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MOTOR INSURANCEMOTOR INSURANCE
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IMPORTANCE OF MOTORIMPORTANCE OF MOTOR
INSURANCEINSURANCE
Maya left office at 4.00 pm on a Friday
evening. As she entered the highway shelooked at the watch and realised that she
had only 10 minutes to pick her daughter
from the school. She looked at the car in
front and accelerated to overtake the
carand then
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Who all do you think got affected
because of this accident?
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Motor InsuranceMotor Insurance
Scope of CoverScope of Cover
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Motor insuranceMotor insurance -- LegislationLegislation
Motor Vehicle Insurance - governed by theMotor Vehicle Act,1939 & amended in 1988.It is also regulated by the Indian Motor Tariff
Act requires any motor vehicle plying in apublic place to be compulsorily insured against
third party injury and property damage
The Indian Motor Tariff consists of 8 Sections
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GENERAL REGULATIONSGENERAL REGULATIONS
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Insurance not provided for:Insurance not provided for:
Motor Insurance includes Private Cars,Motor Insurance includes Private Cars,
Motorized Two Wheelers and CommercialMotorized Two Wheelers and CommercialVehiclesVehicles excluding vehicles running on railsexcluding vehicles running on rails..
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Proposal Form:Proposal Form:
Is required to be submitted by the insured toIs required to be submitted by the insured tothe insurer before the commencement of coverthe insurer before the commencement of cover
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(i)(i) Liability Only PolicyLiability Only Policy: Covers Third Party: Covers Third Party
Liability for bodily injury and/ or death andLiability for bodily injury and/ or death and
Property Damage .Personal Accident Cover forProperty Damage .Personal Accident Cover for
OwnerOwner--Driver is also included.Driver is also included.
(ii)(ii) Package Policy: CPackage Policy: Covers loss or damageovers loss or damage
to the vehicle insured in addition toto the vehicle insured in addition to (i)(i) above.above.
Types of PoliciesTypes of Policies
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RatingRating
Loading on tariff premium rates by 100% mayLoading on tariff premium rates by 100% may
be applied for adverse claims experiencebe applied for adverse claims experience
If the experience continues to be adverse, aIf the experience continues to be adverse, a
further loading of 100% on the expiringfurther loading of 100% on the expiring
premium may be applied.premium may be applied.
No further loading shall apply.No further loading shall apply.
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Extension ofGeographical AreaExtension ofGeographical Area
By charging a flat additional premium theBy charging a flat additional premium theGeographical Area of Motor Policies may beGeographical Area of Motor Policies may beextended to include;extended to include;
BangladeshBangladesh
BhutanBhutan
NepalNepal
PakistanPakistan Sri LankaSri Lanka
MaldivesMaldives
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A customer who is traveling to Bhutan meets
with an accident.Is the claim payable?
Check your understandingCheck your understanding
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The claim will be payable only if the customer
has opted for extension of geographicalcoverage.
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Vintage Cars & Classic CarsVintage Cars & Classic Cars
Vintage CarsVintage Cars
Any car manufactured prior to 31Any car manufactured prior to 31--1212--1940 and1940 andduly certified by the Vintage and Classic Carduly certified by the Vintage and Classic CarClub of IndiaClub of India
Classic CarsClassic Cars
Any car manufactured after 31Any car manufactured after 31--1212--1940, but1940, but
before 31before 31--1212--1970, is considered as a Classic1970, is considered as a ClassicCar by theCar by the Vintage and Classic Car Club ofVintage and Classic Car Club ofIndiaIndia..
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Insureds Declared Value (IDV)Insureds Declared Value (IDV)
IDVIDVof the vehicle is the SUM INSUREDof the vehicle is the SUM INSURED
IDV will be fixed at the commencement ofIDV will be fixed at the commencement ofeach policy period for each insured vehicleeach policy period for each insured vehicle
IDV : fixed on the basis of manufacturersIDV : fixed on the basis of manufacturerslisted selling price of the model and adjustedlisted selling price of the model and adjusted
for depreciationfor depreciation
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SCHEDULE OF DEPRECIATION FORSCHEDULE OF DEPRECIATION FOR
ARRIVINGAT IDVARRIVINGAT IDV
AGE OF THE VEHICLE % OF DEPRECIATIONFOR FIXING IDV
Not exceeding 6 months 5%
Exceeding 1 year but not
exceeding 2 years
20%
Exceeding 2 years but not
exceeding 3 years
30%
Exceeding 3 years but not
exceeding 4 years
40%
Exceeding 4 years but not
exceeding 5 years
50%
IDV for vehicle above 5 years & obsolete models will be mutually agreed
upon by the company and insured as per market value
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Check your understandingCheck your understanding
VehicleVehicle :: Honda City GXIHonda City GXI
Year of MnfgYear of Mnfg :: 20072007 Showroom PriceShowroom Price :: 7 Lacs7 Lacs
What is the IDV?What is the IDV?
