| Q. What is Motor Insurance? |
| A: Legally, no motor vehicle is allowed to be driven on the road without valid insurance. Hence, it is a must to get the vehicle insured.
Motor insurance policies cover against any loss or damage caused to the vehicle due to natural and manmade 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 cover for 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.
At a minimum, you should have insurance that covers third party liability. |
| 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 amount and is a part of most policies covering losses to the policy holder. The deductible must be paid by the insured.
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. For example, the policy will not cover if at the time of accident, the person driving the vehicle did not have valid driver's license. |
| Q. What is third party liability coverage? |
| A: Third party liability coverage, 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.
For a motor claim, you need to have a valid policy, vehicle registration certificate in his name, valid drivers' license, valid permit and Fitness Certificate in case of commercial vehicles.
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| 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: (1) If you are willing to bear a fixed amount (called deductible) in respect of every claim for damages to the vehicle you will get discount (2) if you have not made any claims in the previous years, you will be entitled to 'No Claim Bonus' known as NCB. (3) If you have installed theft protection devices in your vehicle (4) If you are a member of Automobile Association of India.
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| 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 on the road are an example of third party.
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| 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:
- 1. Inform the insurance company the time, date and place of the accident. You can get a standard form for filling in these details from any insurance company branch.
- 2. File a First Information Report (FIR) at the police station closest to the place of mishap. Documents related to the vehicle like registration book, tax paid receipt, insurance papers, driving license, etc. are needed while lodging the FIR.
- 3. You will need to surrender the following to the insurance company:
- 4. Original registration certificate book
- 5. Duplicate key
- 6. The ownership of the car is then transferred to the insurance company and documents pertaining to transfer of ownership are filed. A No Objection Certificate (NOC) is required from the Regional Transport Authority (RTO) for the transfer of the vehicle.
- 7. If the vehicle has been damaged by fire, then a report from the Fire Brigade authorities will also be required.
'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, make and model of the car, 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. Item additionally fitted by vehicle-owners has to be mentioned separately along with value at the time of insurance and covered by paying 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. |
