Motor Insurance is mandatory by law. It is a legal requirement to have a minimal level of insurance before driving a car in India. Coverage would differ by product; however following is a list of possible car Insurance coverages:

• Bodily injury liability- It covers bodily injury claims of people who get injured in an accident.
• Property damage liability- It covers property damages to third parties such as another person's car.
• Medical payments- This payment is done to the policy owner and other passengers in the policy owner’s car.
• Uninsured and under insured motorist coverage. This coverage protects you when the negligent driver has no insurance or insufficient insurance. In most states, this covers only bodily injury losses, though some states do include property damage losses.

Physical damage covers damage to your car in the following instances:

• Covers losses to your car involved in a collision.
• Covers non-collision physical damage if your car is damaged in storm or windshield breaks etc.

Car insurance is packaged into different coverage types and is broadly divided into two as discussed below:

Comprehensive car insurance policy :

protects against any loss or damage caused to the vehicle and its insured accessories as a result of natural and man-made calamities. These calamities can be broadly classified as ‘Natural Calamities’ and ‘Man Made Calamities’. Natural calamities include: fire, explosion, lightning, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide, fire and shock damage due to earthquake.

Man-made calamities include: burglary, housebreaking, theft, riot or strike, accident by external means, malicious act, terrorist activity and damage during travel by road, rail, inland-waterway, or air. This policy also includes personal accident cover, which provides accident cover for the driver of the vehicle while driving.

The owner can avail personal accident cover for passengers in the vehicle. Another mandatory feature is the third party legal liability cover. It protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any damage to the property. It also covers for fire and theft provided the vehicles are laid up in a garage and not in active use.

Third Party car insurance policy :

An insurance policy is between two parties, the insurer and the insured. Therefore, a third party is any person who is neither the insured nor the insurer. Third parties are mainly pedestrians, fare-paying and non fare paying passengers in a vehicle. People in the vehicles like the driver, owner or passengers are also third parties. Fare paying passengers are the people who travel in public transport such as taxis, auto rickshaws and buses.

Non-Fare Paying Passengers are the people who are allowed to travel in a vehicle for free. The Third Party car insurance policy covers your legal liability for any compensation to be paid arising from accident caused by your vehicle. It includes liability for death or injury to third parties like pedestrians, occupant of other vehicles, and outsiders other than passengers.

Passengers of private vehicles and pillion riders are also considered to be covered. As an owner of the vehicle you are insured against death or injury caused to passengers carried in the vehicle for hire. The liability covered is unlimited in case of death or injury. Damage to third party’s property is usually covered by the insurance policy.