Life is unpredictable - we all know that. Any unfortunate incident can happen with anyone at any time. Living in a developing country like India facing situations of rise in population, increase in traffic and un smooth roads, there are higher chances of mishaps or accidents. Such accidents can affect you, your family or third parties. It can be financially distressing and thus the Government of India made it mandatory to have third-party insurance for every vehicle driven on Indian roads. The aim is to help the family of injured or dead in car accident and ease their burden.

Benefits of car insurance

Apart from the basic getting your risk covered benefit, car insurance offers several other advantages like;

  • Cover for legal fees if liable for any third-party car damage
  • Protection against bills of repair due to damage triggered in an accident
  • Shield for damages caused by terrorism, earthquake or natural calamities
  • Security to family or survivors in case of death due to accident


If you do not have a car insurance you will not only miss on the benefit of risk coverage but also will face legal punishment, suspension of driving licence, suspension of car registration as well as a heavy fine. Be it third-party or a comprehensive plan, car insurance is a saviour

or like a sheet of protection to any incidents due to car catastrophes.

5 Reasons why car insurance is mandatory in India

The Motor Vehicles Act, 1988 in India has mandated car insurance due to the following main reasons;

  • It reduces your Third-party liability
  • It covers against legal liabilities to a third-party in an accident
  • It protects in case of Third-party injuries or death in an accident
  • Damage to third-party property is offered coverage too
  • It helps you stay hassle-free and gives peace of mind

Car is a necessity and no longer a luxury has made it riskier and more prone to accidents. With many vehicles on the road, the dynamic has gotten deeper and needs to be protected in and out. Therefore, it is a law in India to have car insurance compulsorily.


As we know driving a car in India comes with its own perils, it is essential to be prepared from your end. Having a car insurance prepares you to face any risk and financial stress. It provides you and your family the coverage against the risk from accidents hence it is mandatory to have at least third-party car insurance in India.

FAQs – Frequently asked questions.

Let's take a look at some frequent queries on reasons why car insurance is mandatory in India;

Q1. Does car insurance provide for wholesome coverage against risks from accident?

Yes, a comprehensive plan provides full protection against risks from accident not just third-party damages or death but also for your car and your hospitalisation as well.

Q2. Does car insurance offer protection in case of disability due to accident?

Yes, car insurance also covers for medical treatment in case of disability due to accident as part of comprehensive car insurance plan.

Q3. Does car insurance cover for natural and man-made calamities as well?

No, a car insurance only covers for natural disasters like flooding or earthquake. For any man-made tragedies like war, car insurance does not provide additional coverage.

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