Motor policy

Motor Policy (A) - Act
Only, as per the Motor Vehicle Act, all the vehicles plying in the Territorial Limits of India must possess an Act Policy at all times. The violation is punishable with fine etc., as per Motor Vehicle act (as prevalent at the time of detection)

What is covered?
Policy (A) covers risks required to be covered under the motor vehicles act. It is mandatory that every car owner be covered against act risks under section 146 of motor vehicles act 1988.

The scope of cover is to pay compensation for death of or bodily injuries to third parties and damage to the property of third parties. While the insured is treated as the first party and the insurance company second party, all others would be third parties

•  As per requirements of the motor vehicles act, while compensation for personal injuries to third parties is unlimited, property damage is limited to rs.6000 only. This limit can be enhanced on payment of additional premium.

Policy (B) (comprehensive)
A Comprehensive Insurance Policy, which provides reimbursement of expenses incurred on repairs of accidental damage to the Vehicle due to an accident falling within the scope of policy in addition to the Act Policy (Motor Policy A) as depicted hereunder:
•  The perils covered are:
  • Damage to vehicle by accidental external means, fire, lightning, explosion, self-ignition, burglary housebreaking
  • Riot & strike, malicious acts and terrorist acts
  • Earthquake
  • Flood, inundation, cyclone etc.
  • Landslide/ rockslide while in transit by rail, road, air, inland waterways, lift or elevator
•  Policy b can be restricted to loss or damage due to fire or theft or both fire & theft in combination with policy a or without
  • In case of "act policy" + fire or theft, the premium is only 25% of own damage premium + act premium
  • In case of act + fire & theft, the premium is 40% of own damage premium + act premium
  • These extended covers can be obtained without inclusion of "act" risks, provided the vehicle is not put to use.

•  The geographical limits for use of the vehicle is India but the limits can be extended to Nepal & Bhutan without extra premium and to Bangladesh by charging an extra premium of Rs.50 for comprehensive policy and Rs.10/ for act policies
•  Policies can be issued for periods less than one year. In such cases, short period scales are charged, which are higher than pro-rata rates. Long-term policies can be issued for "act" only risks.
•  No claim discount: for every claim free year, the insured is rewarded with discounts in premium up to an extent of 65% (policy b only). In case of adverse claims, premiums are loaded with malus.

Policy A
  • The policy pays compensation awarded by a court of law, for death of or bodily injuries to third parties.
  • It also pays damage to the property of third parties up to a limit of Rs. 6000
  • The policy also provides for the death of or bodily injuries with respect to paid drivers (workman) engaged in driving or maintenance of vehicle. The compensation payable is limited to the provisions of workmen's compensation act 1923.
Policy B
  • This policy covers all the risks of policy a (act) as well as the loss of or damage to insured's vehicle also
  • Temporary spot repairs and/or towing charges to repair workshop & delivery for repairs up to Rs.1000 are also paid.

Premium rating for private cars is based mainly on:

•  Power of the engine (by its c.c.): up to 1500 c.c. engine or over 1500 c.c
  • Value: minimum value of up to 1500 cc car to be Rs.15,000 while for higher capacities Rs.30,000 will be the minimum value
  • Geographical areas where the car is used: for this purpose, the country is divided in two zones - zone a comprising of southern states including Maharashtra excluding Mumbai city and zone b - the rest of India including Mumbai city
•  Extra benefits on payment of additional premium:

The following benefits can be availed on the payment of an additional premium
  • Insurance of electrical & electronic components (not as original fittings)
  • Vehicles fitted with bi-fuel system (cng kit)
  • Vehicles (like jeeps) fitted with trailers or caravan trailers
  • In case of foreign made vehicles, valuation by an automobile engineer is compulsory. If the vehicles are owned by foreign embassies an extra premium of 15% is charged. In case of damage to wind screen glasses of these cars, the compensation is limited to 3 per cent of value or Rs. 30,000, whichever is lower.
•  Also, by payment of Rs. 50 per passenger, legal liability to employees while traveling or driving (not as paid driver) is covered
•  On payment of Rs. 15, a wider cover than the standard liability available under workmen's compensation act can be availed of.
•  Personal accident cover up to Rs. 200,000, while traveling in an insured car, can be obtained on payment of additional premium
•  Third party property damage limits can be increased from rs.6000 to unlimited levels on payment of an extra Rs.50

Conditions For Availing Discounts Over Normal Premiums

a. Insured can avail discounts if he chooses to exclude the following covers:
  • Earthquake cover
  • Flood cyclone and inundation cover
  • Riot, strike etc
b. If the insured is a member of recognized Automobile Association in India, he gets a 5 percent discount to a maximum of Rs. 100
c. Driving safely earns you discounts that could range from 20 - 60 per cent of the premium amount. (No claim discount)
Similarly - filing for claims may result in withdrawal of claim or charging of additional premium to the extent of 10 - 50 per cent of the premium. So, one should avoid filing claims for small damages.
d. Having a car financed or leased reduces the premium by about 5 percent.
e. Cars above engine capacity 1500cc attract a higher premium than the ones below 1500cc
f. Declaring the correct market value is important as the premium charged depends on the market value. Cars manufactured in the same year differ up to a maximum of 5 -10 per cent in their market values.

Last Updated on 1/3/2012