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Auto Insurance

In India, under the provisions of the Motor Vehicles Act, it is mandatory that every vehicle should have a valid Insurance to drive on the road. Any vehicle used for social, domestic and pleasure purpose and for the insurer's business motor purpose should be insured. The violation of this act is punishable with fine.

Types of AUTO INSURANCE

There are two types of Motor vehicle Insurance, "Act Only Risk - Motor Policy A" (also known as third party insurance) and "Motor Policy B" (also known as comprehensive insurance policy).



Motor Policy A
Motor Policy A or Third party insurance covers unlimited pay compensation for death or bodily injuries to third Parties and damage to the property of the third parties other than insured, up to a limit. Under this policy the insured is treated as the first party, the insuring company the second party and all others would be third parties. This insurance protects the insured from legal liabilities following an accident involving his/her vehicle. It does not cover any damage to his/her vehicle.

The limit for third party property damage is limited to 7.5 lakhs

Motor Policy B
Comprehensive insurance covers third party liability as well as loss or damage to the insured vehicle itself by the way of accident, theft etc and some other specified risks. Normally it is advisable to get the Comprehensive insurance Policy because it covers insured, vehicle and third party with a single policy.  

A comprehensive insurance policy includes:

  • Third party cover.

  • Loss / Damage to vehicle as a result of an accident, fire or theft.

  • Risks against floods, earthquake, riots and strikes.

  • Accessories like music system, air-conditioner, etc. can be covered by paying additional premium.

  • Risk of loss/damage while in transit by road, rail, watercraft, air, elevator, etc.

How the policy can be obtained
The Insurance Policy can be obtained through an insurance agent or development officer of the insurance company. While giving insurance premium the insurer has to obtain a cover note from the insurance company and which is having the validity of 60 days only. Within this period the insurance company issue policy and which is known as Certificate of Motor Policy. Duplicate Certificate instead of defaced, mutilated or lost certificates can be obtained on payment of a prescribed fee and after production of an affidavit to that effect.

Premium.
As per the Indian Motor Tariff, published by IRDA, all the vehicles are insured at a fixed value called the Insured's Declared Value (IDV). IDV is based on the ex-showroom cost of the vehicle.

On every renewal of policy the IDV is calculated after deducting the prescribed depreciation. One can extend the coverage for Personal Accident, accessories etc by paying an additional premium. Presently there is a provision for the Insuring company to give some discounts of their own. But by the end of September 2007, according to a new resolution passed by the IRDA, the calculation of IDV will take into account the gender of the owner and their age also, along with the usual norms of calculation. From April 2007 onwards the Insurance Industry in India is also under de tariff scenario.

Validity & Renewal
Usually the Insurance policy is valid for one year. It becomes active soon after the payment of premium is received by the insurance company and will end exactly a year later. So the insured must renew the policy before the expiry date. Any delay in the renewal will make the policy invalid. For every renewal a fresh certificate should be obtained.

No Claim Bonus
The Policy holders who have not made any claim in the previous years will be rewarded by the insurers by giving a discount of a comprehensive insurance on a reducing balance basis in the future years. If you are carrying forward a no-claim bonus on any vehicle, you can get it transferred to a new vehicle of the same type (four wheeler to four wheeler ). The only condition to avail of this discount is that you have to sell off your old vehicle. Even if you wish to retain your old vehicle, you can get around this clause by gifting the old vehicle to a family member.

Transfer of Insurance Policy
If you purchase a used vehicle, you can transfer the existing insurance policy to your name. But, you must inform the insuring company within 2 weeks of purchasing the vehicle.  


CLAIMING PROCEDURE

Comprehensive Insurance claim
If an accident takes place, you must report to the insurance company as soon as possible and submit the claim forms. An estimate for repairs /replacements should also be submitted.  

The documents to be submitted are

  • Claim form

  • Original / Copy of the insurance policy

  • Copy of registration certificate of vehicle and driving license of the driver

  • Copy of the estimated cost of repair given by the garage

  • FIR or a police report if the accident is major, or a criminal offence, or if it caused third-party damage or resulted in injuries

  • Fire brigade report, if the loss is due to a fire

After the submission of relevant documents, the Insurance company will direct a person to inspect the value of damage/replacement and genuineness of estimate submitted and according to his report the claim will be settled.  

After repair, a final bill of the repair and replacements and the stamped receipt for payment from the work shop should be submitted to the company to settle the claim. Only after the inspection of the repaired vehicle that you are allowed to take the vehicle home. According to the rule of some companies, payment will be done either directly to the repairer in the form of a cheque or  the companies may recommend preferred auto shops for repair. In case of settlement of claim either for total loss of the vehicle or for replacement of certain items, such damaged vehicle or parts thence belong to the insurance company.

In case, a third party is involved in the accident, a case must be filed immediately with the police and at the same time a report should also be sent to the insurance company.  

If your vehicle has been stolen, file a police complaint and inform the insurer. If you don't get your vehicle within 90 days, obtain a "non-traceable report'  from the police and submit to the insuring company to start the claiming process.

Third Party Insurance Claim
In case, a third party is involved in the accident, a case must be filed immediately in the police station and a report also should be sent to the insurance company at the same time. Your Insurance company will pay you directly.