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Motor Insurance in India 2024: Fast and Easy Guide to Understanding Types of Coverage | ItJunaid.com

Motor Insurance Motor Insurance is the insurance courage of risk arising out of the use of motor vehicles such as cars, trucks, or other vehicles causing damage and loss to oneself as well as others’ property in an accident. Motor insurance is mandatory as per the motor vehicles Act which is passed in the year 1938 and subsequently amended.

Motor insurance provides coverage related to property damage, bodily injury, medical expenses, and any other sort of compensation in legal proceedings. Motor insurance is also referred to as auto insurance, vehicle insurance, and car insurance.

Types of Motor insurance:-

1. Private car insurance

Whenever you are taking insurance for your own vehicle which you have to run for your private uses and no commercial uses so that would be referred to as private car insurance.

2. Commercial vehicle insurance

Commercial vehicle insurance is insurance that you are taking for the vehicle which is going to be used for commercial purposes and would be involved in any sort of business delivery business, transportation business, etc.

3. Defense vehicle insurance

The insurance for the vehicle which is involved in defense like the heavy vehicles which are there in the defense segment so taking insurance for those vehicles.

4. Two-wheeler insurance

The insurance for your two-wheeler vehicles which you own so the insurance for that would be referred to as Two wheeler insurance.

Third-party liability

Third-party liability coverage is part of the insurance policy which protects you in case you are sued or asked compensation for any physical injury or damage to someone else’s property by your vehicle accidentally. Third-party liability could be of the following nature – bodily injury liability and property damage liability.
Motor vehicle insurance generally comprises of following two components:-

1. Third-party liability (Mandatory)

When you met an accident and you are causing damage to another person’s property or another person’s life or any injury so it becomes important that you take insurance which would be providing coverage to help out that person to recover from that injury or property’s damage. Third-party liability is thus mandatory whenever you are driving on the road you are getting the vehicle a driving license for your vehicle you must have to take the third-party liability which would be comprised in the motor insurance policy which you would be taking.

2. Owner’s damage (optional)

The damage which would be happening to your own vehicle so that is optional you may take Or you may not opt. out for it.

Factors affecting premium:

1. Type of vehicle

The cost of the vehicle you are using whether it is a two-wheeler, whether it is a private car, a commercial vehicle, etc. So that would be determining the premium because you see when you are using the commercial vehicle that would be more prone to risk because that would be involved in business day-to-day activities whereas a private car would be used less as compared to commercial vehicles. Thus the premium would be less because the risk would be less as compared to the commercial vehicles.

So whenever you are taking motor insurance, it becomes mandatory that you mention all these things that for which purpose you are owning the vehicle, and in sort that you try to mislead the insurer, it may deny to give you the coverage. Whenever it will come to know about the purpose of the vehicle which you have taken the insurance. If it differs from the purpose which you have mentioned while taking the insurances. Thus it becomes important that you mention the types of vehicles the use of the vehicle etc while taking the motor insurance policy.

2. Physical condition of the driver

It also depends on the physical condition of the driver because if the driver is not healthy enough and he is not having so much of skills on driving and may be a liability in any sort so there is more risk that there would be an accident on the road and thus the premium involved would be higher as compared to a driver who is in healthy condition.

3. Geographical area of use

This also determines the premium amount because geographical area determines the risk involved so maybe you are driving in a more populated city as compared to when you are driving in any rural area or maybe you are driving in any hilly area which is more prone to risk as compared to the city areas. Thus the geographical location where your vehicle would be used and where you are taking the motor insurance policy that would determine the premium because that would differentiate in the risk involved in that particular location.

4. Age of vehicle

The age of your vehicle and how much you have used it because with every use of your vehicle, it goes through depreciation wear and tear happens to your vehicle and thus the risk involved of getting into an accident or any sort of damage becomes higher so the premium would depend on that as well.

Coverage and exclusions

Loss/damage covered

  • loss Or damage by accident, fire, lightening, theft, malicious act, natural disaster
  • Third-party liability in the form of injury death and damage to property.
  • Medical expenses

Exclusions

Normal wear and tear.
Damage when the person was driving without a license.
Damage when the person was driving under the influence of alcohol.
Damage due to war.

Add on covers

1. Zero depreciation cover

You get the whole cost of repairs to external car body damages irrespective of the depreciation amount. Since this is an add-on cover, you pay a higher premium. Your insurer pays for the repairs/replacement of the plastic and fiber components of your car.

2. Engine protection cover

An engine protection cover is an add-on to your car insurance policy, that is meant to cover any damages to the engine through leakage, water damage, physical damage, etc. It thus compensates you for the repair/replacement of your engine.

3. Roadside assistance cover

Roadside assistance in insurance coverage keeps your insurer at your service so that you can contact your insurer immediately after the accident or in any emergency. It provides roadside services such as repair on the spot, emergency fuel delivery, flat tire service, driver disability, shipment of spares, towing to the nearest repair center, accommodation, and can service.

4. Consumable cover

Car insurance usually does not compensate or pay for any of the car’s consumables damage. At the time of claims, you are supposed to pay yourself for the replacement of these consumables. Consumables cover is an add-on insurance cover that pays for the cost of consumables like nuts and bolts in car insurance required to be replaced or refilled in the event of an accident in your car.

5. Return to invoice cover

In case of incidents where you lost your car completely due to fire or theft, your insurance company would pay you only up to the IDV (Insured declared value) which is much lower than the invoice value of the car.

Conclusion

Motor insurance belongs to a miscellaneous class of insurance. The business is so big that insurance companies have to maintain separate departments. When you are taking insurance you have to mention the type of vehicle you own as well as the use of that vehicle so it’s very much in the policy that you have to mention the use of that vehicle whether you will be using it for private purpose or for business purpose or will it be involved in any sort of defense activities.

So all these things you have to mention while taking an insurance policy because that would be combined for a premium amount which you would be paying for your insurance policy.