VEHICLE / MOTOR INSURANCE - DETERMINANTS | CLAIM PROCEDURE | RELEVANT TOPICS

DETERMINANTS OF MOTOR INSURANCE

Determinants of Risk Premium for Motor / vehicle insurance are as follows:

Cubic capacity of the engine: The vehicle which  runs on diesel, normal high premium will be changed due to its higher IDV (insured declared value) and also the capacity of the engine influences the premium rate.

Age of vehicle: The year of manufacturing of the vehicles is one of the factors to determine the premium amount. If the age of the vehicle is more, then premium amount will be lesser.

Geographical zone: The geographical location where the person lives and buys an insurance policy is one of the factors on premium rates. It the person resides in metros / big cities, normally the premium will be high and vice versa.

Type of model: High end cars available in the market will also be insured at a higher premium because of the cost involved in maintaining and repairing cars in case of any eventuality.

Insured declared value (IDV): IDV is calculated on the basis of the manufacturer’s listed selling price of the vehicle including price of accessories after deducting the depreciation for every year as per the schedule provided by the Indian Motor Tariff. This IDV is one of the factors considered when calculating premium.

Other factors: Other factors like personal factors, types of coverage, security systems installed also influence the premium amount.

CASHLESS SYSTEM AND CLAIM PROCEDURE

Cashless:

The first step: The accident / breakdown should be reported to the company.

Insurance companies provide cashless repairs across a wide network of garages in order to ensure a smooth ride and free pick-up, towing facilities, wash benefits at selected garages.

Loss assessment survey of vehicle within 4 hours by dedicated Relationship Manager provided the company is informed before 2 pm on a working day. This facility is not provided on Sunday and National holidays.

Six month quality assurance on all repairs provided subject to maximum usage of upto 6000 kms post such repairs.

If the vehicle is serviced in a garage outside the network, the same can be reimbursed from the company.

In case of accident:

Note the number of the other vehicles involved in the accident

Note the name and contact details of witnesses if any.

Inform the insurance company

Representatives from the company will inform you about the next step i.e. documents needed for claim and preferred cashless garage.

File an FIR in the nearest police station in case of accident, theft, and major damages.

After the registration of claim, company’s Customer Service Manager (CSM) will contact you within 24 hours. He will verify the document and after the estimation give spot approval for repair and claim.

Documents

In case of accident claim, following documents are required:

-      Claim form duly signed

-      RC copy of the vehicle

-      Copy of driving license

-      FIR Copy/Police Copy

-      Original repair bill

-      Any other document as required to investigate the claim.

In case of theft claim:

Along with the above documents, RTO transfer papers duly signed along with Form 28, 29, 30 and 35 and final report

 

Documents required for Third Party Claims

-      Claim form duly signed

-      FIR copy / Police copy

-      Copy of driving licence

-      RC copy of the vehicle

Further documents may be required according to the claim.

 

RELEVANT TOPICS

Road side assistance – One of the services provided by certain companies is road side assistance(RSA)

Breakdown support over phone

Minor repairs

Flat tyre

Battery jump start

Arrangement of keys

Towing on breakdown / accident

Arrangement of rental vehicle

Arrangement / supply of fuel

Message relay

Arrangement of accommodation

 Garage cash plan: If the vehicle is under repair after an accident, the insurance company will give a fixed daily allowance to the policy holder for the period that the vehicle will be in the authorized garage for repair, or for number of days as mentioned in the schedule, whichever is less. In case of total loss of the vehicle, a lump sum amount as mentioned in the schedule shall be paid.

Long Term Two Wheeler Insurance (LTTW): The IRDA has introduced a long term policy for two wheelers which means, the policy holders do not need to renew the policy annually. Instead of one year, he / she can opt for three years. This insurance taken for three years is called the LTTW Insurance.

No claim bonus (NCB): It is a benefit accrued to an insured for NIL claims during previous policy period. As per the current norms, it ranges from 20% to 50% on the own Damage Premium based on successive claim free years. If a claim is made during the policy period, then NCB is lost in the subsequent policy period. NCB is given to insured (policy holders) and not to the insured vehicle, which means, if vehicle is transferred to other person, then the insurance policy can be transferred to the new owner but NCB cannot be transferred. However, the original car owner can use NB for his / her newly purchased car.

VEHICLE INSURANCE

Vehicle or Motor Insurance is one of the largest non-life insurance businesses in the world because this insurance is statutorily mandatory in most countries.

The primary usage of motor insurance is to provide protection against losses incurred as a result of an accident. Motor insurance is required not only to cover risk towards the owner and the vehicle but also to cover the financial liability that may arise from an accident injuring a third party.

In India, the Motor Vehicle Act was established in 1939. It was amended in 1988. This amendment stipulates that no owner of a motor vehicle can use cause or allow to use the vehicle in a public place without a valid insurance. It means that any vehicle which is used in public has to be compulsorily insured against liability risk, etc.

-      Liability arising from death, injury or property damage to third parties.

-      Liability arising from death or injury to workmen such as driver / cleaner / conductor / laborers engaged for loading and unloading, etc.

-      Liability arising from death or injury to fare paying passengers travelling in the vehicle licensed to carry passengers.

Owners of the vehicle, financiers or leaser, who have insurable interest in motor vehicle, can insure the vehicle.

 

TYPES OF VEHICLES

For the purpose of insurance, vehicles are categorized in to three types.

-      Private car: Which is not used for commercial purposes but solely for social, domestic and private purpose. It is not to be used for hire, racing, carriage of good, other than business sample. 

-      Motor cycles and Scooters: Two wheeler with similar characteristics as motor cars

Commercial Vehicles: used for hire or reward. They are further classified into 

a.   Goods carrying vehicles: carry goods under private or public carrier’s permit.

b.   Passenger carrying vehicles: carry passengers on hire for e.g. Auto rickshaws, taxis, buses.

c.   Miscellaneous and special type of vehicles: covers vehicles like ambulances, garbage dumping trucks, publicity vans, mobile dispensaries, etc.

 

TYPES OF POLICIES

There are two types of motor insurance policies which are available for all types of motor vehicles

1.   The Act Liability Policy / Third Party Liability (statutory requirement)

This policy covers the liability as defined in the Motor Vehicles Act. Under this type of policy, the insurance indemnifies the insured against all sums which he may become legally liable to pay any person by reason of death or bodily injury caused to such third parties, or by damage to property of third parties caused by or arising out of use of the motor car.

2.   The Comprehensive Policy

This policy covers an entire range of risk as defined in the Tariff. This policy is also called the ‘Package Policy Cover’. The risks covered are: Fire, lightening, burglary, theft, earthquake, flood, cyclone, terrorist activity, landslide / rockslide, accidental external means, riots, etc.

Loss or damage of accessories is covered only if they are in the motor car. Extra fitting will not be covered unless they are separately described and valued in the policy schedule.

This policy excludes mechanical breakdown, failure and breakages, wear and tear, depreciation, consequential loss, overloading of a commercial vehicle and consequential loss.

 

BENEFITS OF MOTOR INSURANCE

It provides benefits to survivors when an accident results in death

It covers the bills of vehicle repair due to damage caused in an accident

It covers other loss like theft, fire, etc

It provides third party damage cover also

Extra fittings like music player, air conditioners, etc can be added to insurance property in motor insurance

It allows premium discounts

If no claim is made during the policy period, a ‘No claim bonus’ is offered on renewal with certain conditions.

It also provides financial safety for law suits brought against the policy holder as a result of an accident.