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Insurance overview
Insurance – Third party and comprehensive insurance policy
Legally, no motor vehicle is allowed to be driven on the road without valid insurance. Hence, it is obligatory on your part to get your vehicle insured. There are two types of motor vehicle insurances - "Act Only Risk - Motor Policy A" (also known as third party risk) and "Motor Policy B" (also known as comprehensive insurance policy). Although legal requirement is met by Motor Policy A, it would be sensible on your part to go for comprehensive insurance policy.
Third Party Insurance Policy (Motor Policy 'A' )
Third Party Insurance Policy covers risks required to be covered under the Motor Vehicles Act. It is mandatory that every car owner be covered against Act Risks under Section 146 of Motor Vehicles Act 1988.
Third Party Insurance cover for Personal Injury includes:
- Liability for death or injury to third parties - this means that you are insured against death or injury (caused by your vehicle) to pedestrians, occupant of other vehicles, and outsiders other than passengers, for unlimited amounts. Passengers of private vehicles and pillion riders are also deemed covered.
- Liability to employees connected with operation of the vehicle - this means you are insured against death or injury (caused by your vehicle) to the vehicle's drivers, cleaners, conductors, coolies etc. , employees used in the operation of the vehicle.
For private vehicles and cars, the 'Act Only Policy' covers third party property damages only upto Rs. 6000/-. Fire and theft risk can be covered by paying additional premium.
Comprehensive Insurance Policy
A comprehensive insurance policy includes:
- Third party cover.
- Accident
- Fire, Explosion, self-ignition, lightning
- Burglary, house-breaking, theft
- Riots & strikes
- Earthquakes
- Flood, typhoon, hurricane, storm, cyclones
- Malicious acts
- Terrorism
- Risk of loss/damage while in transit by road, rail, watercraft, air, elevator, etc.
- Accessories like music system, air-conditioner, etc. can also be covered by paying additional premium.
The insurance policy is valid for one year. It becomes effective from the moment the payment of premium is received by the insurance company, and ends at midnight, exactly a year later.
The insurance policy can be obtained through an insurance agent or a development officer of the insurance company. Usually, the new car dealer is also an insurance agent. The insurance premium depends on the car's value, the engine power, its seating capacity, and the value of other accessories like the air-conditioner.
Exclusions to the Comprehensive Insurance Cover
This insurance does not cover loss or damage caused due to:
(a) Driver being under intoxication
(b) Vehicle being driven by a person not holding an effective, valid licence.
It also does not cover:
(a) Damage to tyres (unless the vehicle is also damaged).
(b) Wear & tear, mechanical breakdown.
Calculation in the case of Comprehensive Insurance Cover
In the case of Comprehensive Insurance Cover, for the purpose of premium, vehicles are categorized as follows:
Private car:
This is used for personal purposes. The premium is computed on the following basis:
Geographical area of use and cubic capacity
Value of the vehicle. Accessories are to be specified separately under electrical and non-electrical items.
Two wheeler:
This is used for personal purposes only. Premium is calculated on cubic capacity and value of vehicle. Accessories are to be specified. Theft of accessories is not covered, unless the vehicle is stolen at the same time.
Commercial vehicle:
This is a vehicle used for hire and is classified into:
Goods-carrying commercial vehicle: In this case premium is calculated on carrying capacity -gross vehicle weight and value of the vehicle. Accessories extra, as specified.
Passenger-carrying commercial vehicle: In this case premium is calculated on carrying capacity of the vehicle -Number of passengers and value of the vehicle. Accessories extra, as specified.
Note: all commercial vehicles are subject to compulsory excess in each and every claim for damage.
Renewal of Insurance Policy
The insurance policy has to be renewed within the period of validity. Any delay in the renewal of the policy renders the policy invalid and you will not be able to avail any benefit of the policy. Also, driving without a valid insurance policy is a legal offence.
You are eligible for a discount in the premium of a comprehensive insurance policy at the following rate:
- 20% for the 1st year.
- 35% for the 2nd year.
- 50% for the 3rd year.
- 65% for the 4th year and afterwards
The value of the discount depends upon the insurance claims you have made in that particular year.
This discount is adjusted against renewal premium. You can avail the no claim bonus when you renew your policy. In case your policy expires, you can still avail the no claim bonus if you renew the policy within 90 days of its expiry.
In case you are buying a new car you can transfer the no claim bonus from the policy of your old car to the new one.
You need to intimate the insurance company in case you sell your car and you are eligible for the no claim bonus. The no claim bonus is adjusted against the premium of a new car, if the purchase is made within a period of three years.
Transfer of Insurance Policy
In case you purchase a used car, you can transfer the existing insurance policy to your name by informing the insurance company within 14 days from purchasing the car
Insurance Claim Procedure
In case of an accident claim, following documents are to be submitted to the insurance company.
- Proof of insurance-Policy
- Original and a Copy of Registration Book.
- Original and a Copy of Motor Driving Licence of the person driving the vehicle at the material time.
- FIR, in case of accident involving Third Party Injury or Damage.
- Claim form along with the original estimate of repairs obtained from the workshop.
On submission of these documents the insurance company appoints a surveyor, who inspects the damaged car and verifies the authenticity of the estimate of repairs. The car can be repaired only after the insurance surveyor has inspected it.
Submit the final bill for damaged parts that have been replaced and the stamped receipt for payment made to the workshop. Once the car has been repaired, you need to make the payment as per the final estimate and submit the final estimate and stamped receipt to the insurance company for settlement of the claim. The repaired car is surveyed again by an insurance surveyor and only then you can take delivery of your car.
In case your car is stolen, you need to inform about the theft to the nearest police station and your insurance company immediately. You also have to intimate about the stolen car and missing documents to the concerned registering authority where the car was initially registered. Obtain a duplicate RC Book from the RTO office immediately In case of theft, the procedure for the insurance claim is similar to the accident claim, however, in case of theft the settlement of insurance claim takes longer as the RTO and the police is given a reasonable period of time to recover the stolen vehicle. |
