MOTOR INSURANCE

BY S. M. GUPTA

TOPIC - ACCIDENT AND MOTOR INSURANCE

ACCIDENT AND MOTOR INSURANCE. TERMS AND CONDITIONS OF MOTOR INSURANCE. CLAIMS & RECOVERY. COMPULSORY THIRD PARTY INSURANCE.
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WHATIS ISMOTOR MOTORINSURANCE? INSURANCE? WHAT

MOTOR INSURANCE IS A COMBINATION OF TWO WORDS I.E. MOTOR + INSURANCE MOTOR UNDER THE MOTOR VEHICLE ACT IS A SELF-PROPELLED VEHICLE INSURANCE WE ALREADY KNOW IS PROTECTION AGAINST ANY UNFORESEEN RISK THE UNFORESEEN RISK IS AN INCIDENT, WHICH CANT BE FORESEEN I.E. WHICH MAY OR MAY NOT HAPPEN I.E.
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WHATIS ISMOTOR MOTORINSURANCE? INSURANCE? WHAT

A) IT MAY RESULT IN TO EITHER CREATION OF LIABILITIES OR B) WILL RESULT IN TO FINANCIAL LOSSES: INJURIES/DEATH TO PERSON/S AND DAMAGE TO PROPERTY. (LIABILITIES) A

DAMAGE TO THE VEHICLE ITSELF AND B THEFT OF PARTS OR THE THEFT OF THE VEHICLE ITSELF. (FINANCIAL LOSSES)
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WHATIS ISMOTOR MOTORINSURANCE? INSURANCE? WHAT

MOTOR INSURANCE IS THUS PROTECTION AGAINST THE RISKS EXPLAINED EARLIER, IN ORDER TO:
OVER COME THE LIABILITIES AND THE FINANCIAL LOSSES
ASSOCIATED WITH THE ACCIDENTS.

THERE ARE DIFFERENT POLICIES OT MEET THE ABOVE OR A SINGLE POLICY CAN ALSO BE TAKEN FOR THE SAME AS BEING EXPLAINED IN THE NEXT SLIDE.
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TYPESOF OFPOLICIES POLICIES TYPES

THE POLICY WHICH IS MANDATORY TO BE TAKEN IN ORDER TO MEET THE REQUIRED OF THE MOTOR VEHICLE ACT IS, LIABILITY ONLY POLICY, AS EXPLAINED EARLIER AND THE SECOND POLICY IS THE CHOICE OF THE OWNER OF THE VEHICLE I.E. HE MAY OR MAY NOT TAKE THIS POLICY, KNOWN AS, PACKAGE POLICY.
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INTRODUCTION INTRODUCTION
GLOBALLY MOTOR INSURANCE IS THE BIGGEST AND FASTEST GROWING GENERAL INSURANCE PORTFOLIO AND INDIA IS NO EXCEPTION TO IT.
IT ACCOUNTS FOR MORE THAN 45% OF THE TOTAL GENERAL INSURANCE PREMIUM INCOME IN INDIA IN THE YEAR ENDING 2009, TOTAL NONLIFE PREMIUM OF THE INDUSTRY WAS ABOUT 28,000 CRORES OUT OF WHICH MOTOR SHARE WAS ABOUT 13,000 CRORES HOWEVER MOTOR BUSINESS WAS 25 CRORES ONLY AT THE TIME OF NATIONALIZATION.
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INTRODUCTION INTRODUCTION
SOME OF THE FACTORS RESPONSIBLE FOR THIS GROWTH ARE:
INCREASE IN EARNING CAPACITY OF INDIVIDUAL CHANGE IN PRIORITIES OF LIFE EXPLOSIVE GROWTH OF AUTOMOBILE INDUSTRY NEWER MODELS BEING INTRODUCED IN INDIA AND IN THE WORLD, THE COSTLIER ONES AND THE CHEAPEST VERSIONS AND INTRODUCTION OF CHEAP AUTO LOANS.
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GROWTH GROWTH
IN 1951, THERE WERE 3,00,000 MOTOR VEHICLES THROUGHOUT INDIA THE ROAD NETWORK AT THAT TIME WAS OF 4,00,000 KILOMETERS BY THE YEAR ENDING 2004, THE NUMBER OF VEHICLES HAS GONE UP BY 270 TIMES, WHERE AS ROAD NETWORK HAS EXPANDED BY 11 TIMES ONLY.
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GROWTH GROWTH
IN INDIA THE VEHICLE POPULATION HAS ALREADY CROSSED 8 CRORES COMPRISING OF THE FOLLOWINGS:
TWO WHEELERS: MOTOR CARS : COMMERCIAL : 6 CRORES 2 CRORES 2 CRORES AND

