Under the provisions of Motor Vehicles Act, all the vehicles which are plying in public places in India should have an insurance policy at least to cover third party liability. Hence, it is obligatory to get the vehicle insured.

There are two types of policies available for motor vehicles; one is the “Package policy” and the other one is the “Liability Only” policy. “Liability only” policy covers only the inter-alia liability of the vehicle owner for loss or damage to life or property of the third parties whereas the package policy covers in addition to third party liability, loss or damage to the vehicle itself byway of accident, theft, etc and specified perils.

For the purpose of insurance, motor vehicles are divided into three classes: Private cars, Motor Cycles and Commercial Vehicles.