What is Motor Insurance?
Definition: A motor insurance policy is a mandatory policy issued by an insurance company as part of prevention of public liability to protect the general public from any accident that might take place on the road. The law mandates that every owner of a motor vehicle must have one motor insurance policy.
Description: Broadly, there are two types of motor insurance - the 'Act only' policy and a comprehensive policy. The scope of the 'Act only' policy is to pay compensation for death or any bodily injuries and for damage to property of third parties. While the insured is treated as the first party and the insurance company as the second party, all others would be third parties.
In case the vehicle is purchased under a hire-purchase agreement, the financiers insist upon a comprehensive policy to take care of their interest as collateral security. The perils covered under the comprehensive policy are fire or theft or both fire and theft in combination with the minimum requirements of the act (i.e. third party liability).
Comprehensively, these include damage to the vehicle by accidental external means: fire, lightning, explosion, self-ignition, burglary, house-breaking, riot and strike, malicious acts and terrorist acts, earthquake, flood, inundation, cyclone, landslide/rockslide, etc. while in transit by rail, road, air, inland waterways, lift or elevator.
Discounts can be availed if the insured chooses to exclude the following covers: earthquake cover, flood, cyclone and inundation cover, riot, strikes, etc. Discounts can also be availed for every claim-free year.
Also See: Collateral Security, 3rd Party Insurance, Health Insurance, IRDAI.
If there’s something that all Indians unanimously share, that is their love for motor vehicles. Two-wheelers and four-wheelers are the most preferred mode of transports in India. Be it, traveling for work, or a vacation or a small stop to the nearby grocery stores, we love to be in the company of our beloved vehicles. With this being the case, it is but natural that the number of motorists and vehicles on our roads has grown remarkably over the years.
To ensure our roads get safer and better for all, the Government of India, has established the law under the Motor Vehicles Act of 1988 to make motor vehicle insurance mandatory in the country. The primary goal of this law is to help protect the vehicle owner against self or property damage and to ensure the owners and their families have financial aid to help them deal with mishaps if any.
With the law in place, many insurance service providers have rolled up many different plans and policies, leaving the vehicle owners spoilt for choice when it comes to Motor Vehicle Insurance. However, most insurance policies have an exhaustive cover which sometimes could lead to the vehicle owners being either under-insured or over-insured. This could be due to their ignorance about the different types of motor vehicle insurance that is available and the provisions under each. Read further to get a proper understanding of the different types of Motor Vehicle insurance in India.
Types of Motor Vehicle Insurance<
There are three different types of insurance - Private Car Insurance, Two-wheeler Insurance, and Commercial Vehicle Insurance. Let us take a look into what each type of insurance covers.
Private Car Insurance
The first thing that your car vendor will suggest after you have finalised your car booking is to get an insurance policy that will not just protect you and your vehicle, but also your family members. Car insurance acts as a protective armour that shields you from any kind of personal or property damage. Further to this, car insurance policies have an exhaustive cover that provides overall protection for your vehicle including natural calamities like earthquakes or floods, damage or theft, or an accident, etc.
With the government making third-party liability a mandatory requirement, private car owners can be assured that they are also insured against liabilities like third-party damage or physical injury. Apart from this, car owners can also opt for add-ons like engine and gearbox protector, zero depreciation policies to provide better coverage to your vehicle.
Two-wheeler Insurance
Similar to private car insurance, getting two-wheeler insurance with personal accident cover and the third-party cover is mandatory under the Motor Vehicle Amendment Act of 2019. The insurance provides an exhaustive cover which protects the owner from any personal or property damage and liabilities of any type. However, two-wheeler insurance policies have certain exclusions which include regular wear and tear of the vehicle, etc.
Commercial Vehicle Insurance
Commercial Vehicle insurance, as the name suggests, is for vehicle owners who operate for commercial purposes. It is mandatory for them to have insurance in place that will help their business going without any glitches. Commercial vehicle insurance protects businesses and business owners from any liabilities or losses that occurred due to accidents or property damage where their vehicles are involved, which includes loss of life, physical injury, or property damage. This type of insurance is available for commercial vehicles like trucks, cars, private and public carriers, taxis, etc.
Regardless of the type of insurance, the owners have only two different insurance types to choose from - Personal Damage (protects the owner in case of an accident) and Third-party liability (protects the owners from any legal complications). With the right insurance policy in place, the motor vehicle owners can have a stress-free and happy driving!
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