Q. What is Motor Insurance?
A: Legally, no motor vehicle is allowed to be driven on the road without valid insurance. Hence, it is obligatory to get the vehicle insured.
Motor insurance policies cover against any loss or damage caused to the vehicle or its accessories due to the following natural and man made calamities.
Natural Calamities: Fire, explosion, self-ignition or lightning, earthquake, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide.
Man made Calamities: Burglary, theft, riot, strike, malicious act, accident by external means, terrorist activity, any damage in transit by road, rail, inland waterway, lift, elevator or air.
Motor insurance provides compulsory personal accident cover for individual owners of the vehicle while driving. One can also opt for a personal accident cover for passengers and third party legal liability.
Third party legal liability protects against legal liability arising due to accidental damages. It includes any permanent injury / death of a person and damage caused to the property.
Protection from a financial loss arising out of loss or damage to your vehicle.
Protection from liability towards third parties for personal injury.
Protection against death and property damage on account of any accident involving your vehicle.
Q. What is Deductible?
A: In an insurance policy, the deductible or excess is the portion of any claim that is not covered by the insurance provider. It is normally quoted as a fixed quantity and is a part of most policies covering losses to the policy holder. The deductible must be paid by the insured, before he submits his application for the benefits of the policy.
In a typical automobile insurance policy, a deductible will apply to claims arising from damage to or loss of the policy holder's own vehicle, whether this damage/loss is caused by accidents for which the holder is responsible, vandalism or theft. Third-party liability coverage generally has no deductible, since the third party will likely to recover any loss, however small, for which the policy holder is liable.
Q. What is Exclusion?
A: A loss or risk that a policy does not cover.
The exclusion clause in an insurance policy means a peril, events or circumstances whose risk is not covered by the insurance policy.
Q. What is third party liability coverage?
A: Third party liability coverage, also called PLPD, insures you if you cause injury to someone, cause someone's death, or damage someone else's property through a motor vehicle accident.
Q.What is the significance of vehicular documents in motor insurance claims?
A: The provisions of the Motor Vehicles Act largely influence motor insurance in India . Offences relating to vehicular documents can affect the contract of insurance adversely.
If the certificate of insurance is not valid at the time and date of accident, there is no question of claim under the policy, as the risk would have operated beyond the period of insurance. Just imagine the fate of the owner of a vehicle in case he does not have a valid policy and fatally injures a pedestrian by accident. The entire liability that would arise out of the third party claim would have to be borne by him. And that would mean a lot of money.
The certificate of registration not only proves ownership of the vehicle but also gives it an identification number. If the vehicle is not registered in a person's name, he cannot be rightfully the owner of the same. He is therefore not entitled to claim any insurance money arising on account of accident to the vehicle. When a vehicle is sold, the buyer should necessarily get the ownership transferred in his name by means of a transfer endorsement in the RC book. Intimation should be given to the insurance company also to endorse the insurance policy accordingly.
The driving license is a very important document. The insurance companies by means of a warranty in the policy specifically mention that the company shall not be liable to pay any loss or damage arising out of an accident, if at the material time the driver was not holding a valid and effective driving license.
Valid means that the driver should possess the license entitling him to drive that particular type of vehicle. A person holding a driving license to drive a car is not entitled to drive a motor cycle.
Effective it means that the license should be in force. If any of these conditions are not satisfied the driving license is treated to be invalid and claims if made are rejected by the insurance companies.
A learner's license is said to be valid and effective, if an "L" board, according to specifications of the Act, is installed in the front and rear of the vehicle, and a person holding a valid and effective driving license of the vehicle being driven, is seated beside the holder of the learner's license.
The permit is a document issued to commercial vehicles authorizing its use and route. Normally we find the words 'National Permit' written on the hood of trucks or buses. These vehicles are permitted to be used anywhere in India .
If a truck meets with an accident in Gujarat whereas it possesses a permit to be used in Maharashtra only, the insurance company rejects the claim or makes a suitable deduction from the claim amount, for the breach.
The fitness certificate is also issued to commercial vehicles as a proof of its roadworthiness for its particular use. If a vehicle does not have such a certificate and meets with an accident, the insurance companies may reject the claim if the insured cannot prove that the vehicle was roadworthy otherwise and the accident had nothing to do with its roadworthiness. If the vehicle had a fitness certificate and it had expired, insurance companies admit the claim but make a suitable deduction from the amount as penalty for the breach.
