Know why car insurance is mandatory in India by law

Cars have become a necessity in today’s age. From a luxury item, cars have slowly taken the place of a necessity product just like a mobile phone.

However, in order to drive a car in India, there is a lot more that you need to take care of, other than the traffic, which is not in your control. However, keeping the PUC or insurance papers handy and driving license in your pocket, is definitely in your control. Driving is quite a task in India, but we can avoid the other paraphernalia concerns surrounding it if we have a proper insurance coverage for the same. This is especially true if your vehicle is new! In such cases having a new car insurance works well.

Suppose you hit a lamp post while reversing or a speeding car hits your car while crossing the road. Whom do you blame for the damage or who would pay for the disaster? The answer is car insurance.

Third-Party or Comprehensive Car Insurance Policy?

Let’s get into details and learn why car insurance is helpful and necessary. Legal provisions such as vehicle’s registration, valid license for driving the vehicle and insurance of the vehicle are important and mandatory as per The Motor Vehicles Act, 1988.

This Act makes a third-party liability only policy mandatory in India to drive any vehicle on Indian roads. The third party car insurance policy helps to pay for the damages caused by your car to damaged property or injured person. For example, if you have hit a person unknowingly or damaged someone’s property while driving, the policy covers all damages of the other car, property or the injured person.

The Motor Vehicles Act mandates the third-party only car insurance policy in India and not the comprehensive car insurance plan. However, a comprehensive plan includes complete protection of your own vehicle for any road-mishap, theft and calamities, along with third party car insurance. Thus, it is always advisable to opt for the comprehensive car insurance online plan as otherwise your own vehicle damages need to be paid from your own pocket!


The penalties for not getting a new car insurance can be treated differently in every country. In India, if you have not opted for at least a third-party motor insurance policy, there are consequences that will haunt you later. Most people aren’t aware of the consequences and take this matter lightly.

Here is a list of the possible penalties for not having a valid car insurance certificate:

  1. The driving license might be confiscated or suspended
  2. The registration of the car could be suspended
  3. There would be a fine of Rs. 1000 that you will have to pay on spot or at the court
  4. 3 months of imprisonment

Car Insurance Online Certificate

When you buy or renew car insurance online, you receive your policy document in your email. This soft copy is a valid insurance certificate.

According to the rule 141 of the Central Motor Vehicle Rule, the insurer is bound to provide a certificate of car insurance after you renew your old car insurance policy or buy a new car insurance plan. No matter which car insurance plan you choose, it’s mandatory for the insurer to issue car insurance certificate.

Thus, it is recommended to carry the basic documents while driving like your driving license, PUC certificate and certificate of car insurance. So, instead of repenting in future for not getting a valid car insurance, it is always better to be on the safe side by following mandatory car insurance rule in India.