MEANING, NEED AND IMPORTANCE OF INSURANCE
“It covers the vehicle for damages against accidents, fire, natural disasters, theft among others and also covers for any injury to the owner. It also covers any damages and injuries caused to the third party.”
What compensation is given to the Insurer?
Insured Declared Value (IDV) is the maximum Sum Assured fixed by the insurer which is provided on theft or total loss of vehicle. Basically, IDV is the current market value of the vehicle. If the vehicle suffers total loss, IDV is the compensation that the insurer will provide to the policyholder.
Some of the major
reasons why one must invest in motor insurance online and also ensure timely
motor insurance renewal, include:
- Reduces liability.
- Pays for damages.
- Buying
motor insurance online is
cheaper.
- Pays for hospitalization.
- Family receives compensation in
the event of death.
- Pay premiums and enjoy coverage
at all times.
FIRST-PARTY,
SECOND-PARTY, AND THIRD PARTY IN THIRD PARTY MOTOR INSURANCE
Ø First-party refers to the insured individual,
Ø Second-party is the insurance provider, and
Ø Third party is the person towards whom damages are owed by
the first-party in an accident.
NECESSITY OF INSURANCE AGAINST THIRD PARTY
Third-party insurance is important because it is mandated by the law for
all vehicles driving on the road to have a third-party insurance policy.
Moreover, third-party insurance financially protects you against any
third-party damage, loss of property, death or bodily injury caused to the
third party.
Is third-party insurance necessary?
Yes, as per the
Motor Vehicles Act of 1988, third-party insurance is mandatory for all vehicles
driving in India.
What is third-party insurance?
Third-party
insurance is a basic insurance cover that protects you against financial
liability in case of third-party loss, damage of property, or any third-party
death or bodily injury.
What are the features of third-party insurance
A third-party insurance policy protects against:
Any damage or loss of property/vehicle of the third party
Any bodily injury caused to the third-party
An accident resulting in the death of the third-party
WHAT IS INSURANCE POLICY
What is Motor Insurance Policy?
Motor
insurance is just like any other insurance policy, but unlike other insurances,
it is ‘Mandatory'! And, as the name
suggests, it is an insurance that is related to all types of motor vehicles motorcycles(2
Wheeler), cars, jeeps, commercial vehicles etc. Motor insurance has been made
mandatory by the government for your safety and the
safety of others.
Types of Vehicle covered in insurance
Insurance are covers the vehicle for damages against accidents, fire, natural disasters, theft among others and also covers for any injury to the owner. It also covers any damages and injuries caused to the third party.
- Private Car Insurance Policy
- Two Wheeler Insurance Policy
- Commercial Vehicle
Insurance
Types of Motor Insurance Policies in India
Third Party Insurance
Only damages & losses caused to a third-party person,
vehicle or property are covered.
Comprehensive/First Party Insurance
Covers both third-party liabilities and damages to your own vehicle
or property as well.
Main parts of a Two-Wheeler Insurance Policy
First part contains important details such as the name of the
policyholder, phone number, and address. It also records the policy number,
policy issue date, term of the policy, and location.
The second part comprises details such as vehicle
registration number, model and make of the vehicle, year of manufacture, engine
displacement capacity, coverage, IDV, engine and chassis number, and more.
First Party Vs Third Party Car Insurance
|
Attributes |
First Party Car Insurance |
Third-Party Car Insurance |
|
Claimant |
The primary claimant is the
policyholder |
The primary claimant is an unknown
third party. |
|
Settlement |
The claims will be settled by the
Insurance company |
The claims are settled by the Motor
Accident Claims Tribunal court |
|
Contest by the Insurance Company |
It is the moral obligation of the
insurance company to offer coverage for the insured as per the terms of the
policy. |
The insurance company has no obligation
to pay the third party and could contest the claims made by the third party. |
|
Filing Claims |
The policyholder will have to submit
the FIR copy and all documents and evidence to the insurance company as
obliged. |
A case has to be filed with the MACT
tribunal of the court. The court decides the extent of the damage and the
amount to compensate. |
Process To Transfer Your Two Wheeler Insurance
While
transferring your two wheeler insurance policy, the policy has to be
transferred in the name of the transferee.
1. The transferee
needs to apply in writing within a specific time with documents relating to
proof of vehicle delivery.
2. The documents
and details required for the process are the RC of the vehicle, the date when
insurance was transferred and the details pertaining to previous insurance
policy.
3. The name of the
previous policyholder and previous vehicle owner, policy number and date of
insurance are also to be submitted to the insurer to help them make necessary
changes in the records and issue a fresh certificate of insurance.
