Basics of motor insurance policy

 

                 

If we own a vehicle, we need a motor insurance policy to ply the vehicle on the road. The basic mandatory cover required will be the third-party insurance. This cover is a compulsory purchase for a vehicle owner as otherwise the authorities may seize the vehicle. Another insurance cover available is the comprehensive motor vehicle policy which covers both third-party insurance and the damage to the vehicle. Let us examine both the covers in motor insurance in this article.

Comprehensive cover in motor insurance

Comprehensive cover includes:

·        Own damage cover

·        Third party insurance

·        Personal accident cover for owner-driver

Third party covers accident, loss of life, vehicle damage to the third party or opposite party vehicle due to accident. For claim under this section an accident must have occurred between the vehicles of two parties.

Details of comprehensive motor policy

Own damage cover: Own damage cover protects motor vehicle against damages by accidents, theft, act of God perils etc. Loss or damage to the vehicle insured or its accessories by the following perils is covered.

·        By fire explosion self, ignition or lightning

·        By burglary housebreaking or theft

·        By riot and strike

·        By earthquake (fire and shock damage)

·        By flood typhoon hurricane storm tempest inundation cyclone hailstorm frost

·        By accidental external means

·        By malicious act

·        By terrorist activity

·        Whilst in transit by road rail inland-waterway lift elevator or air

·        By landslide rockslide

Subject to a deduction for depreciation at the rates mentioned in policy in respect of parts replaced.

Sum Insured is fixed at the commencement of the policy and is called the IDV or insured’s declared value. The IDV of the vehicle (and accessories if any fitted to the vehicle) is to be fixed on the basis of the manufacturer’s listed selling price of the brand and model, at the commencement of insurance/renewal and adjusted for depreciation.

Third party cover: Any accident where the insured shall become legally liable to pay in respect of:

·        Death of or bodily injury to any person including occupants carried in the insured vehicle

·        Damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured

Personal accident cover for owner-driver: Personal accident cover for owner driver is mandatory for a period of one year. Insurer undertakes to pay compensation for bodily injury or death sustained by the owner-driver of the vehicle in direct connection with the vehicle insured caused by violent accidental external and visible means.

Comprehensive cover

Few insurance companies also offer cashless claims assistance service and one can repair the motor vehicle without spending anything as the tie up between insurer and the garage owner takes care of the claims. Claim is therefore completely taken care of by the insurance company and insured can enjoy a hassle-free process.

Add-on covers of motor insurance

With additional premium, several optional covers are available that provide coverage much more than what the regular policy covers. Some of them are detailed below:

Zero depreciation / nil depreciation: Zero depreciation is compensation payable for cost of parts without deducting depreciation. If a part of the vehicle is damaged and is replaced by a new part, claim amount will reflect depreciation. Amount paid would be after application of depreciation percentage on the cost of the replaced new part.

Supposing cost of part is Rs 3000, and the age of vehicle is more than 10 years then depreciation percentage to be applied is 50% so claim amount payable would be Rs 1500 after applying depreciation. On payment of additional premium, the depreciation is waived and full cost of the part is reimbursed.

Engine protection cover: Protection is offered to give compensation to engine-related repairs other than accidents.

NCB protection cover: For a claim free year, no claim bonus is allowed and increases with each claim free year. This is an incentive to the policyholder and reduces the premium. NCB can go up to 50% thereby decreasing the premium in the subsequent years.

NCB add-on bonus, helps to retain the accumulated bonus even if a claim is made during the year. So, on payment of additional premium the bonus can be retained even if a claim is made subject to the policy conditions.

 Exclusions of own damage insurance cover

Policy does not cover and pay claim under the following exclusions:

·        Outside geographical area

·        Driving without a valid driving license

·        Driving under influence of alcohol or drugs

·        Electrical or mechanical breakdown of the vehicle

·        Coverage that is outside policy terms and conditions

Buying a comprehensive motor policy is the best way to protect the vehicle and oneself from the dangers of   driving. Add-ons and affordable premiums have added to the benefits of motor insurance policies. Do you agree? Do you feel more features can be added to motor insurance policies to make them beneficial to vehicle owners?  Share your thoughts with us in your comments.

We at Zen insurance brokers assist you in choosing the right Insurance cover to suit your needs. Write to us at enquiries@zeninsure.com

 

Disclaimer:   

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.