At the car showroom, you might be surprised to see a high insurance charge on your invoice, somewhere around ₹38,000, even if you planned to pay much less. When the salesperson calls it a “bundled 1+3” policy, it can be confusing because it doesn’t clearly explain what you are paying for.
They explain the price to you, but don’t give you details about the exact policy. So buyers walk out believing they are covered for three years, then find out in month fourteen that protection for their own car ran out long ago.
A 1+3 or 1+5 policy combines two types of insurance into one package, but they expire at different times. To stay fully covered, you need to track the expiration date for each part separately. In this blog, let’s understand what they mean and how you can keep track of them.
What Does 1+3 Actually Mean on Your Invoice?
Your policy has two parts.
- The first part is the third-party cover, which pays the person you injure or the property you damage, and the law makes it compulsory for everyone to have it.
- The other part is the own damage cover, which pays for your own car, and the law leaves that choice to you.
In a bundled policy for a new car, the third-party half runs for three years while the own damage half runs for one. If written simply, this just means it’s 1+3. New two-wheelers usually get 1+5, because their compulsory cover for other people runs for five years.
So in simple words, it means your own damage insurance lasts for one year, while the legal coverage for other people and their property lasts for three or five years.
Only that second half is compulsory under Section 146 of the Motor Vehicles Act, which is how a policy can be entirely legal and still leave your own vehicle with nothing behind it.
Why Only One Half Runs Long
Only one half of the four wheeler insurance runs longer because that’s something the court decides, and not an insurer. Following a Supreme Court order, long-term third-party cover became compulsory on new vehicles sold from 1 September 2018, and car buyers have been paying three years upfront ever since.
Insurers were briefly allowed to sell three-year own damage cover in the same package, but the IRDAI withdrew those long-term package covers from 1 August 2020, saying the initial cost had become too expensive for buyers to afford. What remains available today for purchase is the combined policy you see on your bill.
The Supreme Court introduced this rule because over half of the vehicles on Indian roads are currently driving without insurance. This leaves many accident victims with no financial support if a crash happens.
The Rule Is Moving to 1+4 and 1+6
The same case is now getting a bigger direction, as in August 2026, the Supreme Court raised the compulsory third-party period for new private cars from three years to four, and for new two-wheelers from five years to six.
IRDAI is expected to put the change into practice through its own circulars, so if you are going to purchase a new car soon, ask at the showroom which period you are actually being charged for. A new four-wheeler insurance quote will look heavier once four years of third-party premium fall inside it, and none of that extra money you pay will buy your own car a single rupee of protection.
There is no change as such for the own damage cover. The one year stays one year.
What You Still Have to Renew Every Year
By the 14th month, your own damage coverage has expired and would need to be renewed. If you have a minor accident, you’ll have to pay for repairs yourself. However, the police won’t fine you because your required legal coverage is still active.
Note the start date of your own damage cover when you take delivery and treat car insurance renewal as a yearly event even though the front page of your document says three years.
If you let it lapse, it can cost you more money to renew. Your No Claim Bonus, which climbs to a 50% discount after five claim-free years, survives only while the own damage portion is renewed on time. If you miss the window and the discount resets, a forgotten renewal can quietly raise your premium for years to come.
If you sell your car, the long-term insurance (for other people) stays with the car and goes to the new owner. However, your No Claim Bonus does not automatically transfer unless you request it in writing before selling.
Where Bundled Buyers Lose Out
The highest cost is being locked in. You cannot move the third-party insurance cover to another insurer mid-term, so the only part you can shop for each year is own damage, and dealers rarely mention that you are free to buy it elsewhere. If there are any add-ons bought at delivery and you did use them within the one year your own damage cover lasts, they can often go unused.
The long-term insurance has its benefits: it stays active automatically for years, so you don’t have to worry about it lapsing or forgetting to renew it, which is very helpful when life gets busy or if you sell your car.
Just make sure to keep track of your 1-year policy, as that is the only one you need to renew yourself.
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