Benefits of Transferring Your Insurance Policy
Guarding
Against Future Liabilities – In case the new owner of the vehicle causes a damage
to a third-person or their properties and a third-party claim has to be filed.
Now if you haven’t transferred the ownership of your vehicle and the insurance
policy, you would be named in your policy and will be held legally liable. To
prevent yourself from such troubles, you must ensure that all the documents
including the insurance policy are properly transferred to the buyer of your
old vehicle.
Withholding
the No Claim Bonus – If you have not made any claims on your two-wheeler
insurance policy during the preceding year, you are eligible to get a No Claim
Bonus (NCB) from your insurance provider. NCB is an incentive offered to you by
your insurance provider for riding safe and making no claims. When you transfer
the ownership of your vehicle, do inform your insurer about the same and
collect a No Claim Bonus Certificate which will help you avail discounts on
your next renewal premium.
COMPENSATION
OF VICTIMS OF HIT AND RUN MOTOR ACCIDENTS
(Under Section 161 of MVA,1988)
Ministry has
also published rules on 25.2.2022 regarding creation, operation, sources of
fund etc. of the Motor Vehicles Accident Fund . This fund shall be used for
providing compensation in case of Hit &Run Accident, treatment for accident
victims and any other purpose, as may be specified by the Central Government.
Structured
Formula Basis
Various Offences
And Punishments Related To Unlawful Driving
|
Offences |
Penalty/ Sentence |
Section |
|
Driving above the permitted speed limits |
Up to INR 1000 |
183 Motor Vehicle Act |
|
Abetment for going over the speed limit |
INR 300 |
183 (2) Motor Vehicle Act |
|
Overtaking hazardously |
INR 100 |
177 Motor Vehicle Act |
|
Overtaking from the wrong side |
INR 100 |
177 Motor Vehicle Act |
|
Purposely
disobeying lawful directions |
INR 500 |
132/179 Motor
Vehicle Act |
|
Driving under
the influence of alcohol and/ or drugs |
INR 2,000 and/
or imprisonment for up to 6 months |
185 Motor
Vehicle Act |
|
Using mobile
phone while driving |
Up to INR 5,000 |
184 Motor
Vehicle Act |
|
Leaving a
vehicle in with the engine running |
INR 100 |
177 Motor
Vehicle Act |
|
Leaving vehicle
in a dangerous position |
INR 100 |
177 Motor
Vehicle Act |
|
An accident
involving a minor |
INR 1000 |
184 Motor
Vehicle Act |
|
Playing music
while driving |
INR 100 |
177 Motor
Vehicle Act |
|
Driving when
emotionally, mentally and/ or physically unfit |
Court Challan |
186 Motor
Vehicle Act |
BREATH TEST
A breath alcohol test measures how much alcohol is in the air you breathe out. The device uses that measurement to estimate how much alcohol is in your blood. That number is known as your BAC, or blood alcohol content.It may go up as soon as 15 minutes after drinking. BAC is usually highest about an hour after you drink. In India, the permissible blood alcohol content (BAC) is set at 0.03% per 100ml blood. That works out to 30mg of alcohol per 100 ml of blood.
DIFFERENCE BETWEEN RIDER AND ADD-ONS
A rider is an additional benefit to the standard health insurance cover which provides extra coverage to the policyholder and amends the terms and conditions of the existing insurance policy.
An add-on cover is an optional top-up cover which can be purchased on top of the existing insurance policy to get additional features for medical expenses. You have to pay an extra amount of premium to get this cover and it comes with a set of benefits depending on your needs.
VEHICLE
INSURANCE ADD-ONS/RIDERS
A car insurance
add-on is an additional cover that can be opted with a comprehensive car
insurance policy (First Party) to strengthen the coverage and protection
provided by a car insurance policy. There are multiple add-ons that can be
opted for with a comprehensive car insurance policy.
1. Zero
Depreciation Add-on Cover
The amount of depreciation
applicable on your car and its parts is deducted by the insurer from the claim
amount at the time of a claim settlement. A zero depreciation cover helps
you mitigate this burden of bearing the depreciation cost of your vehicle
thereby increasing your claim amount. Most of the insurers allow a maximum of 2
zero depreciation claims, however, some insurers including IFFCO Tokio allow
unlimited zero depreciation claims during the policy tenure.
2. Consumables
Add-on Cover
This add-on provides coverage for consumable elements such as
grease, air conditioner’s gas, lubricants clip, bearings, fuel filter, engine
oil, oil filter, break oil, nut and bolt, screw, washers, etc, which are not
covered in the standard policy.
