Motor Insurance is a type of insurance policy which covers your vehicles from potential risks financially. Policyholder's vehicle is provided financial security against damages arising out of accidents and other threats as well protecting from third party risk insured has. In India, motor insurance is mandatory.
Motor Insurance includes Private Cars, Motorized Two Wheelers and Commercial Vehicles excluding vehicles running on rails.
What's covered?
- Motor Insurance (Third Party) is compulsory on purchase of new vehicles whether acquired for commercial or private usage as per the Motor Vehicle Act in India. One can be penalized for driving without a valid cover.
- An accident can happen to anyone even if the driver of the vehicle is not at fault. This may result into a lot of damages caused to the person as well as to the vehicle. Motor Insurance turns to be very beneficial under such circumstances.
- If the driver is liable for an accident which results in bodily injuries to a third party, then the expenses have to be borne by the owner of the vehicle. In such a case third party motor insurance saves one from a devastating financial blow.
- It also helps to cover for damages caused other than an accident like fire, theft, etc.
Liability Only Policy
This type of policy only covers the third person who has been damaged or injured in an accident where the owner is accountable. It covers the insured person's liability to third parties' loss caused by an accident involving the auto vehicle of the insured. This refers to the minimum risks that are to be covered under the Auto Vehicles Act 1938 (Act Liability). It doesn't cover the expenses, damage, theft or injuries of the owner. This type of plan is made compulsory by the law of India.
Comprehensive Policy
These policies are also called package policies and are preferred over Liability Only policies. While Liability Only policies cover only the financial liability with respect to any third party or property, comprehensive policies also cover the financial loss faced due to damages suffered by you and your vehicle. As such, the coverage of comprehensive plans is wider.
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Geographical Zones
For the purpose of rating, the whole of India has been divided into the following zones depending upon the location of the office of registration of the vehicle concerned.
- Private Cars/ Motorized Two Wheelers / Commercial Vehicles rateable under Section 4.C.1 and C.4.
- Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.
- Zone B: Rest of India
- Commercial Vehicles excluding vehicles rateable under Section 4. C.1 and C.4.
- Zone A: Chennai, Delhi / New Delhi, Kolkata, Mumbai
- Zone B: All Other State Capitals
- Zone C: Rest of India
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Insured’s Declared Value (IDV)
The Insured’s Declared Value (IDV) of the vehicle will be deemed to be the ‘SUM INSURED’ for the purpose of this tariff and it will be fixed at the commencement of each policy period for each insured vehicle.
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Following is the eligibility criteria to avail a motor insurance policy in India:
- Individuals must be above the age of 18 years.
- He/She must be a citizen of India.
- He/She must own a vehicle along with its RC.
- Corporates and Other Non-Individual entities can also buy motor insurance, subject to other underwriting guidelines by Insurance companies.
FAQs
What is covered under motor 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.
Why do we need motor insurance?
Motor Insurance protects the owner of the vehicle against damages to the vehicle and also pays for any liabilities owed by the vehicle owner as per law. The owner of the vehicle is legally liable for any injury or damage to life or property caused by use of the insured vehicle.
Is motor insurance a mandatory in India?
In India, and all over the world, getting your car insured is compulsory by law, and not an option. The Motor Vehicle Act of 1988 makes it mandatory for all vehicles to be covered under an appropriate insurance policy before they can get on the road.
