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Understanding the Motor Insurance Policy

Understanding the Motor Insurance Policy

Types of Vehicles Covered

  • Motor Cycle/Scooter
  • Private Car
  • Commercial Vehicles
    a) Goods carrying vehicles
    b) Passenger carrying Vehicles
    c) Miscellaneous and special type of vehicle

Basis of Valuation

Insurers ask for your estimate of the value of the vehicle. This has to be determined by the value at which it can be bought or sold in the market. This is known as the market value. This market value should be re-determined at the time of renewal of the claim. In the event of a claim, it is the market value at the time of the accident or theft( not at the time of taking insurance) or sum insured whichever is less.

No claim Bonus/ Malus

No claim Bonus is the discount which is given on the renewal of the policy in case there is no claim in the earlier year. This discount is given only on the own damage component of the premium.
Malus is the loading on the own damage premium if there is a claim in the previous year.

No claim Bonus/ Malus slab:
 

 

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Private Car/ Taxi:

Bonus

  20%

25%

35%

45%

50%

 

 

 

 

 

 

Motor cycle/Scooter and Commercial vehicles:

Bonus

20%

25%

35%

45%

50%

 

 

 

 

 

 

 

Membership of Automobile Associations

Individuals insured (not companies) who are members of recognised Automobile Associations e.g., W.I.A.A. (Western India Automobile Association) are entitled to 5% discount on premium subject to maximum of Rs.100. The insured should give details about membership number and date of expiry of membership.

Extra benefits available on payment of additional premium
  • Personal Accident Cover(irrespective of age):
This can be taken for passengers in the vehicle subject to a maximum number based on the seating capacity of the vehicle.  

Motor Cycle/ Scooter Rs.7.50*
Private Car Rs.5.00*
Commercial Vehicle Rs.6.00*
*Rate per person/ per year for Rs.10,000
Maximum sum insured per person: Rs.2 lacs

  • Legal liability to paid driver: Rs.25
  • Legal liability to the employees of the insured: Rs.50 per employee

Benefits available whilst transacting a private vehicle

For the Seller

When insured sells his vehicle,he can :

  • transfer the no claim bonus(NCB) earned to his policy on new purchase.
  • or freeze the NCB for 3 years by giving an application in the office. The NCB can then be availed of within 3 years.
  • or else insured can substitute the new vehicle in the existing policy, on production of proof of sale of old vehicle.

For the Buyer

Similarly, when a second hand vehicle is purchased:

  • The insurance can be transferred in the name of the new owner on the production of sale letter. A transfer fee of Rs.15 is levied.
  • or else , a new policy can be issued after inspection of the vehicle.
  • while purchasing the second hand vehicle, buyer should get a police verification of the vehicle.

General information

  • Compulsory excess: This is the compulsory deduction from every claim.

    Motor cycle/Scooter : Nil
    Private car : Nil
    Taxi : Rs.1000
    All other commercial vehicles : Rs.1500

  • Towing Charges: These are the charges paid by the company additional to the claim.

    Motor cycle/Scooter: Rs.300
    Private car/ Taxi: Rs.1500
    Commercial Vehicles: Rs.2500

  • Transfers from other companies are accepted without any loss of benefits such as no claim bonus.      
  • It is not permissible to issue ‘Agreed Value Policy’ except for vintage cars.
  • Motor policies are valid in the geographical area of India. However the same can be extended to include Nepal and Bhutan without charging any additional premium. It may also be extended to include Bangladesh by charging additional premium.
  • It is not permissible to pay premium in instalments.
  • No policy can be issued or renewed for a period longer than one year. Premium for policy issued or renewed for a period shorter than one year to be charged as per short period scale of premium.
  • There is no extra charge for built in accessories or other electronic fittings. However if these items are fitted later on, they have to be charged at 3.40% of the value of the items.
  • The CNG kit fitted to the vehicle has to be insured separately at a premium at the rate of 4.00% of the value of the kit.