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In India, everyone dreams of having at least one car in their home. As soon as they buy a car, that car becomes a member of that family. But friends, tell me one thing, do we take care of our car the way we take care of our family?  Some do, some don’t. Now, what does taking care mean? Taking care means ensuring it. In fact, when you insure your vehicle, it is more beneficial for you than your car. How? Let's find out. Read the complete blog, and you will get what vehicle insurance is and why it is important.

What exactly is vehicle insurance?

Vehicle insurance is a legal agreement (contract) that is concluded between the vehicle owner and an insurance company. According to this agreement, the vehicle owner pays a certain amount (premium) to the insurance company. In return, the insurance company promises to pay (financial compensation) for any damage that may occur to the vehicle (such as accident, fire, theft, natural disaster) or damage caused to a third party (another person) by the driver, as per the conditions mentioned in the agreement. This agreement is usually valid for a period of one year, after which it has to be renewed.
 

Now, let us see what are the types of vehicle insurance.
 

Types of Vehicle Insurance:
 

• Third-Party Insurance:

This is a compulsory insurance for all vehicles in India. This insurance is called third-party because it only covers damage to property or health of a third party (i.e. the other person in the accident). It does not cover damage to your own vehicle. It only fulfils a legal requirement.
 

• Comprehensive Insurance: This is an optional but more protective insurance. It covers damage to your own vehicle, as well as damage to third parties. It covers a wide range of risks, including accidents, fire, explosion, theft, riots, earthquakes, cloudbursts, and floods. It is wise to take this insurance to protect your big investment (vehicle).
 

2. Importance and Advantages of Vehicle Insurance
 

• Legal Mandatory: It is mandatory by law to have at least third party insurance to drive a vehicle on the road. Failure to do so may result in action under the Indian Penal Code (IPC).
 

• Financial Protection Cover:
 

The huge financial burden (repair costs, medical expenses of the other party) due to an accident can be avoided with insurance. The insurance company bears this cost.
 

• Peace of Mind and Security:

With insurance, you can focus on your health and safety instead of financial worries in the event of any unexpected incident.
 

• Third Party Protection:

If your vehicle causes damage to another person, the insurance company takes the financial responsibility for it, which saves you from legal suits.
 

3. New Rules and Changes in 2025
 

The Insurance Regulatory and Development Board of India (IRDAI) has issued several important changes for the benefit of consumers and to simplify the process:

• Third-party insurance premiums increased: Due to increasing accident compensation claims (claim ratio) and inflation, IRDAI has increased the premium rates of third-party insurance by approximately 15 to 20%. This increase applies to all vehicle owners.
 

• Zero Depreciation discount becomes common in all: As per the old rules, a certain percentage (depreciation) was deducted from the claim amount based on the age of the vehicle. In 2025, most insurance companies are offering 'Zero Deductible' coverage as a default discount for the entire insurance. This means that now the insurance company will bear the entire cost of replacing new parts even for an old vehicle.
 

• Compulsory Deductible abolished: The compulsory amount (e.g., ₹500) that the insured has to pay out of his own pocket while making a claim has been completely abolished. Now the insured gets the entire sanctioned amount of the claim.
 

• Direct Claim Process Improved: Now you are free from the need to deal with the third-party insurance company. Under the “Direct Claim” facility, you can get your car repaired directly from your insurance company at its network of garages, cashless. Your company coordinates with the third-party company. This process has become very fast and hassle-free.
 

4. Some Potential Disadvantages or Challenges
 

• Increase in Premium: The increase in third-party insurance premium is a direct financial burden on vehicle owners.
 

• Need for Consumer Awareness: Understanding the new rules and choosing the right insurance depends on the consumer’s awareness. If you make the wrong choice, you will not get the full benefits.
 

• Financial pressure on companies:

Higher compensation may put financial pressure on insurance companies, which may lead to higher premium rates in the future.

Conclusion
 

The 2025 motor insurance rules are clearly biased in favour of the consumer. While the increase in premiums may seem like an immediate financial burden, the long-term benefits of the new rules are far greater. With full compensation, no-depreciation claims, and a simpler process, motor insurance has truly emerged as a 'safety net'. To secure the future of your vehicle and your family, it would be wise to opt for a good comprehensive insurance policy and take full advantage of these new rules.
 

FAQ:

Ans:Yes, of course. As per the new rules, the insurance company will pay the full cost of new parts even for the repair of an old car due to zero depreciation coverage.
 

Ans:In case of an accident, immediately contact your insurance company's claim helpline number. They will provide the information of the nearest network garage to you. Once the car is taken to that garage, the company and the garage will take care of the rest of the cashless process.
 

Ans: When you renew your insurance, you will have to pay a higher premium than the previous year for the third party insurance part. The premium for the entire insurance may also increase slightly, but the benefits that come with it are more important than that increase.
 

Ans: Legally, yes. But it only fulfils the legal requirement. So, if there is any damage to your own car, you will not get a penny of help. It is highly recommended to take out comprehensive insurance to protect your investment.
 

• Claim Settlement Ratio (CSR): The higher this percentage, the more willing the company is to settle claims.

• Number of network garages: Check how many garages they have in your city/region.

• Customer service response: Read online reviews.

• Premium comparison: Ask for quotes from different companies and compare coverage.