How has the Car Insurance Policy Changed in India in 2024, and What New Coverages Are Available?

As of 2024, the car insurance landscape in India has undergone significant changes to accommodate new driving trends, technological advancements, and the shifting priorities of Indian car owners. The car insurance policy industry has adapted with enhanced features and new coverage options to ensure that car owners are better protected on the roads.

Key Changes in Car Insurance Policies in India in 2024

Several modifications in car insurance regulations and offerings have shaped the 2024 insurance market. Here’s an overview of the most noteworthy changes:

1. Comprehensive Policy Reforms

The Insurance Regulatory and Development Authority of India (IRDAI) has introduced comprehensive reforms, aimed at simplifying policy language, improving transparency, and making claim processing faster. These changes help consumers better understand the scope of their policies, which include third-party liability, collision damage, and personal accident cover.

2. Introduction of Pay-As-You-Drive (PAYD) Policies

PAYD policies, first tested in the past few years, have gained full-fledged acceptance in 2024. These policies base premiums on the actual distance driven, allowing customers who drive less frequently to save on premiums. PAYD policies also align with India’s goal of reducing carbon emissions, as they encourage people to limit driving when possible.

3. Telematics and Usage-Based Insurance (UBI)

Telematics and UBI have become central to car insurance policy innovations. Insurance companies use telematics devices to track driving behaviours like speed, braking habits, and mileage, creating a more personalised policy and premium structure. Safe drivers can receive discounts, while riskier drivers may face higher premiums. This data-driven approach appeals to tech-savvy consumers and allows insurers to offer fairer and more tailored pricing.

4. Electric Vehicle (EV) Specific Coverage

With the rise of electric vehicles (EVs) in India, 2024 policies now frequently include specialised EV coverage. These policies cover EV-specific components such as battery packs, charging cables, and other essential EV parts, often excluded from traditional car insurance. Additionally, some policies offer coverage for charging station incidents and roadside assistance specific to EV needs.

5. Increased Emphasis on Roadside Assistance and Breakdown Coverage

In 2024, roadside assistance and breakdown coverage have been made an integral part of comprehensive policies. Given the unpredictable traffic and road conditions in many Indian cities, having coverage for on-the-spot repairs or towing services is a critical benefit for many car owners.

New Coverage Options Available in 2024

Beyond the regulatory and structural changes to policies, insurers are now offering additional types of coverage to meet the evolving demands of policyholders. Here are some of the most popular new options:

1. Zero Depreciation Cover for Older Vehicles

Traditionally, zero depreciation add-ons were limited to newer cars. However, recognising that many Indians drive older vehicles, insurance providers have extended zero depreciation coverage to include cars up to 7-10 years old. This option ensures that the full cost of parts replaced after an accident is reimbursed, without factoring in depreciation, making it a valuable addition for older car owners.

2. Return to Invoice (RTI) Cover

RTI cover, a popular add-on in 2024, is designed to reimburse the original invoice amount of a car in case it’s completely damaged or stolen. This type of coverage, which is becoming more widely available, ensures that the insured receives the full value of the car without any depreciation deductions.

3. Engine Protect Cover

While previously an optional feature, engine protect cover is now available in most comprehensive policies in 2024. This add-on is especially relevant for areas prone to flooding and poor road conditions, which can damage a car’s engine. This cover pays for engine repairs caused by water ingress or oil leakage, protecting policyholders from the high costs associated with engine replacement.

4. Key Replacement Cover

As key fobs and car remotes become increasingly sophisticated and expensive, key replacement cover has gained popularity in 2024. This add-on covers the cost of replacing lost or damaged keys and helps policyholders avoid high replacement costs.

5. Consumables Cover

Consumables such as engine oil, nuts, bolts, and other small parts are typically excluded from regular policies. With the introduction of consumables cover in 2024, however, policyholders can now opt to have these often-overlooked expenses included, resulting in a more comprehensive claim amount following repairs.

6. Tyre Protection Cover

Tyre damage can be costly, especially if the tyres are high-performance or specialised. Tyre protection cover, introduced widely in 2024, reimburses policyholders for costs related to accidental tyre damage, including punctures, sidewall cuts, and bursts.

7. No Claim Bonus (NCB) Protect Plus

The standard No Claim Bonus (NCB) rewards policyholders with premium discounts for each claim-free year. In 2024, many insurers now offer NCB Protect Plus, which allows policyholders to retain their NCB even after a claim. This add-on is ideal for those who want to maintain lower premiums despite needing to make minor claims.

Types of Car Insurance in 2024

There are several types of car insurance plans available in India, each designed to cater to different needs:

1. Third-Party Insurance

Third-party insurance is mandatory in India and covers damage to third-party property or injury to third-party individuals. While it is the most basic form of insurance, it does not cover damage to the insured’s vehicle.

2. Standalone Own Damage Cover

Standalone own damage cover is a recent addition that allows policyholders to insure only the damage to their vehicle, without the third-party liability component. This insurance type appeals to those with minimal liability needs but who want coverage for damage or theft.

3. Comprehensive Insurance

Comprehensive insurance includes both third-party liability and own damage cover. This type of insurance provides extensive protection for a wide range of scenarios, including theft, natural disasters, and accidents. It can be further enhanced with add-ons like zero depreciation and roadside assistance.

4. Pay-As-You-Drive Insurance

PAYD insurance is ideal for those who drive less frequently, with premiums based on mileage. This type of car insurance, which gained popularity in 2024, is part of a larger trend towards personalised insurance.

5. Telematics-Based Insurance

Telematics-based insurance policies calculate premiums based on driving behaviour and can provide valuable insights into driving patterns, making it a great option for safe drivers who want to reduce premiums.

6. Electric Vehicle Insurance

As electric vehicles become more common, electric vehicle-specific policies have emerged to cater to the unique needs of EV owners. These policies cover battery-related repairs, charging station mishaps, and provide other EV-centric support options.

How to Choose the Right Car Insurance Policy in 2024

Selecting the best car insurance policy in 2024 depends on several factors:

1. Driving Habits: Choose PAYD or telematics-based policies if you drive infrequently or have a safe driving record.
2. Vehicle Age: For older cars, zero depreciation and return-to-invoice add-ons can offer financial security.
3. Vehicle Type: EV owners should opt for electric vehicle-specific policies, which offer tailored coverage for battery and component replacement.
4. Location and Environmental Risks: Engine protection and roadside assistance may be essential if you live in flood-prone or remote areas.

Conclusion

The car insurance policy landscape in India has evolved substantially in 2024, with a host of new features aimed at creating personalised, user-friendly, and tech-driven insurance solutions. From mileage-based plans and telematics to specialised EV insurance and extended zero depreciation cover for older cars, the insurance sector is responding dynamically to consumer needs. Whether you are an occasional driver, EV owner, or someone who drives regularly, the latest options offer more tailored coverage choices than ever before. As the market continues to innovate, these trends will likely bring further improvements in flexibility and protection in the coming years.

Disclaimer: *T&C Apply – Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third-party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer’s website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. URN No. BFL/Advt./23-24/594