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MOTOR INSURANCE PLANS

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WHAT IS MOTOR INSURANCE?

Motor insurance (also commonly known as auto insurance or vehicle
insurance) is an insurance policy that provides a safeguard against the
unforeseen events that might fall upon your vehicle.

The motor insurance policy provides you a smart choice to be insured
from the increasing number of road accidents, thefts, or any other kind of
loss or damages.

Apart from this, it also provides coverage from third party liabilities that
might occur due to accidental damages, injury, or death of the third party.
It is important to note that motor insurance has been made compulsory
by the government.
According to the Motor Vehicles Act, 1988 each vehicle on Indian road
should carry a valid insurance policy on it to run legally. If the vehicle is
not covered by insurance and caught, the owner will have to face
penalties in the form of fines and even imprisonment in extreme cases.

Motor insurance policy can be purchased for private as well as
commercial vehicles including cars, trucks, bikes, scooters, tractors, and
various other vehicles.

TYPES OF MOTOR INSURANCE POLICIES

Based on the vehicles available in the market, motor insurance is broadly divided into these three categories :
PRIVATE CAR INSURANCE
A car insurance is a contract between you and the insurance company to
protect you against any financial loss or damages against your car or
third-party liability. It covers the vehicle against damages like accidents,
fires, natural calamities, thefts, and many others as well as covers for any
injury that might occur to you. Before choosing any car insurance policy,
it is necessary to compare the premium offered by the various insurance
companies to get the best deal possible. The premium offered depends
on the make and value of the car, the state from where it is registered,
and the manufacturing year. Car insurance has been made mandatory on
the purchase of a new car by the government.
TWO WHEELER INSURANCE
Two-wheeler insurance provides protection to your privately owned and
used scooter and bikes. It protects your two-wheeler vehicle from any
own damages as well as damages from accidents, fire, theft, etc. It also
protects from any accidental damage caused to a third party property or
person. Similar to private car insurance, it is necessary to compare the
premium offered by the various companies and this premium offered
depends on the make and value of the vehicle, the state from where it is
registered, etc. This insurance is made mandatory by the Government
and also offers a compulsory personal accident cover for the vehicle
owner as well as the passenger.
COMMERCIAL VEHICLE INSURANCE
This policy covers vehicles that are commercially used. This insurance
protects from any damage caused to the vehicle used for business
purposes or any loss caused to the third-party liability (bodily injury,
death, or property). Commercial Vehicle insurance policy can be further
subdivided into two categories:
  • Passenger carrying vehicle insurance​: It covers passenger-carrying
    vehicles like ambulances, bikes, taxis, etc.
  • Goods carrying vehicle insurance​: It covers vehicles used for
    transportation like trucks, agriculture vehicles, lorries, multi-utility
    vehicles, etc.

IMPORTANCE OF MOTOR INSURANCE

According to ​a WHO article​, every year the lives of approximately 1.35
million people are cut short as a result of a road traffic crash. Between 20
and 50 million more people suffer non-fatal injuries, with many incurring
a disability as a result of their injury.

With the increasing number of road accidents, it has become mandatory
to have a motor insurance policy. Before the implementation of the
Motor Vehicles Act, the road accident victims were not compensated,
because the vehicle owners did not have the resources to pay any
compensation to the victim. Motor insurance is now legally required by
almost all the countries in the world. Quality motor insurance protects
the vehicle, driver, and passenger financially as well as from third-party
damages.

TYPES OF MOTOR INSURANCE COVERAGE IN INDIA

Motor Insurance can also be segregated based on the coverage provided:
THIRD-PARTY INSURANCE COVER
This insurance plan financially covers any loss or damage caused by your vehicle to any third-party. The damages can be an injury, damage to property, or in the worst-case scenario, the death of a person...
COMPREHENSIVE INSURANCE COVER
A comprehensive insurance plan provides an all-round coverage. It covers both, the third-party liabilities and any damages like fire, theft, natural calamities, etc that might cause any financial loss to you...

WHAT IS COVERED IN MOTOR INSURANCE?

The following damages motor insurance policy covers:
Cinque Terre
FIRE
Cinque Terre
LIGHTING
Cinque Terre
EARTHQUAKES
Cinque Terre
THEFT, HOUSEBREAKING
Cinque Terre
FLOODS, STORMS, ETC
Cinque Terre
STRIKES, RIOTS, TERRORISM
Cinque Terre
LANDSLIDES

WHAT IS NOT COVERED IN MOTOR INSURANCE?

The following damages are not covered in a motor insurance policy:
Any damages caused deliberately.
Any damages that take place when the policy is inactive or lapsed.
Any damage or loss due to electrical or mechanical breakdown.
Any damage or loss caused by individuals driving under the influence of
alcohol, drugs, and intoxicating drink without a valid driving license.
Any damage or loss if the accident has taken place outside India under
the policy.
Any damage or loss of the insured vehicle if it is used for any unlawful reason.
Any loss or damage due to radioactivity or nuclear-related activities.

HOW TO FILE A CLAIM UNDER MOTOR INSURANCE POLICY?

