MOTOR VEHICLE INSURANCE5 min read

BY- JYOTSNA SINGH

INTRODUCTION

Motor Vehicle Insurance, also known as Auto Insurance, is a contract in which the insurer assumes that risk of any loss, the owner of a motor vehicle may incur through damage to property or to persons as a result of the accident. It deals with the losses that occurred to the automobile or its parts due to natural or man-made accidents. It is just like other insurances but unlike them, it is mandatory for everyone’s safety. It is related to all types of motor vehicles. The auto insurance companies do not pay out of their pockets for the damages in any kind of incident. People pay annual premiums to the auto insurance companies from the time insurance is signed, then the company pays for most of the damage that occurred due to the accident.

The annual premiums of people are different according to people’s age, gender, driving experience, history of violation of rules, etc. Main factors affecting Auto insurance premiums include types of cover in which premiums of the insured vehicle plus third party would be high in contract to normal only insured vehicle; geographical location is also a crucial factor for example in metropolitan cities there tend to be more accidents, and if the vehicle is installed with safety features then the premiums vary accordingly.

The coverages for an insurance include property damage or theft of the vehicle, legal responsibility for the property damage or bodily injury to others and medical costs for treating injuries or rehabilitation or funeral expenses.

PRIVATE CAR INSURANCE

Insurance for any private car owned by an individual and is mandated by the Government of India. It covers the vehicle for damages against natural disasters, fire, accidents, theft, riots, terrorist attacks, third party claims and also covers for any injury to the owner. It covers for expenses of replacing or repairing damaged parts of the vehicle. Premium can be reduced by asking for A claim bonus (NCB) which is a reward given by the insurer for not raising any claim during a policy year. Another benefit is protection from inflation.

There are also instances when the insurance plan doesn’t cover the vehicle or owner like when damage caused by drunken driving or use of the drug; when the driving person do no have a valid driver’s license; damages caused by war; mechanical or electrical breakdown of vehicle and depreciation of the vehicle.

COMMERCIAL VEHICLE INSURANCE

This insurance covers all those vehicles which are not used for personal uses like trucks, buses, heavy vehicles for commercial purposes, light commercial vehicles, agricultural vehicles, etc. The premium for this insurance is calculated on basis of the model of commercial vehicle, registration, manufacture year, current price, and if the insurer is an individual or a company.

TWO-WHEELER VEHICLE INSURANCE

This policy covers two-wheelers like bikes and scooters and is mandatory by the Government of India. This policy covers the damages from accidents, disasters, fire, theft, etc. as well as damages and injuries to the third party. As it is mandatory for personal accident cover of the owner, it can be taken for passengers too.

THIRD-PARTY INSURANCE

It is a statutory requirement under the Motor Vehicles Act. The beneficiary in this insurance is a third party instead of the two parties in the contract which are the insurer company and the insured. It does not provide benefit for the insured but it covers the insured person’s legal liability for the death or disability of the third party and damages to the third party’s property. The third party’s definition is not limited and it can be anyone who is injured by the insured. The premiums of this policy are calculated by the Tariff Advisory Committee. The third-party claims come under the no-fault liability. In this insurance, the liability of the insured has to be proven to claim damages from him. This insurance involves a lawyer’s aid. Insurers are allowed few defenses when: use of vehicles for hire and no permit is there; the vehicle is used for racing or speed testing; no driving license with the driver; or the policy taken is void. The burden of proving these defenses’ availability lies on the company. Although these defenses exist, they cannot absolve insurer liability. Without the knowledge of the owner the breach of conditions like not holding a driving license cannot be absolved.

It is also essential that the information is collected about the accident and provided to the insurer:

  • All details about the accident including the date and time
  • Photographs of the evidences from the accident site and weather and visibility condition at the time of accident
  • About the injuries of the driver, passengers or the property damages.
  • Witnesses
  • Description of insurance and policyholders during the accident

COMPREHENSIVE INSURANCE

In comprehensive insurance, the third-party liability and the own damages are covered. it covers a wide range of damages like natural calamities disasters, vandalism, theft, and even the add-on covers are there that are not under other insurances zero depreciation, electrical appliances, and personal accident cover. Hence this plan ensures security to any kind of situation the insured might encounter. It also covers lawsuits that include legal fees against policyholders due to the accident. If the insured is at fault for an accident then a claim can be made for an incurred loss. Hence, covers private vehicle insurance and third-party insurance.

CONCLUSION

Accidents can happen anywhere and anytime hence insurance has been made mandatory by the government. While many people believe it’s a waste of money, it is actually for their own benefit and for the ones injured. It pays for damages, reduces your liability, pays for your hospitalization, and also compensates your family even after your demise. To deal with the perils that come along with driving it is important to get car insurance for one’s own safety. There are several benefits of having an insurance policy like having an insurer to pay for your expenses of repair of the property. The other benefit is that in case of total disability or death then the person is provided with accident insurance. The third benefit is that it also takes care of third-party damages. Also, for insurance that meets their specific requirements, one much research thoroughly as it is going to be crucial if an accident occurs.

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