Beyond Paperwork: Why Motor Insurance Is Your Vehicle’s Real Safety Net

Motor insurance is not just a requirement under the Motor Vehicles Act — "it's a critical financial safeguard for every vehicle owner," says V Suryanarayanan, Managing Director, Chola MS General Insurance in an exclusive interaction with Bizz Buzz

Despite the legal mandate, a large segment of vehicle owners in India still view motor insurance as a 'paper formality'. Why does this perception persist, and what can change it?

Motor insurance is not just a requirement under the Motor Vehicles Act —it's a critical financial safeguard for every vehicle owner. Yet, the perception of insurance as a 'paper formality' continues to persist as many policyholders buy motor insurance at the point of vehicle purchase as a financing requirement or at renewal for fear of stoppage on the road by the Police authorities. In a price-sensitive market like India, the decision on the choice of insurer is often based on recommendations, on the premium price rather than on service quality or coverage depth.

As India gradually gets into a mechanism of an independent rating of insurers based on service parameters apart from the inherent strengths of insurers, policyholders will rely on the independent endorsement of the quality of an insurer.

Insurers can help the situation by promoting awareness and simplifying the policy wording so that the language is user-friendly and understandable to the common man. The Regulator has been encouraging insurers to walk down this path and the initiative of requiring insurers to provide a Customer Information Sheet (CIS) to all policyholders' is a step in the right direction.

Insurers can also help by way of better customer experience while transacting – whether it is in the buying process, renewal process, claims process, guiding policyholders' on necessary covers, and operating with transparency.

How has the Indian motor insurance landscape transformed over the last 10 years, not just in policy types, but in how insurers engage with the everyday Indian vehicle owner?

The Indian motor insurance size has grown to almost Rs.100,000 crores in FY 2024-25 and continues to be the backbone, as a principal line of business, for all multi-line insurers. With personal mobility gaining ground in the country by way of enhanced cars and 2-wheeler production (both ICE and electric), the share of commercial vehicle insurance has been reducing in proportion.

Across the industry, over 55% of the motor insurance size constitutes the mandatory motor third-party premium which the policyholder buys to protect himself/herself from compensation payable to third-party accident victims by way of death or injury. The incidence of road accidents causing death or injury to the common man continues to be high in India as is borne out by the report made by the Ministry of Road Transport and Highways (MoRTH). The prices for a motor third party are fixed by MoRTH and have not seen a revision in the last 3-4 years despite the compensation awards pronounced by Courts going up with inflation.

The 45% of the motor insurance market size pertains to the protection from damages to the motor vehicle itself. The pricing for this section is free and determined by the insurers. The competitive market has meant that pricing has actually reduced over the last few years. Innovative covers such as Pay as You Drive (PAYD), and Pay How You Drive (PHYD) have been introduced. Add-on covers such as Zero depreciation cover (popularly called bumper to bumper cover), hydrostatic cover (protection for engine from inundation), etc are increasingly bought by customers for protection. In cars, covers such as Return to Invoice which protects the policyholders by paying the enhanced price of the same vehicle plus registration/road tax plus insurance should the car suffer a total loss are also quite popular.

Significant improvement has been witnessed in the ease of buying as well as in the claims servicing. The use of technology in claims servicing has risen. For example, Chola MS uses Artificial intelligence (AI) in its damage estimation for cars which helps in providing the work order for repair to garages in minutes.

Insurers are moving towards a more customer-centric, experience-driven approach with a growing focus on personalization, technology, and trust-building. Insurers are no longer just underwriting risk but are earning relationships. That is the real shift.

When it comes to monsoon-related vehicle damage, how prepared is the average Indian consumer and how often do they realise too late that they aren't adequately covered?

Monsoons in India are predictable in timing and unpredictable in intensity. In the last 2-3 years several parts of the country have seen inundation-led losses (Chennai, Southern Tamilnadu, Gujarat, Delhi, Andhra Pradesh etc) causing hardship to the policyholder. The average consumer often assumes that a standard motor policy will pay for all damages. The need for buying zero depreciation covers hydrostatic covers or Return to Invoice covers for protection is underscored by such events for total insurance protection from natural calamities.

At Chola MS, we see this as an opportunity to bridge a crucial awareness gap. Through proactive communication, timely reminders, and contextual education—especially ahead of monsoon we are helping customers make more informed decisions.

What are the most underused or overlooked add-ons that can be lifesavers during the monsoon season, especially in metros like Mumbai, Chennai, Hyderabad, or Bengaluru?

In metro cities like Mumbai, Chennai, Hyderabad, or Bengaluru where monsoon flooding is almost routine—the real risk isn't when the water is on the roads, but water inside your vehicles. Yet, some of the most critical add-ons remain underused.

Engine Protect Cover tops that list. Most standard policies do not cover engine damage due to water ingress—a common occurrence during urban flooding. This add-on alone can save owners from hefty out-of-pocket expenses.

Zero Depreciation Cover-monsoon-related repairs, parts like plastic or rubber components often get replaced, and without this cover, customers bear a significant part of the cost.

Return to Invoice (RTI) ensures you get the full invoice value back if your vehicle is totaled in a flood.

Roadside Assistance comes as a lifesaver when your car stalls in a waterlogged area.

With these add-on covers for their vehicles, one is safe during the monsoons.

From waterlogged engines to stranded vehicles, monsoon throws up costly surprises. How can policyholders build a shield against these risks, and what role must insurers play in guiding them better?

Monsoons can be a costly ordeal—be it a waterlogged engine, a stalled car, or a damaged interior. The truth is, that many of these risks are insurable but only if the policyholder is aware & equipped in advance.

Policyholders also need to be conscious of the value for which the vehicle is insured (Insured Declared Value). Often while buying, to reduce the insurance premium outgo, the insurance is purchased for a lower value which comes to haunt them when there is a monsoon-led total loss. In such cases, insurers will pay only the IDV covered which can be significantly lower than the market value of the vehicle leading to hardship for the policyholder as he/she tries to replace the vehicle.

Policyholders can build a strong shield by opting for smart add-ons like Engine Protect, Roadside Assistance, Zero Depreciation & more especially in flood-prone urban centres. At Chola MS, we focus on timely, contextual communication—reminding customers of relevant covers simplifying choices, and making it easy to upgrade.