ABOUT 90 LAKH MOTOR VEHICLES (ALL TYPES) ARE BEING ADDED ON INDIAN ROADS EVERY YEAR.
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ACCIDENTS ACCIDENTS
ABOUT 300 PERSONS ARE BEING KILLED ON ROAD ACCIDENTS DAILY AND ABOUT 10,00,00 ARE BEING INJURED ANNUALLY AND THE INCIDENCE OF ROAD ACCIDENTS TO NUMBER OF VEHICLES IN INDIA IS ALARMINGLY HIGH IN COMPARISON TO DEVELOPED COUNTRIES: THE NUMBER OF ROAD ACCIDENTS PER 10,000 VEHICLES IN INDIA IS ABOUT 120 AS AGAINST 10 IN THE DEVELOPED COUNTRIES OF THE WORLD THE NUMBER OF DEATHS PER 10,000 VEHICLES IN INDIA IS 55 AS AGAINST 2 IN THE WEST.
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ACCIDENTS ACCIDENTS
IN 1990, TRAFFIC ACCIDENTS WERE WORLDS NINTH BIGGEST CAUSE OF DEATH AND IT IS EXPECTED TO BECOME THE THIRD BIGGEST BY 2020. STUDY UNDERTAKEN BY THE WORLD HEALTH ORGANIZATION REVEALS THAT ROAD ACCIDENTS ARE THE SECOND AND THIRD BIGGEST CAUSE OF DEATH IN THE AGE GROUP OF 5-29 AND 30-44 YRS. RESPECTIVELY. THE INDIAN SITUATION IS AMONGST THE WORST IN THE WORLD I.E.
SHARE OF ROAD FATALITIES IS AROUND 86%. AGAINST 40% SHARE OF VEHICLE POPULATION.
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Worlds Costliest Car-Bugatti Veyron Before and after the accident

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IMPLICATIONS IMPLICATIONS
IT IS THEREFORE NATURAL THAT IN A SITUATION LIKE THIS I.E. THE WIDESPREAD USE OF VEHICLE BY THE COMMON MAN MANY VEHICLE OWNERS AND USERS MAY NOT HAVE THE REQUISITE FINANCIAL CAPABILITIES OF COMPENSATION TO THE VICTIMS OF THE ROAD ACCIDENT.
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REMEDIES REMEDIES
THE MOTOR VEHICLE ACT HAS THEREFORE MADE THE THIRD PARTY INSURANCE COMPULSORY IT A PUNISHABLE OFFENCE TO USE THE VEHICLE WITHOUT INSURANCE NECESSARY PROVISIONS FOR ITS ENFORCEMENT ARE THEREFORE ARE AVAILABLE WITH THE AUTHORITIES:
FAILURE TO COMPLY THE PROVISIONS OF SEC.146 OF THE MV ACT IS PUNISHABLE BY AN IMPRISONMENT OF THREE MONTHS OR A PENALTY OF RS. 1000 OR BOTH (SEC.196 OF THE MV ACT).

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HISTORY HISTORY
MOTOR INSURANCE IS ONE OF THE MOST IMPORTANT PORTFOLIOS OF INSURANCE INDUSTRY AND IT IS MANDATORY/ COMPULSORY INSURANCE FOR THE VEHICLES PLYING ON THE ROADS IT IS WORTHWHILE TO KNOW THAT THE TOLL TAKEN BY ROAD ACCIDENTS IS NO LESS THAN THE TOLL OF A MAJOR NATURAL OR A MAN-MADE CATASTROPHE (LIKE 9/11).
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HISTORY HISTORY
1894: 1ST MOTORCAR INTRODUCED IN U.K. ENGLAND. 1895: 1ST MOTOR POLICY ONLY THIRD PARTY LIABILITIES INTRODUCED. 1899: ACCIDENTAL DAMAGE TO CAR ADDED COMPREHENSIVE INSURANCE (PACKAGE). 1903: CAR & GENERAL INSURANCE CORPORATION LTD. ESTABLISHED MAINLY TO TRANSACT MOTOR INSURANCE, FOLLOWED BY OTHER COMPANIES.
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HISTORY HISTORY
POST WORLD WAR- I: INCREASE IN NUMBER OF VEHICLES AND ROAD ACCIDENTS. ROAD TRAFFIC ACTS: 1930 & 1934 COMPULSORY THIRD PARTY LIABILITY INSURANCE. ROAD TRAFFIC ACT 1960: COMPULSORY INSURANCE PROVISIONS OF ABOVE ACTS WAS CONSOLIDATED.
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HISTORYINDIA INDIA HISTORY