3. Roadside
Assistance Add-on Cover
This add-on
cover secures assistance services in the event of the breakdown of the insured
vehicle. The services include towing to the nearest garage, on-site repair
services, assistance in case of loss of keys, changing flat tyres, fuel
delivery, etc.
4. Engine
Protection Add-on Cover
This cover allows the policyholder to get indemnified against
expenses for mechanical/electrical breakdown of the engine due to an oil spill
or water ingression.
5. Key Loss
Add-on Cover
This add-on cover makes the insurance company liable to
compensate the policyholder for the loss of key(s).
6. Passenger
Assistance Add-on Cover
It is a bundled cover that includes Hospital Allowance,
Medical Expenses and Medical Transport Assistance to the policyholder in the
event of an accident.
7. Tyre
Damage Add-on Cover
This add-on provides cover for damages such as in-tyre bulge,
puncture or bursting of tyres, cut on a tyre due to an accident, etc.
8. Return
To Invoice Add-on
This add-on cover allows you to get full invoice price of
your vehicle when it suffers Total Loss, Constructive Total Loss (CTL) or
theft.
9. Protection
of NCB Add-on
This add-on helps you retain your No Claim Bonus (NCB)
discount even if you had filed a claim in the last policy tenure. NCB is the
discount which you get on own-damage premium for every claim-free year.
10. Loss of
Personal Belongings Add-on
With this add-on, the insurer
compensates the policyholder for the loss of personal belongings such as the
articles or other items of a personal nature which are likely to be used,
carried or worn.
11. Personal
Laptop and Mobile Add-on Cover
This add-on allows you to get
compensation for the loss of a personal laptop and mobile kept in the vehicle.
Depreciation is the decrease in cost
of your car, due to its natural wear and tear due to its age. The older your
car is, the higher is its depreciation.
How is
Depreciation Calculated?
According
to the Insurance Regulatory and Development Authority of
India (IRDAI), following are the depreciation rates, on the
basis of which the total depreciation of your car is calculated:
·
Rubber, Nylon, and Plastic Parts, and Batteries: 50%
·
Fiber Glass Components: 30%
·
Wooden Parts: 5% in the first year, 10% in the second year,
and so on.
% of Depreciation in Vehicles
|
Age of Vehicle |
% of
Depreciation |
|
Not Exceeding 6 months |
5% |
|
Exceeding 6 months but not
exceeding 1 year |
15% |
|
Exceeding 1 year but not exceeding
2 years |
20% |
|
Exceeding 2 years but not
exceeding 3 years |
30% |
|
Exceeding 3 years but not
exceeding 4 years |
40% |
|
Exceeding 4 years but not
exceeding 5 years |
50% |
% of Depreciation in Vehicles (Metallic Parts)
|
Age of Vehicle |
% of
Depreciation |
|
Below 6 months |
Nil |
|
Exceeding 6 months but not
exceeding 1 year |
5% |
|
Exceeding 1 year but not exceeding
2 years |
10% |
|
Exceeding 2 years but not
exceeding 3 years |
15% |
|
Exceeding 3 years but not
exceeding 4 years |
25% |
|
Exceeding 4 years but not
exceeding 5 years |
35% |
|
Exceeding 5 years but not
exceeding 10 years |
40% |
|
More than 10 years |
50% |
Benefits of Zero Depreciation Car Insurance Addon
Save Money
Having a Zero
Depreciation Addon ensures that you do not have to shell out money from your
pocket in case there is a claim, as without a Zero Dep addon the cost of
depreciation of the parts has to be borne by you. But with a Zero Dep Addon,
that is taken care by your insurance company.
Get a Higher Claim
Amount
Securing your
car with a zero depreciation add-on means the depreciation on your car’s parts
won’t be calculated and hence you’ll receive a higher amount during
claims.
Peace of Mind
Opting for a
zero depreciation addon ensures you don’t unnecessarily spend from your pocket
during claims and honestly just being assured that someone will have your back
during your unfortunate times can be so satisfying and really gives you some
peace of mind.
What is not covered in a Zero Depreciation Addon?
Driving
without a Driver’s License
You won’t be
applicable to receive the benefits of a zero depreciation addon if you don’t
have a valid car license.
Cars
More Than 5 Years Old
Unfortunately, a
zero depreciation addon cannot be opted for if your car is more than five years
old.
Driving
Under the Influence of Alcohol
Those driving
under the influence of drugs or alcohol are excluded from benefiting from a
zero-depreciation cover during claims.
Doesn’t
Cover Compulsory Deductibles
A zero
depreciation cover doesn’t cover for your compulsory deductibles (if any)
included in your car insurance plan.
Doesn’t
Cover Mechanical Breakdowns
As a standard
rule, a zero depreciation cover won’t cover for mechanical breakdowns or normal
wear and tear of your car.
