Here's your motor insurance cheatsheet

Manju DhakeSushil Insurance Brokers

Cars are an expensive investment for an individual. An accident can turn this investment into a huge loss as well. Hence it is important to have Car (Motor) insurance.Having insurance on your motor vehicle will give you peace of mind. Just knowing that your vehicle is insured can help you relax and drive with ease. It is actually a benefit to have car insurance even if you do not get to use it often, which is probably a good thing. However, it is there when you might need it the most. If you hit someone, you will be responsible for the damages you caused, including car repairs, medical bills, car rental and so on. All it takes is one accident to ruin your life if you are not protected by auto insurance.

Keeping this view in mind, let us try to understand few things on Motor Insurance in this Article :

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.

Motor insurance in India covers for the loss or damage caused to the automobile or its parts due to natural and man-made calamities. It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability.

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Manju Dhake

Principal Officer|Sushil Insurance Brokers

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Motor Insurance gives Protection to the vehicle owner against:

1. Damages to his /her vehicle and 2. Pays for and Third Party Liability determined as per law against the owner of the vehicle.

Third Party Insurance is a statutory requirement. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by or arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable offence in terms of the Motor Vehicles Act, 1988.

Types of Insurance Cover:Broadly there are two types of insurance policies that offer motor insurance cover:

a. Liability Only Policy (Statutory Requirement)b. Package Policy (Liability Only Policy + Damage to owner’s Vehicle usually called O.D. Cover)

Formerly these were known as Act only and Comprehensive Policy respectively.Remember that if you take only a Liability Only Policy, damage to your vehicle will not be covered. Hence, it would be prudent to take a Package Policy which would give a wider cover, including cover for your vehicle.

Risks Covered:The company will indemnify the Insured against loss or damage due to following perils usually covered under OD section of the Motor Insurance Policy:

a. Fire, Explosion ,Self-ignition or lightening;b. Burglary, Housebreaking /Theftc. Riot and Striked. Earthquake e. Flood, Typhoon, Hurricane, Storm, Tempest. Inundation, Cyclone, Hailstorm, Frostf. Accident external meansg. Malicious Acth. Terrorist Activity i. While in Transit by Road, Rail, Inland, Waterway, Lift, Elevator or Air j. Landslide/Rockslide

ExclusionsThe following contingencies are usually excluded under the Motor Insurance Policy:a. Not having a valid Driving Licenseb. Under influence of intoxicating liquor/drugsc. Accident taking place beyond Geographical limitsd. While Vehicle is used for unlawful purposese. Electrical/Mechanical Breakdown.

Basis of Sum Insureda. For Own Damage The Sum insured under a Motor Insurance Policy reflects the value of the motor vehicle determined based on the concept known as Insured’s Declared Value (IDV). IDV is the value arrived at based on the Manufacturer’s present value and depreciation based on the Age of the Vehicle.

b. For Third PartyCoverage is as per requirements of the Motor Vehicles Act, 1988. Compulsory Personal accident cover for owner-driver is also included. Policy can also be extended to cover various other risks line Personal Accident to occupants of vehicle. Workmen’s Compensation to Driver, etc. over and above the cover available to him under statue

I hope , the above points will equip you with the basic knowledge on Motor Insurance, it’s coverage’s, the exclusions, basis of sum insured ,etc.  which will be helpful to gain a PEACE OF MIND while selecting the right insurance cover for your Valuable Investment-Your Car.

(P.S.: Don’t forget to read our Second Series on Motor Insurance on Claims and its procedure.)

The author is a principal officer at Sushil Insurance Brokers.