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Depreciation on parts in case of partial loss
claims
A certain percentage
is charged on parts in
case of partial loss
whatever maybe theclass of the vehicle
depending on parts
and age of the
vehicle.
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Geographical ZonesGeographical Zones
Private Cars/ Motorized Two Wheelers /Private Cars/ Motorized Two Wheelers /Commercial Vehicles rateable under SectionCommercial Vehicles rateable under Section4.C.1 and C.4.4.C.1 and C.4.
Zone A: Ahmedabad, Bangalore, Chennai,Zone A: Ahmedabad, Bangalore, Chennai,Hyderabad , Kolkata, Mumbai, New Delhi andHyderabad , Kolkata, Mumbai, New Delhi and
Pune.Pune.
Zone B: Rest of IndiaZone B: Rest of India
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Commercial Vehicles excluding vehiclesCommercial Vehicles excluding vehiclesrateable under Section 4. C.1 and C.4.rateable under Section 4. C.1 and C.4.
Zone AZone A Chennai, Delhi / New Delhi, Kolkata,Chennai, Delhi / New Delhi, Kolkata,MumbaiMumbai
Zone BZone B All other State CapitalsAll other State Capitals
Zone CZone C Rest of IndiaRest of India
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Period of InsurancePeriod of Insurance
Normally 12 months, Unless specifically statedNormally 12 months, Unless specifically statedotherwiseotherwise
Premium Rates for Short Period CoverPremium Rates for Short Period Cover
Short Period Cover/ Renewal may be grantedShort Period Cover/ Renewal may be grantedfor periods less than twelve months at the shortfor periods less than twelve months at the shortperiod scale as per AIMTperiod scale as per AIMT
Short period for Liability Only Policies are notShort period for Liability Only Policies are notpermissible.permissible.
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Display of PremiumDisplay of Premium
In case of a Package Policy, the Own Damage and theIn case of a Package Policy, the Own Damage and theLiability components of premium should be displayedLiability components of premium should be displayedseparately in the Policy Scheduleseparately in the Policy Schedule
All permissible loadings on /discounts from tariff ratesAll permissible loadings on /discounts from tariff ratesshould be displayed separately in the policy scheduleshould be displayed separately in the policy schedule
The Own Damage as well as the Liability components ofThe Own Damage as well as the Liability components of
premium are required to be rounded off to the nearestpremium are required to be rounded off to the nearestrupee, separately.rupee, separately.
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Compulsory Deductibles
Claims underOwn Damage section of policies
covering all classes of vehicles are subject to a
compulsory deductible as per the table below:
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Voluntary Excess
Insured may opt for higher deductible over and above
the compulsory deductible which attracts discount in
OD premium
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NO CLAIM BONUS (NCB)NO CLAIM BONUS (NCB)
NCB is to reward safe driving
This is given at the time of renewal by way of
discount NCB is given only on Own Damage Premium
An insured becomes entitled to NCB only at
the renewal of a policy after the expiry of thefull duration of 12months.
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The entitlement of NCB shall follow theThe entitlement of NCB shall follow thefortune of the original insured and not thefortune of the original insured and not thevehicle or the policy.vehicle or the policy.
i.e., NCB is provided to the insured and not the
vehicle
In the event of the death of the insured, theNCB entitlement will pass on to family
members (spouse and/or children).
