What is the minimum insurance period for a new car in India?

You purchased your first vehicle. What comes next? It's a responsibility as well as a thrilling milestone. But it's important to make sure you have auto insurance before you embark on this adventure. One important error that many first-time buyers of auto insurance make is assuming that it's an annual event. After all, the majority of goods and services, including health insurance, have yearly renewals.

This is the actual tale. In 2018, the Supreme Court ordered insurers to offer all new cars long-term third-party insurance; the IRDAI quickly adopted and put this verdict into effect. A minimum of three years of third-party insurance must be included with every new private vehicle sold today. "How many years of insurance do I need for a new car in India?" is a question that many first-time buyers frequently have, or "How long is a new car's minimum insurance period?"

Let's discuss it in a clear and understandable manner.

Why is insurance mandatory for new cars?

According to the Motor vehicles act of 1988, every car owner in India must have at least third-party insurance. This type of coverage protects other people and property from damage caused by your vehicle. Without it, you’re not just risking financial liability, you're also breaking the law.

So, how many years of insurance does one require for a new car in India?

As per the IRDAI (Insurance regulatory and development authority of India) mandate issued in 2018:

All new private cars sold in India must have a minimum of 3 years of third-party insurance.

This regulation ensures that every new vehicle on Indian roads carries continuous legal coverage, even if the owner forgets to renew it annually.

Understanding the mandatory insurance periods

Here’s a simple breakdown of the minimum insurance requirement for new cars in India:

What are your policy options?

As a car buyer, you essentially have three main insurance options:

1.    Standalone 3-year third-party cover

●        Only covers third-party injury, death, or property damage

●        No protection for your own car

●        Legally mandatory

2.   Bundled policy (3-year TP + 1-year own damage)

●        Meets legal requirement

●        Also covers damages to your own car for the first year

●        You’ll need to renew the own damage portion every year after

3.   3-year comprehensive car insurance

●        Covers both third-party and own damage for 3 years straight

●        Optional, but offers maximum peace of mind

●        Includes options for add-ons like zero depreciation, engine protection, etc.

Real-life example: choosing the right option

Let’s say you buy a new hatchback in Delhi.

●      Option A: You go for the minimum — three-year third-party coverage only. Your insurer charges ₹6,000 upfront. You’re legally covered, but if your car is damaged, you’ll bear all the costs yourself.

●      Option B: You opt for a bundled plan with 3-year TP + 1-year OD. You pay ₹12,000, but get damage cover for the first year and renew that part annually after.

●      Option C: You choose a 3-year comprehensive plan. It costs around ₹20,000 upfront but protects your vehicle against all major risks for 3 years — without any hassle of renewal.

Note: Option C is more expensive initially, but it gives you maximum coverage and convenience in the long run.

What happens after 3 years?

Once the mandatory three-year period is over, you’ll need to renew your car insurance annually -  whether it’s a third-party policy or a comprehensive one.

You can:

●        Continue with third-party insurance only (minimum requirement)

●        Renew or upgrade to comprehensive insurance with or without add-ons.

●        Port your policy to another insurer if you find a better deal.

Why a longer coverage period makes sense

1.    No annual renewals

Avoid the stress of forgetting renewal dates or lapsing into an uninsured period.

2.   Stable premiums

Lock in your rate and protect yourself from rising costs each year.

3.   Complete peace of mind

With comprehensive cover, you can rest assured that your car is financially protected, regardless of the weather conditions or heavy traffic.

So, what is the minimum insurance period for a new car? In India, there are three years of third-party coverage, without exception. However, owners of smart cars often opt for bundled or comprehensive policies that extend beyond the legal minimum and also protect their own vehicles. 

If you’re buying a car, don’t just ask, “What’s the cheapest insurance I can get?” Instead, ask, “What’s the best protection for the long road ahead?”

FAQs

Q: Is third-party insurance enough for a new car?
 Legally, yes. But it won’t cover damages to your car. For broader protection, consider a comprehensive or bundled plan.

Q: Can I get one year of insurance for a new car?

You can only obtain insurance for your own damage. New cars must purchase third-party insurance for a minimum of three years.

Q: What happens if I don’t buy the required insurance?
 You could face heavy fines, vehicle seizure, or even legal action.

Q: Can I switch to another insurer during the 3-year period?
 You can port your policy after the term ends or in case of total vehicle sales or de-registration.