As you are aware that there are various types of Motor Insurance Policies are available in the market. These policies provide different types of benefits based on coverage and riders opted by the insured. Some of the polices are;
Types of Motor Insurance Policies in India
The primary goal is to protect car owners from damage and accidents.
Motor insurance policies are based on coverage, which refers to the type of insurance plan chosen, which can be classified as follows:
- Comprehensive Insurance
- Third-party Liability Insurance
1. COVERAGE UNDER COMPREHENSIVE MOTOR INSURANCE
A comprehensive motor insurance plan, as the name implies, covers every conceivable aspect of the vehicle insured and the policyholder's interests.
However, it is preferable to be aware of the various aspects that are covered by these insurance plans.
Comprehensive insurance covers a variety of different aspects, including Fire, severe weather, and natural disasters all cause damage, third-party or animal-caused damage, damage to the vehicle caused by civil disturbances such as riots or theft and vandalism.
WE CAN SAY THAT: The insurance policy which pays for the financial interest of the owner at the time of accidental damage to the vehicle and third party (for bodily injury or property damage) is referred to as Comprehensive Insurance.
To rationalize market demand for insurance, the regulator IRDA introduced the Motor Insurance Policy. It is available as a Comprehensive Package Policy and a Third-Party Liability Policy.
A Comprehensive Insurance is an assurance of protection of:
a) the vehicle own damage
b) liability of any third party involved in the accident.
For any mishap, the insurance company is liable to settle the claim for repairs unless it is a compensation in the event of death. In the event of death due to a road accident, the nominee of an individual will be indemnified by MACT. The Comprehensive Cover is the maximum cover one can purchase for their vehicle.
What Comprehensive Insurance Covers
In terms of what comprehensive insurance covers, the list includes damages related to:[ INVESTOPEDIA]
- Contact with animals, such as hitting a deer;
- Natural disasters, including earthquakes, floods, and hurricanes
- Fire;
- Riots and vandalism;
- Vehicle theft, or theft of certain parts of the vehicle;
- Broken windshields;
- Fallen objects, including branches, rocks, or hail.
- Third Party injury /Damage liabilities.
ADD-ONS WITH COMPREHENSIVE MOTOR INSURANCE POLICY
The following are some of the add-ons of choosing comprehensive motor insurance in India:
i) ZERO DEPRECIATION
This is a common add-on cover that is also referred to as bumper-to-bumper insurance. This add-on cover is available for all vehicle segments. A zero depreciation cover is extremely important in claim settlement calculations or reimbursements. When car insurers pay the claim settlement amount or reimburse your bill payments, they usually deduct the car's depreciation value as of that day. As a result, no insurer will offer to pay the full claim amount. However, if you have this coverage, the Depreciation factor will not be considered when calculating claim settlement. This optional cover is ideal for vehicles that are under 5 years old.
ii) ENGINE PROTECTION COVER
The fitness of an engine is critical because it is an essential component of the vehicle. Unfortunately, comprehensive auto insurance does not cover non-accidental engine damage. This is where the engine protection add-on comes in, providing financial protection for the engine against all damages. This add-on relieves the insured of all engine-related expenses, such as an oil spill, water ingression, electrical or mechanical breakdown, and complete replacement of car engine parts, among other things.
iii) ROADSIDE ASSISTANCE
If your car breaks down while you're driving, whether on city streets or highways, you'll need immediate assistance. If you live in a remote area where finding a mechanic is difficult, roadside assistance add-on cover can be extremely useful. You simply need to contact the insurer and inform them of the situation. If the engine fails, the insurer will either arrange for towing or garage service through its network of garages. Few insurers include this as part of the basic policy; otherwise, you can purchase it as an add-on.
iv) CONSUMABLE COVER
This consumable add-on covers consumable elements such as grease, air conditioner gas, lubricants clip, bearings, fuel filter, engine oil, oil filter, brake oil, nut and bolt, screw, washers, and so on that are not covered by the standard policy.
v) RETURN TO INVOICE COVER
You can purchase return to invoice coverage after the first policy year has ended. If the car is completely damaged in an accident or is irreparable as a result of a mishap, the insurer will pay the full value of the vehicle without taking into account the declining balance percentage.
vi) TYRE PROTECT COVER
Tyre Protect add-on covers damages such as in-tyre bulges, punctures or bursting of tyres, cuts on a tyre caused by an accident, and so on.
vii) THIRD-PARTY INSURANCE
Third-party car insurance is required by law for all vehicle owners in India. Essentially, these insurance policies protect the policyholder's interests from damages caused by the policyholder to a property or an individual.
In a variety of situations, third-party coverage can be said to help reduce the policyholder's risk and liability. This coverage is also recommended for low-cost and old vehicles that are less expensive to repair.
2. COVERAGE UNDER THIRD-PARTY MOTOR INSURANCE
i) FINANCIAL AND LEGAL ASSISTANCE
If you have third-party insurance on your car, you will not have to worry about any legal issues that may arise as a result of an accident. Remember that a third-party insurance policy protects you in the event of an accident. If you have a valid third-party car insurance policy, you will not be subjected to any of these court tribunals. Aside from that, this policy covers you for expenses related to the recovery of a third party's loss.
ii) AFFORDABILITY
If you believe that third-party insurance policies are expensive, you are mistaken. Look, the insurance premiums are specifically designed to meet the needs of all vehicle owners. The premium you must pay is determined by the model and engine capacity of your vehicle. A third-party insurance policy has lower premiums than a comprehensive car insurance policy.
iii) ONLINE PROCUREMENT PROCEDURES
You do not need to visit the official premises of any insurer to purchase a third-party insurance plan for your car, as insurance plans can be obtained online. Insurance companies have dedicated web-based insurance portals to ensure that vehicle owners have appropriate plans. You can simply log in, browse insurance plans, and select the best one for your needs.
iv) HOW THIRD-PARTY INSURANCE COVER WORKS
The first step in understanding how third-party insurance works is to make a list of the terms that are used. Some of the terms commonly associated with third-party coverage are:
- First-party: The policyholder or the person who purchased the insurance policy.