Q. What extension of cover can be obtained with regard to private car?
A: The following are the prominent extra risks that can be covered in addition to the standard cover:
Personal accident of insured, spouse and unnamed passengers
Legal liability of the employees of the insured
Wider Legal Liability to Drivers
Q. How is the premium charged under motor insurance?
A: The premium in a Motor Insurance Policy is regulated by the India Motor Tariffs, operating in the Madras , Bombay , Delhi and Calcutta Regions. For private cars, the rating considerations are:
Cubic Capacity of the Insured Vehicle
Insured's estimate of the full value of the vehicle and zone in which the vehicle operates (The premium will also vary depending on whether an 'A Policy' or a 'B Policy' is purchased)
Q. What are the circumstances under which discounts are offered in premium?
A: The following are the significant circumstances under which a discount is offered on the amount of premium to be paid: Where the insured is prepared to bear a fixed amount in respect of every claim for damages to the vehicle A discount commonly referred to as bonus is allowed on the premium when no claims are made against the policy during the relevant previous year
Q. Who is a Third Party?
A: According to the Motor Vehicles Act, a third party is any person who is not the insured or the insurer and includes the Government. Pedestrians constitute a large section of third parties. The pedestrians have not only a right to use the footpath but also occasionally to use the road and also cross it. Fare-paying passengers are those who are carried in a public service vehicle.
The owner of the vehicle has a legal duty not only to provide roadworthy vehicles but also to appoint competent drivers. The owner's responsibility commences from the time the passenger enters the vehicle and continues until he alights from it.
Any accident in the interim period is the responsibility of the owner. Non-fare paying passengers are those who are allowed to travel in the vehicle by gratis. In other words, owner of goods traveling in the goods vehicle hired by him for transportation of his goods is a non-fare paying passenger.
Passengers allowed travel on humanitarian grounds are also non-fare paying passengers.
The duty of the vehicle owner towards such passengers is to provide them with a reasonably safe mode of conveyance. Persons in other vehicles like drivers, the owner or passengers are also third parties. Children are not expected to exercise the same care as adults and therefore the driver of a motor vehicle has to show extra care towards children on the roads.
Q. How an insurance claim can be filed in the event of complete damage to the vehicle?
A: Complete damage or total loss (as it is popularly known) occurs in the event of the vehicle being beyond repair after an accident or fire etc. In such cases, the insurance company declares the car as a �total loss'.
Typically, one can claim total loss damages as follows:
�Total Loss claims' could take a long time depending on how quickly or otherwise you are able to arrange for reports from the police and the fire brigade. To enable the process go smoothly, it is advised to keep all documents related to the vehicle handy.
Q. For what value the car is to be insured - Depreciated value or reinstatement value?
A: The car is neither to be insured for reinstatement value nor for depreciated value. It is to be insured for second-hand value in the local market for a similar type of car for a similar model. In the event of loss, the liability of insurance company is the maximum compared to the market value or the amount of insurance whichever is less.
Q. What factors influence the premium for car insurance?
A: The cubic capacity, use of car, normal area of operation and the value of car proposed for insurance decide the premium payable and also various extensions opted for.
Q. How much would the insurance company pay in the event of an accident?
A: In case of an accident, the insurance company pays for cost of damaged parts which are replaced and the labour cost towards repair cost of the vehicle. As per the revised regulations, depreciation is not deducted from the cost of the parts except for the tires and tubes for which 50 percent depreciation is deducted.
Q. Are accessories and extra fittings of the vehicle covered under the Comprehensive Motor Insurance Policy?
A: Accessories are generally those parts which are directly supplied by the manufacturer along with the vehicle. But they are not essential for the running of the vehicle. The engine of a vehicle is essential for its running and obviously not an accessory. A spare tire, is however an accessory. Loss or damage to accessories are covered only if they are on the vehicle.
In case the accessories are detached from the vehicle and kept in a garage and are destroyed by fire, they are not covered. Radios, tape recorders, air conditioners and other electrical or electronic items are fitted by vehicle-owners. These cannot be considered as accessories. These items qualify as extra fittings and the owner the owner has to specifically describe and mention separate values towards them at the time of insurance. They can be covered only on payment of the requisite additional premium. However, if such items are built-in and supplied by the manufacturer, then they will be treated as accessories and need not be separately insured.
Q. What happens if at any point of time there are in existence two policies for insurance of a vehicle?
A: This situation is one of Double Insurance. In such cases, one of the policies is cancelled, provided there are no claims reported in either of the policies.
Refund is granted on a pro rata basis for the period both the policies are in force concurrently. If one policy is applicable during the period 1.1.2000 to 31.12.2000, while the other is from 1.3.2000 to 28.2.2001. In case the first policy is cancelled on 1.4.2000, refund is made on pro rata basis for the period 2.4.2000 to 31.12.2000. In case the second policy is cancelled on 1.4.2000, then the refund is made for the period 2.4.2000 to 28.2.2001.
However if there is a claim on 1.4.2000, clearly both the policies will cover it. In such cases, the Contribution Condition of the policy is invoked, which states that each of the policies will bear its rate able proportion of the claim.