What should you know about car and bike insurance?

Enjoy the drive safely!

Need of the Insurance:

When you buy a car or bike as per the Indian motor rules you must get the insurance certificate. Car and Bike owners have liabilities to third parties (victim) – injured or dead- in case of an accident. Often owners are not able to pay the huge claims made by the dependants of the victim. Hence government of India has made third party insurance mandatory for car and bike drivers. Also, understand that vehicle insurance is the only legal document by which you can claim the vehicle.

Insurer – insurance company
Insured – refers to you or your vehicle
Third party – person other than you

Kinds of Motor Insurance:

Third party Insurance and Comprehensive policy/ Package policy are the two kinds of Insurance. Of these two insurance, third party insurance is mandatory and Package policy is optional one. Third party insurance covers the insured for death or injuries of the person you hit and for their property.

Limits of Liability – Third party insurance:

*Claim - as per Motor Vehicle Act 1988. After receiving the victim’s claim which should be justified with sales tax and Income tax returns your insurer will estimate the victim’s earning and depending on the partial or complete disability, the victim will get the amount.

*Your insurer will take care of all the legal expenses incurred for defending the third party claim

*Damage to third party property in respect of any one claim or series of claims arising out of one event up to amount of Rs 7.5 lakhs for private car and Rs 1lakh for two wheelers.

Package/ comprehensive policy in addition to the above covers

*Personal accidents cover for owner-driver which is compulsory in case of individual owners and importantly total liability of the insurer shall not exceed the sum of Rs 2lakhs during any one period of insurance.

*Personal accident cover for occupants incase of cars

*Legal liability to paid driver as per workmen compensation act up to 1lakh

*Damage or loss to vehicle or its accessories due to fire explosion, burglary, theft , riots & strike, accidental external means, natural perils, terrorist activity, flood , malicious act, in transit( road rail inland waterway lift elevator or air) and landslide.

*The insurer will pay the towing charges if the vehicle is unmovable to the owner for moving the vehicle to nearest garage where repairs can be made. Towing charge for cars – Rs 1500 and for two wheelers – Rs 300.

To insure the vehicle…

*For insuring the new vehicle you have to produce the original RC book of the vehicle.

*For a vehicle which insurance is lapsed you have to physically show the vehicle to get the new insurance. Know that you have no need to pay for the lapsed period or any fine.

*For an old car bought from someone third party insurance has to be changed to your name. Regarding the comprehensive policy most prefers to continue

*In the event of death of sole insured the legal heirs of the sole insured may apply to have the existing policy transferred to their names within a period of three months or until the expiry of policy( whichever is earlier)

Steps for Calculating Premium:

IDV – Insured Declared Value of the vehicle will be deemed to be the ‘sum assured’ for the purpose of this policy which is fixed at the commencement of each policy period for the insured vehicle.

A) Own Damage:

1)Find out the IDV
a)vehicle own damage
b)accessories
c)CNG/LPG kit

2)Apply premium rate to the IDV
a)age of the vehicle
b)zone – depends on areas
c)cubic capacity

3)Calculate Own Damage Premium(IDV*rate)

Deduct discounts
a)Voluntary deductible
b)Anti theft devices
c)No claim bonus(NCB)

B) Liability

a) TPPD – Third Party Property Damage
b) Owner – driver Personal Accident (PA) cover
1) Passenger PA
2) Paid driver
3) Employee liability
4) Any other additional cover

Final premium = own damage (A) + Liability (B) + service tax + stamp duty.

Insurers:

The insurers include General Insurance Company of India and its subsidiaries New India Insurance company, Oriental Insuarance Company, National Insurance company and United India Insurance Company. Private players include Tata AIG, Bajaj Allianz and ICICI LOmbard. Because of the new de-tariffy system differnt company offers different packages. Check it and pick the one which suits you

In the following posts we will see how to calculate IDV, what is deprecation, what these company offers when there is no claim - bonus, what you have to pay for claims – malus and most importantly how to make a claim in case of vehicle damage…