their recommendation and the insurer's reputation for excellent customer service, you may consider renewing your motor insurance policy with that company.

Evaluate the Network of Cashless Garages

In the case of vehicle repairs, having access to a network of cashless garages can be highly convenient. Cashless garages allow you to get your vehicle repaired without paying upfront and then claim reimbursement from the insurer. While renewing your motor insurance policy, check if the insurer has a wide network of cashless garages in your area to ensure a smooth and hassle-free claims process.

If you frequently travel between cities for work or leisure, having a large network of cashless garages across different locations can provide peace of mind knowing that you can easily avail repairs without any financial burden.


Having a vehicle insurance policy brings peace of mind. It allows you to drive with confidence, knowing that you are protected against unforeseen circumstances. Whether it's an accident, theft, or damage caused by natural disasters, you can focus on your well-being and recovery, knowing that your insurance coverage has you covered.

Renewing your motor insurance policy in India requires careful consideration of various factors. By evaluating your coverage requirements, checking the Insured Declared Value (IDV), considering add-on covers, reviewing the claim settlement ratio, and comparing premiums and discounts, you can make an informed decision and ensure that your motor insurance policy provides adequate coverage at a reasonable cost. 

By conducting thorough research, comparing options, and considering additional factors, you can make an informed decision that provides you with the right coverage, excellent customer service, and peace of mind when protecting your motor vehicle.

Team Finpage

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