If due to any unfortunate event, you have to file a claim, depending on the type of insurance you have taken the following documents
and procedure will be required.
For claims to be accepted, your policy should be in force and the insurance cover of the vehicle should be valid.
01
DOCUMENTS REQUIRED DEPENDING ON
THE TYPE OF MOTOR INSURANCE CLAIM:
  • Claim Form
  • Driving License
  • Registeration Certificate Book
  • Police Report (F.I.R/Spot survey if T.P)
  • Final Bill from Repairs
  • Surveyors Report
  • Receipt from the Repairer
  • Discharge Voucher (full and final payment)
02
FILING FOR CLAIM IN CASE OF DAMAGE TO PRIVATE
CAR/TWO WHEELER/COMMERCIAL VEHICLE:
  • Inform the insurance company on their toll-free number
  • Submit a claim with a duly signed Claim Form
  • Keep a duplicate of your Driving License, RC Book, Policy
    Document Ready
  • A surveyor will be assigned for inspection
  • Police Report, if required.(Kindly list the contact details and
    vehicle number of the people involved in accident)
  • Original Repair Estimate Bill
  • In the case of cashless service, only Invoice receipt
  • In the case of a refund provide the estimate bill, original invoice, and payment receipt
03
TOTAL LOSS CLAIM UNDER MOTOR INSURANCE CLAIM:
  • If the vehicle is damaged beyond repair, at that time, you can claim for Total Loss.
  • If the market value is more than IDV, the insurance company will pay IDV.
  • The remaining undamaged parts of the vehicle will be taken by the insurance company.
  • The insurer will collect the R.C. book, keys, and other necessary documents.
04
THEFT CLAIM UNDER MOTOR INSURANCE POLICY:
  • The insurance company and Police need to be informed about the theft
  • Submit the FIR report issued by the police
  • If the vehicle cannot be traced, you are required to submit a “Non-Traceable” certificate issued by the police
  • Once the claim is approved, submit the “Non-Traceable” Certificate + R.C. book + Taxation Certificate to the Insurer
  • The insurer would take the keys, R.C. book, etc
  • The claim is settled
05
THIRD PARTY CLAIM UNDER MOTOR INSURANCE POLICY:
  • Inform the insurance company on their toll-free number.
  • Submit a claim with a duly signed Claim Form.
  • Submit duplicate of FIR issued by the police.
  • Submit a duplicate of Driving License, Policy, and vehicle’s R.C. book, respectively.
THE PROCEDURE FOR THE THIRD PARTY CLAIM IS AS FOLLOWS:
  • On receipt of the notice from the insured or third-party, the matter is to be transferred to the advocate.
  • After the full information related to the accident is obtained, the following documents are required -
    • Driving License
    • Police report
    • Details of driver’s prosecution, if any
    • Death certificate, Post Mortem report, if there are any fatal claims.
    • Medical Certificate for bodily injury claims
    • Details of age, income, and the number of departments, etc.
06
PARAMETERS THAT DECIDE MOTOR INSURANCE CLAIM:
  • Age of the person
  • Driving history
  • Make of the car/ two-wheeler/ commercial vehicle
  • The profession of the person
  • Geographic location

HOW CAN YOU SAVE MONEY ON MOTOR INSURANCE POLICY?

Automobile Association of India​ - If you are a member of the Automobile Association of India, that makes you eligible for a 2.5% of discount on own-damage premium, as approved by IRDAI.
Anti-theft device​ - If you are installing an anti-theft device then you are eligible for a 2.5% discount on the premium, as approved by IRDAI.
Voluntary Deductible Discount​: You can opt to pay for the voluntary deductible discount, meaning, you will be opting to pay the minimum amount of money at the time of claim, and the insurance company offers a pre-fixed percentage of discount on the own-damage premium. If you do not claim, you do not have to pay any money, and on top of that, you save money.
No Claim Bonus​: At the time of renewal of your motor insurance policy, if you haven’t lodged a claim in the previous policy, then you are entitled to a No Claim Bonus, as a discount on your own-damage premium. The discount can go up to 50% on your own-damage premium if you do not lodge claims for 5 consecutive years.

WHAT IF YOU BOUGHT THE WRONG MOTOR INSURANCE POLICY?

Purchased a wrong insurance policy? Don’t worry!

Sometimes it is possible that after buying an insurance policy one
realises that the terms and conditions of the policy are not suitable to
one or are simply not meeting one’s requirement.

It may also happen that the vehicle model is not the same as you own or
you have bought a commercial insurance policy instead of a private
insurance policy. Safe to say, we are humans and we make mistakes but
do we need to stay quiet and keep on paying the premium?
The answer is ‘No’. There are two possible solutions.

If you have realised that you have got the wrong policy before the
policy start date, i.e., the risk date then you can cancel before that
and get a full refund. But,

If you are planning to cancel after the start of the risk date,i.e., the
policy start date then you will get the refund on a pro-rata basis.

CAN YOU AVAIL TAX BENEFIT UNDER MOTOR INSURANCE POLICY?

Yes, it is possible to avail tax benefit under motor insurance but, only if
the use of the vehicle is for business purposes.

If the vehicle is used for the purpose of business, then the motor
insurance premium paid will be treated as a business expense for which
you can avail tax benefit.
Have a look at the following clauses:

If the vehicle is being used for only personal purposes instead of
business purposes, the motor insurance premium will not be treated
as a business expense and you will not be able to avail tax benefit.

If the vehicle is used for partly personal use and partly business
purposes, then the income deduction will be proportionate to what
is used for business purposes.