- Second-party: Insurer or insurance company
- Third-party: The person or entity who files a claim for damages caused by the first party.
If the policyholder is involved in an accident with a third party, the policyholder is responsible for any damages or injuries sustained. When an accident occurs, the policyholder must notify the insurance company as soon as possible and explain the situation.
According to the preceding article, you have a variety of options when it comes to motor insurance, so register for insurance with the car insurance company as early as possible.
IN THIS ARTICLE WE ARE GOING TO DISCUSS THE LIMITS OF LIABILITY UNDER A COMPREHENSIVE INSURANCE POLICY
The insurer, when an insurance policy has been issued is liable for third party to the extent specified in this section and it cannot opt out of the statutory obligation by incorporating terms and conditions in violation of the provisions of this section of the Insurance Policy.
In addition to these limits the insurer can enter into contracts where its liability could be more or even unlimited by issuing policies known as "Comprehensive Policies. It depends on the will of the Owner of the vehicle and the insurance company to inter into contract to cover unlimited liability or liability to be paid by the owner as specified under provisions of Section 147 of the Motor Vehicles Act, 1938 in case of accident to the third party.
SECTION 147 OF THE MOTOR VEHICLES ACT, 1938
Requirement of policies and limits of liability -
(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which –
(a) is issued by a person who is an authorized insurer; and
(b) insurers the person or classes of persons specified in the policy to the extent specified in sub – Section (2) –
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorized representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place;
Provided that a policy shall not be required –
(i) to cover liability in respect of the death, arising out of and in the course of this employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen’s Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee –
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation. – For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely: -
(a) save as provided in clause (b), the amount of liability incurred.
(b) in respect of damage to any property of a third party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4) where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any
In case of "Comprehensive Policy” the liability of insurance company is not limited, it depends on the basis of mutual contract between the owner and the company.
The premium charged by insurer in "Comprehensive Policy” is on higher side as compared with "Act only policy” or "Third Party Liability "insurance. Thus in "Comprehensive Policy” insurance policy the liability of an insurer is unlimited and liable to compensate the third party against any accident held with the vehicle of the owner.
The term "Comprehensive Policy” was examined by the Rajashthan High Court in Sohan Lal Vs. Bal Swaroop Bal Bhatanagar, 1987 ACJ 113(Raj) of the Old Insurance Act, 1939, the maximum liability of the truck insurer was Rs. 50,000/- but the contention of the claimants was that the liability was unlimited. The term of the policy was "such amount as is necessary to meet the requirements of the Motor Vehicle Act, 1939 and followed by the class which limits maximum liability to Rs. 50,000/-.
The Bench held that the liability of the insurer would be limited only when a clause to that effect is inserted in the Insurance Policy. The terms quoted above, held the court, means the liability was limited to Statutory Limit as specified in the Insurance Act, 1939. It was further held that meaning of "Comprehensive Policy” has to be appreciated in contrast to a policy which covers only third-partyrisk, the term "Comprehensive” cannot be mean to be taken unlimited liability. The Court further concluded that unless there is contract otherwise depicting that liability of the insurer is unlimited the limit of liability will be Statutory Liability as specified in the Insurance Act, 1939.
In Lakhpat Rai Vs. United Fire & General Insurance Co. Ltd-1988 in this case ACJ 466(P&H) an incomplete insurance policy was put before the court and it was decided that the liability of insurance company was unlimited.
The Orissa High Court in Rangochari Laxmi Vs. Prakash Chandra (1987) 1 ACC 197 drew an adverse inference against the insurer for not filing the complete insurance policy and held that the insurer was liable beyond the statutory limit, and being of this view the insurer was asked to pay entire amount awarded was Rs. 15000/- as against the Statutory Liability of Rs. 5000/-.
It has consistently been held that where the insurance company does not produce the policy, its liability will be unlimited. It is the duty of the insurer to plead the terms of the policy and to make available to the Court such records.
In National Insurance Co. Ltd. Vs. Vasantha-1988 Mad 146 the Madras High Court held that "Comprehensive Policy” of insurance is used to meanthat, apart from the loss or damage suffered to vehicles, it also assumes responsibility for third party. To what extent such liability is undertaken, would depend on the terms and conditions of that policy.
CONCLUSION
As we are aware that an insurance is contract between insurer and the insured. An insurance company in lieu of payment of premium as consideration promises to indemnify the insured against death, damage or injury incurred due to specified perils /risks in the policy. In case of motor vehicles as per statutory requirements the owner of every vehicle plying on road or public places whethertwo-wheeler or 3 or 4 wheelers should take a third-party insurance policy to protect third party from damage or injury in an of an accident in which vehicle involved. A Comprehensive Motor insurance is a policy which covers various types of perils along with damage to the owner and the vehicle itself. A Comprehensive Policy also covers Third Party Liability.
The liability in the "Comprehensive Policy” may be unlimited and it depends between contracts of insured and the insurance company. An owner and the insurer mutually agree to cover unlimited liability or such liability as may be decided on payment of additional premium.
In the absence of such an agreement the policy covers statutory liability as may be specified under the provisions of the Insurance Act, 1938.
DISCLAIMER: The article presented here is only for sharing information and knowledge with the readers. The views are personal, shall not be considered as professional advice. In case of necessity do consult with insurance professional.
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