1939: MOTOR VEHICLES ACT (MVA) PASSED. COMPULSORY 3RD PARTY INSURANCE INTRODUCED ON 1ST JULY, 1946. PRACTICE IN INDIA FOLLOWS THAT OF U.K. MARKET. GOVERNED BY A TARIFF: WITHDRAWN IN UK. MVA 1988, REPLACED THE MVA OF 1939. EFFECTIVE FROM JULY 1ST 1989.
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MANDATORYINSURANCE INSURANCE MANDATORY

THE MANDATORY PART OF THE MOTOR INSURANCE IS KNOWN AS THIRD PARTY INSURANCE THIS INSURANCE WAS FORMED ON THE BASIS OF MOTOR VEHICLE ACT THE POLICY IS BEING ISSUED IN ACCORDANCE WITH THE PROVISIONS OF THE M. V. ACT, IS NOW CALLED AS THE LIABILITY ONLY POLICY & THE COVERAGES PROVIDED ARE:.
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LIABILITYTO TOTHIRD THIRDPARTIES PARTIES LIABILITY

DEATH OF OR BODILY INJURY TO ANY PERSON INCLUDING OCCUPANTS (PROVIDED SUCH OCCUPANTS ARE NOT CARRIED FOR HIRE OR REWARD) AS PER MOTOR VEHICLES ACT, 1988. THE COMPANY SHALL NOT BE LIABLE FOR DEATH OR INJURY ARISES OUT OF AND IN THE COURSE OF THE EMPLOYMENT DAMAGE TO PROPERTY OTHER THAN PROPERTY BELONGING TO THE INSURED OR HELD IN TRUST/ CUSTODY OR CONTROL OF THE INSURED ALL COSTS AND EXPENSES INCURRED WITH ITS WRITTEN CONSENT.
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LIABILITYTO TOTHIRD THIRDPARTIES PARTIES LIABILITY

ANY DRIVER WHO IS DRIVING THE VEHICLE ON THE INSUREDS ORDER OR WITH INSUREDS PERMISSION PROVIDED THAT SUCH DRIVER SHALL AS THOUGH HE/ SHE WAS THE INSURED OBSERVES & FULFILL THE TERMS EXCEPTIONS AND CONDITIONS OF THIS POLICY.
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LIABILITY TO THIRD PARTIES LIABILITY TO THIRD PARTIES

ANY PERSON ENTITLED TO INDEMNITY, THE COMPANY WILL INDEMNIFY SUCH PERSON OR HIS/ HER PERSONAL REPRESENTATIVE PROVIDED THAT SUCH PERSONAL REPRESENTATIVE SHALL AS THOUGH WAS THE INSURED, OBSERVE FULFILL THE TERMS EXCEPTIONS AND CONDITIONS OF THIS POLICY.
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PERSONAL ACCIDENT COVER PERSONAL ACCIDENT COVER FOR OWNER-DRIVER FOR OWNER-DRIVER
THE COMPANY UNDERTAKES TO PAY COMPENSATION AS PER THE FOLLOWING SCALE FOR BODILY INJURY/ DEATH SUSTAINED BY THE OWNER-DRIVER OF THE VEHICLE IN DIRECT CONNECTION WITH THE VEHICLE INSURED OR WHILST:

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PERSONAL ACCIDENT COVER PERSONAL ACCIDENT COVER FOR OWNER-DRIVER FOR OWNER-DRIVER
DRIVING MOUNTING INTO/ DISMOUNTING FROM THE VEHICLE INSURED WHILST TRAVELING IN IT AS A CO-DRIVER CAUSED BY VIOLENT, ACCIDENTAL, EXTERNAL AND VISIBLE MEANS WHICH IS INDEPENDENT OF ANY OTHER CAUSE SHALL WITHIN SIX CALENDAR MONTHS OF SUCH INJURY RESULT IN:

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SCALEOF OFCOMPENSATION COMPENSATION SCALE

Compensation Death 100% Loss of two limbs or sight of both eyes or one limb & 100% sight of one eye Loss of one limb or sight of one eye 50% Permanent total disablement 100%
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Nature Of Injury

1 2 3 4

LIMITATIONS LIMITATIONS
PROVIDED ALWAYS THAT
COMPENSATION SHALL BE PAYABLE UNDER ONLY ONE OF THE ITEMS (1) TO (4) ABOVE IN RESPECT OF THE:
OWNER-DRIVER ARISING OUT OF ANY ONE OCCURRENCE AND

THE TOTAL LIABILITY OF THE INSURER SHALL NOT IN THE AGGREGATE EXCEED THE SUM OF RS. 2 LACK DURING:
ANY ONE PERIOD OF INSURANCE.
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EXCLUSIONS EXCLUSIONS
NO COMPENSATION SHALL BE PAYABLE IN RESPECT OF DEATH OR BODILY INJURY DIRECTLY OR INDIRECTLY WHOLLY OR IN PART ARISING OR RESULTING FROM OR TRACEABLE TO:
INTENTIONAL SELF INJURY SUICIDE OR ATTEMPTED SUICIDE PHYSICAL DEFECT OR INFIRMITY OR AN ACCIDENT HAPPENING WHILST SUCH PERSON IS UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS.

SUCH COMPENSATION SHALL BE PAYABLE DIRECTLY TO THE INSURED OR TO THEIR LEGAL REPRESENTATIVES.
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LIMITATIONS LIMITATIONS
THIS COVER IS SUBJECT TO:
THE OWNER-DRIVER IS THE REGISTERED OWNER OF THE VEHICLE INSURED THE OWNER-DRIVER IS THE INSURED NAMED IN THIS POLICY THE OWNER-DRIVER HOLDS AN EFFECTIVE DRIVING LICENSE
IN ACCORDANCE WITH THE PROVISIONS OF RULE 3 OF THE CENTRAL MOTOR VEHICLES RULES 1989, AT THE TIME OF THE ACCIDENT.

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LIMITSOF OFLIABILITY LIABILITY LIMITS

UNDER SECTION - II OF THE POLICY:
DEATH OF OR BODILY INJURY - SUCH AMOUNT AS IS NECESSARY TO MEET THE REQUIREMENTS OF THE MOTOR VEHICLES ACT, 1988.
UNLIMITED.

UNDER SECTION - II OF THE POLICY:

DAMAGE TO THIRD PARTY PROPERTY:
RS.6,000 / RS.7, 50,000 AS THE CASE MAY BE.

P.A. COVER UNDER SECTION III:

FOR OWNER-DRIVER (CSI):
RS.2,00,000.
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TYPESOF OFVEHICLES VEHICLES TYPES

THE INDIAN MOTOR TARIFF REVISED W.E.F. 1ST JULY 2002, FOR THE PURPOSES OF INSURANCE HAS CLASSIFIED THE MOTOR VEHICLES BROADLY INTO THREE CATEGORIES WITH FURTHER SUB CLASSIFICATION VIZ.
PRIVATE CARS MOTORIZED TWO WHEELERS AND COMMERCIAL VEHICLES.

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PRIVATECARS CARS PRIVATE

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MOTORIZED TWO WHEELERS

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The most expensive motorcycle $250,000, Dodge Tomahawk, V10 engine 505 c.c., 10 cylinders, max. speed of almost 400 mph.

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COMMERCIAL VEHICLES

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Neoplan Jumbo cruiser 2 in 1 bus double deck bus 170 passenger capacity

