A guide to motor insurance

What is a motor insurance policy?

A vehicle is the most crucial investment that one makes in his life. A person saves a lot of money very patiently to one day own a vehicle of his/her own choice.

A motor insurance thus secures the hard-earned vehicle. It provides a financial shield to the vehicles in case of any damage or accidents caused by various means. A motor insurance policy is also known as vehicle insurance or auto insurance and is bought for all kinds of vehicles such as the private car, two wheeler’s, four wheeler’s, commercial vehicle etc.

Considering the exorbitant cost of repairs, service etc of the vehicle, motor insurance is but an important thing to invest in.

Also, unlike other insurance policies, motor insurance is not a choice but a compulsion as per the motor act of 1988.

What does motor insurance aim at?

The main objectives of the motor insurance policies are:

  • To safeguard you against any financial loss: accidents and damages are a very common thing these days. These can bear rather heavily on your pocket, thus, motor insurance policy safeguards your pocket against the damages caused by the natural calamities or man-made accidents.
  • Liability cover against the bodily injury or accidental deaths of pedestrians, passengers or damage to the vehicles etc
  • Liability against the damages caused due to third party property, collision or accident due to third party.
  • It protects you against the theft of the insured vehicle.

Categories/ classification of motor insurance policies:

The main objectives of the motor insurance policies are:

There are different kinds of vehicles operating on the roads and each with the same risks of accidents, damages etc. but different vehicles demand different ways in which the damages are to be repaired. Thus the requirement of each vehicle is different and hence there are different policies available for different kinds of vehicle operating on roads.

The insurance policies can be broadly classified into the following categories:

  • Car insurance: get the coverage against the damage to your own car or to the third party. There are so many insurance policies available, a person should definitely check and compare the premiums so that he ends up buying a policy that gives him the best deals possible. It also important to note that the amount of premium depends on the value and make of the car along with the manufacture year and also the state where it is registered.
  • Two wheeler insurance: this is the insurance for the two-wheeler’s such as bikes, scooters, scooty etc. it has features which are similar to those as car insurance.
  • Commercial vehicle insurance: the commercial vehicles are those that are not meant for personal use and are made use of, for purposes such as carrying goods and for business export or transportation of things across the country. This insurance takes care of the losses occurred damages to the vehicle. They help the drivers of such vehicles to save themselves for additional burden.
  • Third party insurance: covers the third party who has been injured in an accident along with you and your car. According to IRDA, this is compulsory insurance because no person can decline to underwrite third person insurance.
  • Comprehensive cover: an add on to the third party insurance plan and protects the owner from financial losses occurred due to damage or theft of the insured vehicle. You also get the third party coverage.

What all gets covered under the motor insurance policy?

Different policies have different covers. Let us now deal with each of them

Third party insurance covers: it covers the liability Any liability incurred by the insured vehicle in respect of bodily injury, disability, or death of any person – pedestrians, passengers of other vehicle, and including owner of the goods or his authorised representative

  • Liability incurred due to the loss or damage to any property of a third party
  • Liability incurred due to the bodily injury, disability, or death of any passenger of a public vehicle
  • Liability arising under Workmen’s Compensation Act, 1923 due to the respect of death or bodily injury of:
  • Paid driver of the insured vehicle
  • Conductor, or ticket examiner
  • Workers, carried in a goods vehicles
  • Liability arising due to the bodily injury or death of passengers of another vehicle.

Comprehensive motor insurance cover: this covers the third party liability along with the following:

Damages incurred to the insured vehicle due to the following perils:

  • Fire, explosion, self-ignition or lightning.
  • Burglary, house breaking or theft.
  • Riot and strike.
  • Earthquake (fire and shock damage).
  • Flood, hurricane, storm, inundation, cyclone, hailstorm, frost.
  • Accidental external means.
  • Malicious act.
  • Terrorist activity.
  • Transit by road, rail, inland waterway, lift, elevator or air.
  • Landslide /rock-slide.

Personal Accidental Cover Under the Motor Insurance Policy

  • Personal Accidental Cover is mandatory for the vehicle owner

    In case of unfortunate accident, where the owner-driver suffers a permanent disability or dies, the compensation is paid by the insurance company. It is compulsory for all the vehicle owners to get a personal accidental cover. Moreover, there are other optional PA covers for passengers and pillion riders

Exclusions under the motor insurance policy:

These exclusions are what do not get covered by your motor insurance policy:

  • If at the time of accident, the driver is under some influence of drugs or alcohol
  • Any accident or damage caused outside India
  • If the driver does not have a driving license
  • Vehicle used for illegal purposes or activities that are not stated in the policy document.

Why buy a motor insurance?

A motor insurance gives you the following benefits which are reasons enough to buy a motor insurance policy.

  • Direct settlement or cashless claim at the network garages
  • Zero depreciation coverage
  • Engine cover
  • 24*7 assistance
  • Towing facility

and a peace of mind that you do not have worry about your finances in case of damages occurring to your vehicle.

Filing a motor insurance claim

We have talked about various polices available and thus each policy will have different claim process and also the documents required when you file a claim will also vary from policy to policy.

Claim process at the time of personal car accidents:

All you have to do is to submit the form that contains the details of the total loss occurred to your vehicle to the insurance company. The insurance company will then have an automobiles company inspect the damage and then a survey report shall be submitted to the insurance company. Then the reimbursement of the claim takes place or the insurer pays for all the damages.

According to the claim form, the other documents that are required are as follows:

  • Driving license
  • Damage report
  • Police report
  • Final bill from the repairers
  • Registration certificate book

Third party claims: this is slightly complicated because on the information by the owner or the third party, the complain then goes to the advocate.

The whole matter is then looked upon deeply and the following documents are required:

  • Medical certificate
  • Police report
  • Death certificate in case of accidental death
  • Driving license

How can the premiums be reduced?

Well, here are certain tips that you must follow if you wish to reduce your premium rates

  • Be aware of all the discounts: we should be aware that all the comprehensive covers offers a reward for good claim history which can amount up to 50% of the premium. It is always good to avail the no claim bonus but we should also pay attention to other smaller discounts which could be a substantial amount when added up together.
  • Anti theft devices: this sounds interesting because it gives you best of both the worlds. When you install approved the anti theft device as approved by the Automobile Research Association of India, you get discounts on your premiums.
  • Riders: adding riders to a motor insurance will add up to the premium rate. However, you should be careful that you are not adding the same services as offered to you by the plan through your rider also.
  • Compare before you invest: every insurance company charges different amount for the services. So it is absolutely beneficial for you to compare before you invest because that would help you to at least save some amount.

Additional tip:

Whether you are new to this world of policies or not, you must go for comparison because that can save up to 55% of the premium rates. Also, because you can compare and buy any policy online, it saves you a lot of time and energy and also a lot of headache that might occur while talking with various agents etc.