In a previous piece on motor insurance, we examined how most of us renew our policies with little clarity about what we are paying for and the value we receive. To recap the basics: a motor insurance policy has two components. One is the statutory third-party (TP) liability cover, with premiums fixed by the Insurance Regulatory and Development Authority of India (IRDAI). The other is the own damage (OD) cover, where premiums are determined independently by insurance companies.
It is this second component that causes most of the confusion when a renewal premium quote lands in your inbox. The first step towards clarity is to place your existing policy and the renewal quote side by side, and compare what is covered, for what value, and at what price.
Start with the IDV, or insured declared value. This represents the value for which your car is insured and is derived from the ex-showroom price, adjusted for depreciation based on the vehicle’s age.
In the event of theft, total loss, or damage beyond economical repair, this is the maximum amount you will receive as a claim.
Insurers usually offer an IDV range from which you can choose. You can ask for this range, and you may also opt for add-ons such as nil depreciation or return-to-invoice cover, which effectively restores the claim value closer to the original purchase price.
Once you have the IDVs, compare them with the corresponding premiums. Logically, the renewal premium should be lower, since the sum insured reduces each year. Yet, many policyholders find the premium unchanged, or even higher. The explanation typically offered is that the premium rate has increased because the car is older. Remember that OD premium rates are not regulated; insurers have complete flexibility in pricing.
Quotes often mention a discount applied to the OD premium. This is negotiable, and you can ask for a better deal. To strengthen that conversation, obtain renewal quotes from multiple insurers or use comparison websites that aggregate offerings. Armed with alternatives, an informed and persistent customer is far more likely to secure a better bargain.
The TP premium, incidentally, will be identical across insurers since it is set by IRDAI. One limited area of variation is the ₹15 lakh compulsory personal accident (PA) cover for the owner-driver, which is bundled with the TP portion. While mandatory, this cover can be waived if you already hold a PA policy of equal or higher value, either independently or for another vehicle you own. The maximum premium is capped at ₹750, though insurers often offer discounts of up to 50%. PA covers are benefit policies, meaning claims can be made under multiple policies for the same accident, as payouts are not linked to actual medical expenses.
Together, TP and OD make up what is commonly called comprehensive motor insurance. If you believe that a comprehensive cover is the same across insurers, be prepared for a rude shock. There are multiple variables, and plenty of room for confusion.
One common justification for similar premiums despite a lower IDV is the inclusion of additional or different add-on covers in the renewal quote. If so, request a quotation for exactly the same coverage as your current policy.
Also ask for a clear break-up showing each add-on and its individual premium. After all, a tyre protection cover or roadside assistance cannot logically be for the same insured amount as for the entire vehicle.
This granular break-up allows you to make informed choices — dropping covers you no longer need or adding new ones. Ideally, add-ons should be modular, but insurers often bundle them in ways that limit flexibility. Pay particular attention to cashless garage networks. Premiums can be significantly lower if cashless repairs are excluded. Depending on whether you are comfortable paying the workshop upfront and seeking reimbursement later, or prefer a seamless, hands-off claims process, you can choose accordingly.
Confusing terminology
Be alert to confusing nomenclature as well. Recently, an OD quotation listed an add-on called “car damages”. On inquiry, this turned out to mean damage caused by falling objects such as trees, something already covered under standard OD insurance. Such wording creates the illusion of additional benefits where none exist.
That said, many insurers genuinely offer competitive pricing.
This may stem from operational efficiencies such as fully digital models that reduce overheads, or from scale advantages that allow them to operate on thinner margins.
(The writer is a business journalist specialising in insurance and corporate history)
Published – January 12, 2026 06:04 am IST