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The percentage of NCB earned on a vehicleThe percentage of NCB earned on a vehicle
owned by an institution during the periodowned by an institution during the period
when it was allotted to and exclusivelywhen it was allotted to and exclusively
operated by an employee should be passed onoperated by an employee should be passed on
to the employee if the ownership of theto the employee if the ownership of the
vehicle is transferred in the name of thevehicle is transferred in the name of the
employee (on submission of a letter from theemployee (on submission of a letter from theemployer)employer)
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In the event of the insured, transferring hisIn the event of the insured, transferring his
insurance from one insurer to another insurer,insurance from one insurer to another insurer,
the transferee insurer may allow the same ratethe transferee insurer may allow the same rate
of NCB which the insured would haveof NCB which the insured would have
received from the previous insurerreceived from the previous insurer
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In case an insured holds NCB but fails to renew hispolicy on time, the NCB will be transferred to hispolicy if the policy is renewed within 3 months ofexpiry.
i.e., NCB cannot be allowed when a policy is not
renewed within 90 days of its expiry.
If an insured vehicle is sold, and if the insured holdsNCB, he/she can obtain NCB certificate from the
insurance company for the same. This is valid for 3years
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On production of evidence of having earnedOn production of evidence of having earned
NCB abroad, an insured may be granted NCBNCB abroad, an insured may be granted NCB
on a new policy taken out in India as peron a new policy taken out in India as per
entitlement earned abroad, provided the policyentitlement earned abroad, provided the policy
is taken out in India within three years ofis taken out in India within three years of
expiry of the overseas insurance policy,expiry of the overseas insurance policy,
subject to relevant provisions of NCB undersubject to relevant provisions of NCB underthese rulesthese rules
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Other Discounts:Other Discounts:
Automobile Association Membership
Private Car - 5% on Own Damage premium or max Rs. 200
Two Wheeler 5% on OD premium or max Rs. 50
Anti theft devices approved by ARAIPrivate Car - 2.5% on Own Damage premium or max Rs. 500
Two Wheelers - 2.5% on Own Damage premium or max Rs.
500
Vintage Car
25% on Own Damage Premium
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Transfer of Ownership of vehicle
On transfer of ownership, the Liability Only cover, eitherunder a Liability Only policy or under a Package Policy, isdeemed to have been transferred to the new owner witheffect from the date of transfer
The TP cover will be valid for 3 months
The OD cover will be valid for a period of 14 days from thedate the vehicle is transferred.Within this time, the new
owner should intimate the Insurer that the vehicle istransferred, failing which the cover lapses
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Change ofVehicleChange ofVehicle
A vehicle insured under a policy can be substituted byanother vehicle of the same class for the balanceperiod of the policy subject to adjustment of
premium, if any, on pro-rata basis from the date ofsubstitution.
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Cover noteCover note
A cover note is a temporary certificate of insuranceA cover note is a temporary certificate of insurance
issued by the Insurer before the issuance of a policy,issued by the Insurer before the issuance of a policy,
after the Insured has given a duly filled proposal formafter the Insured has given a duly filled proposal form
and has paid the premium in full.and has paid the premium in full. A cover note is valid for a period of 60 days from theA cover note is valid for a period of 60 days from the
date of issue of the cover note and the Insurer shalldate of issue of the cover note and the Insurer shall
issue the Certificate of Insurance before the coverissue the Certificate of Insurance before the cover
note expires.note expires.
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EndorsementsEndorsements An endorsement is a written evidence of an agreed changeAn endorsement is a written evidence of an agreed change
to a policyto a policy
It is a document that incorporates changes in the terms ofIt is a document that incorporates changes in the terms ofthe policythe policy
If there are any alterations to be done in the policy, theIf there are any alterations to be done in the policy, thecustomer needs to approach the Insurance company tocustomer needs to approach the Insurance company toeffect the change in the policy. This is done by way of aneffect the change in the policy. This is done by way of an
endorsementendorsement
An endorsement may be issued at the time of issuing theAn endorsement may be issued at the time of issuing thepolicy to provide additional benefits and cover or topolicy to provide additional benefits and cover or toimpose restrictionsimpose restrictions
An endorsement may also be issued subsequently to recordAn endorsement may also be issued subsequently to recordchanges like change of address, change of name, change ofchanges like change of address, change of name, change ofvehicle etc.vehicle etc.
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Cancellation of Motor PolicyCancellation of Motor Policy
A policy can be cancelled only after ensuringA policy can be cancelled only after ensuring
that the vehicle is insured elsewhere, at leastthat the vehicle is insured elsewhere, at least
for Liability Only cover and after surrender offor Liability Only cover and after surrender of
the original Certificate of Insurance forthe original Certificate of Insurance for
cancellation.cancellation.