Updated: 4 October 2026
Yes. Third-party insurance is compulsory for a tractor. Section 146 of the Motor Vehicles Act, 1988 says no one may use a motor vehicle in a public place unless a policy of insurance is in force, and a tractor is a motor vehicle. Driving without it is an offence under Section 196: up to 3 months in jail or a ₹2,000 fine or both for the first offence, and up to 3 months or ₹4,000 or both for a repeat.
A third-party policy pays only for harm to other people and their property. It does not repair the tractor, replace it if stolen, or cover flood or fire. For that a comprehensive policy is needed.
Is insurance compulsory for a tractor and trailer
- Tractor: Section 146 applies to every motor vehicle used in a public place, such as a village road, highway or market yard road. It exempts only government vehicles used for government purposes (Section 146(2)) and vehicles the government exempts by order (Section 146(3)). No exemption for farm use was found in the text.
- Trailer: the Rules price a trailer separately, so a trailer has its own premium line. On 5 May 2025 the Supreme Court held, in Royal Sundaram Alliance Insurance v Honnamma, that the insurer of the tractor cannot refuse liability only because the attached trailer had no separate policy. The trailer premium is still a separate line in the Rules, so insure it with the tractor.
Third-party versus comprehensive
| Cover | Third-party only | Comprehensive |
|---|---|---|
| Injury or death of others, damage to their property | Yes | Yes |
| Owner-driver personal accident | Yes (Digit lists it under both) | Yes |
| Damage to your own tractor in an accident | No | Yes |
| Theft, fire, flood, earthquake, riot | No | Yes |
| Premium | Fixed by the Central Government, same at every insurer | Own-damage part set by each insurer, plus the fixed third-party part |
Third-party premium fixed by the Government
The base third-party premium is no longer notified by IRDAI alone. Since 1 June 2022 it is fixed by the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 (G.S.R. 394(E), 25 May 2022), made by the Ministry of Road Transport and Highways in consultation with IRDAI. Before that, IRDAI notified the rates, for example in June 2019.
| Vehicle class in the Rules | 2019 (IRDAI) | From 1 June 2022 |
|---|---|---|
| Agricultural tractors up to 6 HP (listed in Table I) | ₹857 | ₹910 |
| Pedestrian controlled agricultural tractors up to 6 HP (Table III) | ₹1,550 | ₹1,645 |
| Trailer, other vehicles including miscellaneous and special type (Class C), per trailer | ₹2,341 | ₹2,485 |
| Other miscellaneous and special type vehicles (Table III) | ₹6,847 | ₹7,267 |
The notified schedule has no separate line for a tractor above 6 HP. Insurers do not publish which line they apply to a larger tractor, so the quote on the policy is the figure to go by. A June 2023 proposal for 2023-24 shows ₹910 and ₹2,485 unchanged, and later revisions were not confirmed. Rates are the same at every insurer, and the first one to compare is the own-damage part.
What decides the own-damage premium
- IDV (Insured Declared Value): the maximum payout in a total loss. A higher IDV means a higher premium.
- Tractor model, make, engine and manufacturing year, and the registration location.
- Claim history and No-Claim Bonus (NCB): a claim-free record earns a discount, and one secondary source quotes up to 50% after 5 claim-free years.
- Add-ons chosen.
The insurer sets the own-damage rate, and a single national rate for tractors was not found. Take quotes from at least two insurers for the same IDV and the same add-ons.
IDV and the depreciation schedule
IDV starts from the manufacturer's listed selling price of the model and falls with age on this schedule, as printed by IFFCO-Tokio.
| Age of the tractor | Depreciation for fixing IDV |
|---|---|
| Not exceeding 6 months | 5% |
| Over 6 months, up to 1 year | 15% |
| Over 1 year, up to 2 years | 20% |
| Over 2 years, up to 3 years | 30% |
| Over 3 years, up to 4 years | 40% |
| Over 4 years, up to 5 years | 50% |
| Over 5 years | Agreed between insurer and owner |
The schedule is used for total loss claims. The same document treats the vehicle as a constructive total loss when repair or retrieval cost goes beyond 75% of the IDV. An older tractor is better insured at a fair market figure than the lowest one, so check it against the tractor valuation tool or listings in the used tractor market.
Add-ons and exclusions
- Add-ons offered: zero depreciation, engine and gearbox protection, consumables cover, breakdown assistance, additional towing, loss of revenue and EMI protection. Availability differs by insurer.
- Not covered: own damage under a third-party policy, driving without a valid licence, driving under alcohol or drugs, contributory negligence such as driving into known flood water, consequential loss, wear and tear or mechanical failure, and unauthorised commercial use without a permit.
How to make a claim
- Tell the insurer at once by call or app. Reporting after 24 to 48 hours can lead to rejection, according to one secondary source.
- Do not move the tractor until the surveyor allows it, and take photos or video of the damage.
- File an FIR for theft and for injury to a third party.
- Give the policy copy, RC, driving licence, repair bills, photos and the FIR.
- Get repairs done at a network garage for cashless settlement, or pay and claim a refund.
Timelines in the policyholder rules, as stated by SBI General: surveyor appointed within 72 hours of intimation, survey started within 48 hours, claim settled or rejected within 30 days of the final survey report, and interest at 2% above the bank rate on late payment.
Renewal and lapse
- Renew before the expiry date. This keeps the No-Claim Bonus and avoids a vehicle inspection.
- Driving after expiry means driving uninsured, with the Section 196 penalty above and no cover for a victim's claim against the owner.
- Whether a lapsed tractor policy needs an inspection or loses NCB after a fixed number of days differs by insurer and was not confirmed.
Dealer-bundled policy and the on-road price
A dealer usually adds the first insurance to the on-road price quote, along with registration and other charges. No tractor-specific rule on this could be found. For cars and two-wheelers, IRDAI ended long-term own-damage cover from 1 August 2020 and cited forced selling by dealers as a reason, so one-year own damage with the long third-party term is the only option there. For a tractor, ask the dealer for the insurer name, the IDV, the add-ons and a premium split between own damage and third-party, and compare it with a quote of your own. Then check the whole figure in the on-road price tool.
When the tractor is bought on a tractor loan, the lender will ask for the policy, and the premium can change the EMI if it is added to the loan. See tractor prices and tractor dealers to compare offers.
Sources
- Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022, G.S.R. 394(E), 25 May 2022 (full text, TaxGuru)
- IRDAI, third party motor premium notification of June 2019 (earlier rates)
- Section 146, Motor Vehicles Act, 1988 (Necessity for insurance against third party risks)
- Section 196, Motor Vehicles Act, 1988 (Driving uninsured vehicle)
- Supreme Court of India, Royal Sundaram Alliance Insurance v Honnamma, 5 May 2025 (Supreme Court Observer summary)
- IFFCO-Tokio General Insurance, IDV Depreciation Table and total loss rules
- Bajaj General Insurance, motor third party premium rates (proposed FY2023-24, secondary source)
- Digit Insurance, tractor insurance: cover, add-ons and exclusions (insurer page)
- Tractor For Everyone, best tractor insurance 2026: claim tips (secondary source)
- Tractor For Everyone, tractor insurance in India 2026 (secondary source)
- SBI General Insurance, claim timelines under IRDAI policyholder rules (secondary source)
- Autocar India, IRDAI ends long-term own damage cover from 1 August 2020