2. Motor insurance (also known as vehicle / car
/ auto insurance) is insurance purchased for
cars, trucks, and other road vehicles. Its
primary objective is to provide protection
against physical damage resulting from traffic
collisions and against liability that could also
arise there-from.
4. Laws in India make it mandatory for vehicles to be
insured before they are driven. The new Road
Transport and Safety Bill, 2014 proposed to raise
the fine for driving a non-insured car from Rs
10,000 to Rs 75,000. However, it is not for the fear
of the law that you must get your vehicle insured.
Getting an insurance policy for your car is protects
your life, money, and any third party. A car is an
expensive investment that always lasts at least a
couple of years. It goes without saying that
thorough research is needed to buy the right
policy for your car.
5. PERILS COVERED
1. By fire explosion self ignition or lightning
2. By burglary housebreaking or theft
3. By riot and strike
4. By earthquake
5. By flood , typhoon , hurricane storm and cyclone
6. By malicious act
7. By terrorist activity
8. By landslide / rockslide
9. Whilst in transit by road rail , inland waterway lift
elevator or air
6. What Motor Insurance
excludes
Not having a valid Driving License
Under Influence of intoxicating liquor/ drugs
Accident taking place beyond Geographical
limits
While Vehicle is used for unlawful purposes
Electrical/Mechanical Breakdowns.
7. Principles of Motor Insurance
Utmost Good Faith
Insurable Interest
Principle of Indemnity
Principle of Contribution
Principle of Subrogation
Principle of loss Minimization
Principle of ‘CAUSA PROXIMA’
8. PARAMETERES THAT DECIDE
PREMIUM
Age of the person
Driving history
Making of the vehicle
Profession of the person
Geographic location
9. TYPES OF MOTOR
INSURANCE
Motor insurance provides mainly two types of
policies :
a. Liability only or Act only or Third Party policy
-mandatory insurance requirement as per Indian
motor vehicle act 1988.This policy insures the
liability of the owner of vehicle against third
party.
b. Package or Comprehensive Policy
- It covers the damage to the vehicle apart from the
mandatory liability insurance.
10. Liability cover
1a. Third party death or bodily injury.
b. Third party property damage.
2a.Personal Accident cover to owner/
driver death.
b. Personal accident cover to owner/
driver injury.
c. Total compensation not to exceed 1 lac in
two wheelers and 2 lac in case of other vehicles.
(exclusions as per pa policy)
11. Comprehensive policy
Comprehensive policy includes the below in addition to
liability only policy covers:
a. Fire, Explosion, Self ignition, Lightening.
b. Burglary, housebreaking or theft.
c. By riot and strike.
d. By Earthquake.
e. By flood, typhoon, hurricane, storm, tempest,
inundation, cyclone, hail storm, frost.
f. By accidental external means.
g. By malicious act.
h. By terrorist activity.
i. While in transit by road, rail, inland water way, lift,
elevator or air.
12. Exclusions
Contractual liability.
War perils nuclear perils .
Consequential loss, Depreciation ,Wear and tear
,mechanical or electrical break down.
Damage suffered due to driving the vehicle under
the influence of intoxicating liquor or drugs.
Claims arising outside the geographical area
specified in the policy.
Claims arising whilst the vehicle is used in
contravention of the limitations as to use.
Claims arising when the vehicle is driven by a
person without valid driving license
14. INSURANCE POLICY
THE POLICY COVERS FOLLOWING :-
Loss or damage to your vehicle against natural
calamities
Loss or damage to your vehicle against man-made
calamities
Personal Accident Cover- Coverage of `2 lakhs for
the individual driver of the vehicle while travelling,
mounting or dismounting from the car. Optional
personal accident covers for co-passengers are also
available.
Third Party Legal Liability - Protection against legal
liability due to accidental damages resulting in the
permanent injury or death of a person, and damage
caused to the surrounding property.
15. Policy does not cover
Normal wear and tear and general ageing of the vehicle
Depreciation or any consequential loss
Mechanical/ electrical breakdown
Loss/ damage due to war, mutiny or nuclear risk
Damage to/ by a person driving any vehicles or cars
without a valid license
Damage to/ by a person driving the vehicle under the
influence of drugs or liquor
Vehicles including cars being used otherwise than in
accordance with limitations as to use
Wear and tear of consumables like tyres and tubes
unless the vehicle is damaged at the same time, in
which case the liability of the company shall be limited to
50% of the cost of replacement
16. HOW IDV IS CALCULATED
Each car is insured at a fixed value which is termed as the
Insured’s Declared Value (IDV). This sum insured is
calculated on the basis of a number of factors. Here’s how it
works:
IDV is calculated on the basis of the manufacturer's listed
selling price of the vehicle plus the listed price of any
accessories after deducting the depreciation for every year as
per the schedule provided by the Indian Motor Tariff.
If the price of any electrical and / or electronic item installed in
the vehicle is not included in the manufacturer's listed selling
price, then the actual value (after depreciation) of this item
can be added to the sum insured over and above the IDV.
In case of vehicles fitted with bi-fuel system such
as petrol/diesel and CNG/LPG, permitted by the concerned
RTO, the CNG/LPG kit fitted to the vehicle is to be insured
separately at an additional premium of 4% on the value of
such kit. You need to specifically declare this in the proposal
form.
17. Car Theft and Insurance - An
ICICI Lombard Case Study
An insured car was stolen and as per the usual
process, the claimant processed a claim.
However, the insurance company kept delaying
the disbursement of the claim in the faint hope of
car getting recovered in sometime
soon. Meanwhile, the frustrated claimant, a
resident of Kolkata, brought a new car. After 15
months, police recovered the lost car in a
dilapidated condition. Now, the insurance
company used this as an excuse to reject the
claim flaring a debate.
18. Is the insurance company
justified in rejecting the claim?
The insurance company was knowingly delaying
the process in the faint hope of recovering the
car and getting excused from paying up.
This is a clear case of bluffing by the insurance
company.It is such practices by the insurance
provider that tarnishes a buyer’s trust and
makes insurance buying an unpopular choice.
Settle the claim within a stipulated time to keep
the real purpose of buying a policy intact.
Reduce buyer’s harassment by dealing with
transparency and honesty. The idea should not
be to delay the claim but to do the right thing
and sympathize with the claimant too. It is for
timely financial assistance that a buyer pays
