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Is Car Insurance Mandatory For A Parked Car In India?

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Have you ever thought, "It's not moving, so why insure it?" and left your car locked and the engine off? This question sparks the discussion of car insurance for a parked car.

People holding their cars for weeks or even the whole rainy season often think they can stop paying for cover to save money. On the other hand, rules, threats in the real world, and fines say otherwise.

This piece breaks down the rules, risks, and smart cover choices so you can make an informed decision.

Legal Requirements in India (Motor Vehicles Act)

Title 146 of the Motor Vehicles Act 1988 states that all cars "used" in a public area must have legal third-party liability insurance. Courts take "used" in a comprehensive sense. If you park your car on a public road, in front of a store, or a housing association lot, the law still considers it to be "in use."

Section 196 says that traffic police can fine the driver ₹2,000 if the car doesn't have the appropriate cover. For a first crime, officials can even give you up to three months in jail; the fines are double for repeat offenders.

Some owners consider getting special insurance for a non-running car when they store it in a private, gated garage for months.

However, the law says that liability insurance has to be kept up to date as long as there is any chance that the car could be moved. This could be for repairs, emergencies, or just to get into a public lane.

Risks for Parked Cars

A car is still a tempting target even when the key is not in the ignition. Industry loss data shows that a lot of claims for own damage are made while the cars are still in use. This shows that "at rest" doesn't always mean "risk-free."

Theft:
Theft of cars increased by 2.5 times in 2023. In the National Capital Region, police reported 105 thefts a day, or one car stolen every 14 minutes.

Vandalism:
The "Thak-Thak" gangs in Delhi are known for breaking windows and stealing goods from stopped cars. This is why the police are constantly cracking down on them.

Natural Disasters:
The North India floods of 2023 flooded streets and workshops in the basements of towns around Chandigarh and its neighbours. It flooded or totalled hundreds of cars that were sitting still for hours.

Falling Objects:
Strong monsoon winds knocked down a big tree that fell on parked cars near the Sector 17/22 road split in Chandigarh. This showed how random rubble can destroy a car that is just sitting there.

Drivers constantly wonder, "Do I need insurance for stored car?" when faced with such a wide range of risks. The numbers above say "without a doubt."

What Type of Insurance Covers Parked Cars?

Your car needs security that is tailored to "non-use" threats and legal requirements, even when it is not being used. Here's how the main covers stack up against each other and how each one fits into a storage plan:

Stand-Alone Liability Plan:
It meets the legal standards, but you'll have to pay for repairs, repainting, or the cost of a total loss if your garage roof collapses or is stolen.

Own-Damage "Fire-And-Theft" Add-On:
It's a safe, affordable middle ground that pays for claims of fire, theft, or short circuits. Confirm that it stays active during moving, regular engine starts, or test drives to the shop when choosing this option as insurance for a non-running car.

Full Comprehensive Cover:
It covers responsibility, accidents, and natural disasters. It gives you more comprehensive car insurance benefits, like replacing your windscreen, paying for an engine flush after flood damage, and keeping your no-claim bonus even after minor repairs.

Always list expensive extras like navigation systems, alloy wheels, and dash cams so that you can get them back at market value if crooks break into your "safe" parking place.

Consequences of Not Having Insurance

If you don't renew your car insurance policy, it can cost you much more than the price you hoped to save. This is true even if the car isn't being used. Five equally dangerous fronts make up the threats:

Legal Exposure:
During random tow-and-ticket campaigns, police officers look at license plates and immediately mark cars that don't have insurance. Fines are more than ₹2,000, storage fees add up daily, and getting the car back requires buying insurance on the spot and showing proof to the court.

Financial Loss:
Replacing a stolen basic car now costs more than 6 lakh rupees. If the owner doesn't have insurance, they must pay that amount plus registration, road tax, and any extras. It can wipe out months of payment savings.

Third-Party Liability:
If a weak handbrake lets the car roll or an electrical short sets fire to a neighbour's bike, the owner is responsible for paying for the neighbour's medical care, fixing up their property, and possibly getting a civil court settlement.

NCB Reset:
If you miss even one day, you could lose up to 50% of your no-claim bonus. If you reinstate coverage, the premium rises quickly and stays high for the next full insurance term.

Loan Covenant Breach:
Auto-finance contracts require insurance to always be in effect. A coverage gap can lead to late fees, higher-cost insurance, or even loan recalls that require borrowers to pay a large sum of cash immediately.

In short, not having coverage can cost much more than the fees. This makes many people wonder, "Do I need insurance for stored car, even in a private garage?" The smart answer is yes, for your peace of mind and to follow the rules.

Conclusion

Even if a car is at rest, it is still subject to the law and danger. The law requires third-party liability insurance, whether the vehicle is parked on the street, in a club garage, or being restored. Also, threats in the real world, like thieves and the weather, haven't gone away.

By choosing the right amount of both your damage and liability insurance, you can ensure that one unexpected event doesn't wipe out the savings you hope to make by storing your car.

Curious how comprehensive insurance protects against vandalism, even when your car is parked? Check out our guide on How Does Comprehensive Insurance Handle Vandalism? to see why extra coverage matters.

FAQs

Do I need car insurance for the parked car if it stays in a locked shed for six months?
Yes. Fire, theft, or roof fall claims can happen even if the car isn't being driven on the road, and most places still consider an uninsured car to be illegal if it goes back into a public place.

Can I just park my car in a gated community and not update my third-party liability insurance?
Not at all. If tourists or transport people can get to the colony road, it's a public place, and liability insurance is still necessary by law.

What will happen to my future comprehensive car insurance benefits if I switch from comprehensive to fire and theft protection?
Some insurers consider the time between full coverage and re-enrollment as a break. If you renew your policy on time, you won't lose your NCB and can start receiving benefits again easily.

Can I get a lower rate if my car is unattended?
Lay-up or garage approvals from most insurers can cut your damage premiums by up to 75% if you give up your license plates, promise not to use the car on public roads, and park it inside.

What papers should I keep while storing things for a long time?
Keep digital copies of your policy, registration, recent photos, storage facility lease, and battery repair invoices. Having quick proof speeds up the process of evaluating theft, fire, or flood claims and settling disputes.

Related Blogs:

• Car Parking Techniques - A Beginner's Guide!

• Automatic Car Parking System - Types, Benefits & Features

• Handbrake in Cars: A Complete Guide on How to Use It

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