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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 4 years

40%


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.

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