Cost
of Engine Oil
This addon
doesn’t cover for costs such as engine oil, clutch oil, coolant, etc.
CONDITIONS UNDER WHICH NO CLAIM IN INSURANCE POLICY
1) Loss due to Wear and Tear
Any loss occurring due to normal wear and tear of the vehicle will not be
eligible for a claim. Similarly, any form of mechanical or electrical
breakdown, failure of chassis, or body parts, or breakage due to rusting or
other weather conditions will not be considered for a claim.
2)Damage to Tyres, Electrical equipment, or Electronics
Tyres are going to wither with constant use and time. As a result, they will
not be eligible for any claim. Similarly, electrical equipment in the car can
get damaged due to severe weather conditions, short-circuit, or infestation of
rodents. Such damage will not be compensated.
3) Damage incurred if the insured is driving under influence of alcohol
No insurer will offer cover for damages caused to the car due to accident in
case when the insured person is driving under the influence of alcohol or any
other intoxicating substance.
4) Any injury or property damage caused intentionally
If the insured person has intentionally caused damage to a person or property,
then he will not get any form of reimbursement under a car insurance plan.
Similarly, it will not cover damage caused to the insured’s property.
5) Damage Incurred during War
Any loss caused to vehicle due to war, bio-chemical attack, or fire due to
nuclear explosion and related events will not qualify for a claim.
6) Damage Due to Racing
Any kind of collision damage or property damage caused due to organized racing
will not be cover under a car insurance policy. Similarly, it will offer
limited cover or no cover at all for damages incurred if the vehicle is used in
sharing programs.
SUMMARY :
Third
Party Liability Car Insurance Policy Inclusions and Exclusions
A
third party liability car insurance policy insures a policyholder against
financial liabilities for compensating a third party. However, it does not
protect the insured’s car as well as the policyholder himself (if not opted for
otherwise).
|
Inclusions |
Exclusions |
|
Bodily Injuries of Third Party The insurance company will pay for the treatment of
an injured third party on behalf of the policyholder. |
Bodily Injuries of Policyholder The third party liability policy does not by
default cover bodily injuries incurred by a policyholder/car owner. |
|
Death of Third Party The insurance company will indemnify for the death
of a third party on behalf of the policyholder. |
Bodily injury of Co-passenger(s) The policyholder will not get compensation for the
injuries suffered by the co-passengers travelling in the insured’s car. |
|
Third Party Property Damage The insurance company will offer a compensation of
up to Rs. 7.5 lakh for damages of third party property. |
Damages Incurred by the Insured’s Car The insurance company will not be liable to
compensate for the damages incurred by the insured’s car in a road accident, natural/man-made
calamity, fire or theft. |
Comprehensive
Car Insurance Policy Inclusions and Exclusions
The comprehensive car
insurance policy offers a wider coverage than a third party liability policy.
Besides third party liabilities, it also offers protection against the damages
incurred by the insured’s car.
|
Inclusions |
Exclusions |
|
Bodily Injury/Death of a Third Party The policyholder can claim compensation for the
expenses incurred while compensating for injury/death of a third party. |
Wear And Tear Of Car (Depreciation) The insurance company will not bear the
depreciation cost of the car or its parts. |
|
Third Party Property Damage The insurance company will offer indemnification of
up to Rs. 7.5 lakh on behalf of the policyholder for third party property
damage. |
Damage Incurred to Tyres And Tubes Damages incurred exclusively to tyres and tubes of
the insured’s car are not covered under this policy. |
|
Damage of Insured’s Car The insurance company will pay for the expenses
incurred while repairing the insured’s car in case of damages incurred in a
road accident, self-ignition, explosion or due to a natural or man-made
calamity. |
Electrical/Mechanical Damage of Insured’s Car Any damage incurred to the insured’s car engine
parts, differential parts and gearbox are not covered under the policy. |
|
Theft of Insured’s Car The policyholder will get compensation for the
loss/theft of the insured car. |
Contractual Liabilities The company will not pay for liabilities assumed by
the policyholder on behalf of someone else. |
|
U/S |
Description |
|
|
146 |
||
|
147 |
||
|
148 |
Validity
of policies of insurance issued in reciprocating countries |
|
|
149 |
||
|
150 |
Rights
of third parties against insurers on insolvency of the insured |
|
|
151 |
||
|
152 |
||
|
154 |
Insolvency
of insured persons not to affect liability of insured |
|
|
155 |
||
|
156 |
||
|
157 |
||
|
159 |
Production
of certificate of Insurance on application for authority to use vehicle |
|
|
170 |
||
|
196 |
||
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