Motor Insurance is an agreement between the insurer and the insured, wherein, the insurer provides financial cover for the vehicle and the insured in return pays premium annually according to the value of the vehicle. Motor Insurance provides protection for your vehicle against the financial loss and/or third party liability that could result as a part of accident or theft.
As per the Motor Vehicles Act, 1988 it is mandatory for every owner of vehicle plying on roads, to take an insurance policy, to cover the amount, which the owner becomes legally liable to pay as damages to third parties as a result of accidental death, bodily injury or damage to property. A valid Certificate of Insurance must be carried with the vehicle as a proof and for verification.
Motor Insurance protects you from the unforeseen expenses that may be incurred in getting the vehicle repaired in case of any accident. It also safeguards you from legal liability in case of a third party claim. This policy covers all types of vehicles plying on public roads such as:
Scooters & Motorcycles
- Private cars
- All types of commercial vehicles
- Motor Trade (vehicles in showrooms and garages)
Types of motor insurance coverage available:
Liability Only Policy: This policy covers you from any third party legal liability resulting from accident of your vehicle. The coverage includes death, bodily injury or property damage to third party. This policy does not cover theft of vehicle or damage to the vehicle in case of an accident. Liability Only Policy is legally mandatory in India under the Motor Vehicles Act, 1988.
Package Policy: This is a comprehensive cover policy which not only includes third party liability but also covers own damage or theft of the vehicle. Though this policy is not mandatory under MV Act, 1988 it is recommended in order to indemnify you against any unforeseen event.
In addition to the coverage under liability only policy, the package policy covers loss or damage to the insured vehicle and its accessories due to:
- Fire, Explosion, Self-ignition or Lightning and Burglary, housebreaking or theft.
- Riot and Strike, Malicious Act or Terrorist Act and Earthquake (Fire and Shock) Damage.
- Flood, Typhoon, Hurricane, Storm, Tempest, Inundation, Cyclone and Hailstorm.
- Accidental external means.
- Whilst in transit by road, inland waterway, lift, elevator or air.
- By landslide/Rockslide.
The important exclusions under the policies are:
- Wear and tear, breakdowns.
- Loss when driving with invalid driving license or under the influence of alcohol.
- Loss due to war, civil war, etc., Claims arising out of contractual liability.
- Use of vehicle otherwise than in accordance with `limitations as to use ‘ (e.g. private car being used as a taxi).
Many of the Insurance Companies have tie ups with reputed garage networks across the Country for cashless claims and some companies offer the same as a reimbursement facility. Motor Insurance is a fool-proof system to protect yourself from an unexpected expenditure in case of a motor accident.
The amount of insurance for the vehicle (called Insured Declared Value) depends on the manufacturer’s price of the vehicle minus the depreciation of the vehicle as per its age.
The facility of No-Claim Bonus (NCB) is available when you have not made any claims in the previous year. This discount is available on renewal of policy and usually ranges from 10% to 50%, depending upon the type of vehicle and the number of years for which no claim has been made.
Add on covers:
- The policy can be extended to cover the following risks on payment of additional premium:
- Loss or damage to accessories fitted in the vehicle such as Music system, AC etc.
- Personal accident cover under private car policies for: passengers, paid driver.
- Legal liability to employees and Legal liability to non-fare paying passengers in commercial vehicles.
Nil Depreciation policies
Most of the insurance companies are offering motor insurance with NIL depreciation or ZERO depreciation for high-end cars, wherein depreciation is not recovered while settling the claims. The add-on cover is available for new cars and cars less than 5 years old.
Vehicle insurance is portable, which means that one can change his/her insurer without losing the benefit of any no-claim bonus that they may be eligible for.