Motor Insurance is a must for every vehicle running on the Indian roads as per the Indian Motor Tariff. You can be asked for insurance papers along with the license, whenever traffic police catch you for jumping a signal.

So you cannot choose whether to have insurance or not. But what type of insurance product you choose is really up to you.

There are basically two types of insurance that are available:

1. Third Party Insurance
2. Comprehensive Insurance

Third Party Insurance basically covers legal damages in the case of injury or death to a third party (not the owner of the vehicle) as well as damage to third party property.

Comprehensive Insurance, however, covers third party damages as well as loss or damage to your own vehicle and injury to the owner while driving. It does not cover wear and tear of the car over time. For instance, worn-out tyres, rusty bumper etc. are not covered.

Of course, the premium for third party insurance is much less than that of comprehensive insurance. So should you opt for third party insurance?

"Not really. Vehicles are not small ticket items anymore and to compromise on insurance would be foolish as a good insurance provides a hedge against any eventuality", says Financial Advisor, Sandeep Shanbag.

Customise Your Motor Insurance

There are various motor insurance products available in the market. However, if you want your insurance to cover more than what regular comprehensive insurance covers, you can customise your insurance policy to provide the following at a higher premium:

1. Cover for other passengers as well
2. Cover for Individual items (accessories) like car stereo, seat covers etc.