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Last Updated : Sep 26, 2019 10:49 AM IST | Source:

Explained: Buying a motor insurance policy? Here is how to spot a fake one

Customers must check the credentials of the seller and their IRDAI registration number; you can be jailed for 3 months (plus fined) for having a fake policy

M Saraswathy @maamitalks

The amendments in the Motor Vehicles Act have doubled the rate of penalty for driving a vehicle without a valid third party insurance. From Rs 1,000, the penalty has been hiked to Rs 2,000 for the first offence, and Rs 4,000 for the subsequent ones.

While this has prompted owners to go for insurance cover, there is another menace to counter - fake policies. The added trouble is that it is difficult to spot a fake policy.

Moneycontrol gives you a lowdown on how to spot a fake policy and differentiate them from genuine ones.


Verify the distributor's credentials

Before buying a third-party insurance product, it is essential that the credentials of the distributor is verified. Each motor insurance policy distributor is required to have a valid motor insurance service provider (MISP) license.

When you are buying a motor third-party (TP) policy from an auto dealer ask for their IRDAI (Insurance Regulatory and Development Authority of India) license number. You can check their details by going to the IRDAI website and verifying if their name features in the list of intermediaries. Any policy sold by unregistered entities are not valid.

Policy number

This is the first step to cross-verify if you have been sold a genuine policy or not. Go to the insurance company’s website and enter the policy details. If it is a valid policy, the details of the product will show up. Check for the vehicle model, registration number and the details of the cover. The specifications would be exactly similar to that of your vehicle.

Premium payable

This is a tricky area. While fraudsters try to lure unsuspecting customers by offering a lower-than-market premium, IRDAI sets the annual premium for motor TP insurance. One can go to the IRDAI website and verify the premium payable since the regulator publicly announces the annual premium every year.

If you buy a policy with lower premium and are caught by the traffic policy, you are liable to pay a fine and also be subject to a three-month imprisonment.

Cover note number

The cover note number is a unique identification for each policy. It can be verified by scanning the QR code.

If this code is scanned by the traffic authorities, they will get details of the type of insurance and its validity. Depending on the type of vehicle, an insurance policy can be valid for one, three or five years. Digital copies are also accepted in a few states like Karnataka and Andhra Pradesh.

Company stamp

Look out for the shiny, embossed company logo that has a 3D effect.

The insurance company, on whose behalf the motor policy has been issued, will have its official logo embossed on the policy with a stamp. Policies without an official logo and stamp are invalid, and those carrying these products as proof will be liable for penalty.

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First Published on Sep 24, 2019 11:47 am
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