I am participating in a car rally. Will my current car insurance policy hold good or do I need to get it endorsed? Or do I need to buy a separate policy for it?

You can get your current policy endorsed with IMT31. For this, the insurance company will generally ask for the following documents:

Registration form; Entry form; File with complete details from the Organizers; Rally Licenses; Letter by the organizer stating on the Rally  and other details involved  with it, like the speed limit and strech/ area/ place of rally.

You cannot comment on this entry