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WORLDS LONGEST TRUCK MIDNIGHT RIDER TRACTOR TRAILER LIMOUSINE

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CONDITIONS CONDITIONS
NOTICE SHALL BE GIVEN IN WRITING IMMEDIATELY FOR ANY ACCIDENTAL LOSS OR DAMAGE TO THE VEHICLE NOTICE SHALL BE GIVEN IN WRITING IMMEDIATELY OF ANY WRIT/ SUMMONS ALONG WITH COPY OF ANY PROSECUTION INQUEST OR FATAL INQUIRY NO ADMISSION, OFFER, PROMISE, PAYMENT WITHOUT THE WRITTEN CONSENT IN CASE OF THEFT, IMMEDIATELY INFORM THE POLICE NO ADMISSION, OFFER, PROMISE, PAYMENT, SHALL BE MADE WITHOUT THE WRITTEN CONSENT OF THE COMPANY..
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CONDITIONS CONDITIONS
THE INSURED SHALL TAKE ALL REASONABLE STEPS TO SAFEGUARD THE VEHICLE FROM LOSS OR DAMAGE AND TO MAINTAIN IT IN EFFICIENT CONDITION:
COMPANY SHALL HAVE FREE AND FULL ACCESS TO EXAMINE THE VEHICLE OR ANY PART THEREOF OR ANY DRIVER OR EMPLOYEE OF THE INSURED.
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CONDITIONS CONDITIONS
IN THE EVENT OF ANY ACCIDENT OR BREAKDOWN, THE VEHICLE SHALL NOT BE LEFT UNATTENDED WITHOUT PROPER PRECAUTIONS:
TO PREVENT FURTHER DAMAGE OR LOSS IF THE VEHICLE BE DRIVEN BEFORE THE NECESSARY REPAIRS ANY EXTENSION OF THE DAMAGE OR FURTHER DAMAGE SHALL BE ENTIRELY AT THE INSUREDS OWN RISK.
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CONDITIONS CONDITIONS
THE COMPANY MAY CANCEL THE POLICY BY SENDING SEVEN DAYS NOTICE & WILL RETURN THE PREMIUM PAID LESS THE PRO RATA PORTION THEREOF THE POLICY MAY BE CANCELLED BY THE INSURED ON SEVEN DAYS NOTICE:
PROVIDED NO CLAIM HAS ARISEN DURING THE CURRENCY OF THE POLICY INSURED SHALL BE ENTITLED TO A RETURN OF PREMIUM LESS PREMIUM AT THE COMPANYS SHORT PERIOD RATES..

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CONDITIONS CONDITIONS
SUBJECT TO RETENTION OF THE MINIMUM PREMIUM OF RS. 100 RS. 25 FOR VEHICLES SPECIFICALLY DESIGNED/ MODIFIED FOR USE BY BLIND/ HANDICAPPED/ MENTALLY CHALLENGED WHERE THE OWNERSHIP OF THE VEHICLE IS TRANSFERRED, THE POLICY CANNOT BE CANCELLED UNLESS:
EVIDENCE THAT THE VEHICLE IS INSURED ELSEWHERE IS PRODUCED.

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CLAIMS CLAIMS
TYPE OF LOSSES:
TOTAL LOSS (ACCIDENTAL)
WHEN INSURED VEHICLE IS DAMAGED TO THE EXTEND THAT REPAIRS IS UNECONOMICAL TO THE COMPANY OR COST OF RETRIEVAL EXCEEDS THE IDV. IF ASSESSED VALUE OF THE LOSS EXCEEDS 75% OF IDV (CTL).

TOTAL LOSS (THEFT)

WHEN PHYSICAL PRESENCE OF VEHICLE IS NOT THERE I.E. VEHICLE IS STOLEN.

PARTIAL LOSS (ACCIDENTAL)

REPAIRABLE LOSS OCCURRING DUE TO AN INSURED PERIL.

PARTIAL LOSS (THEFT)

THEFT OF PARTS/ ACCESSORIES. ACCESSORIES COVERED ONLY IN PRIVATE CARS.
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CLAIMSPROCEDURE PROCEDURE CLAIMS

IMMEDIATE NOTICE OF LOSS IN WRITING TO BE GIVEN FOR ACCIDENTAL LOSSES, ESTIMATE OF REPAIRS AND CLAIM FORM TO BE SUBMITTED FOR LOSS DUE TO THEFT OF VEHICLE, A COPY OF F.I.R. ALONG WITH A CLAIM FORM TO BE GIVEN TO APPOINT A SURVEYOR FOR ASSESSMENT OF LOSS/ AN INVESTIGATOR TO INVESTIGATE THE THEFT..
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CLAIMSPROCEDURE PROCEDURE CLAIMS

ORIGINAL R/C, D/L TO BE PRODUCED REPAIRS CAN BE STARTED IN CASE OF PARTIAL LOSS, AFTER INITIAL VERIFICATION BY SURVEYORS CLAIMS ARE SUBJECT TO COMPULSORY EXCESSES IN CASE OF TOTAL LOSS, LIMIT OF LIABILITY WILL BE IDV ANY DISPUTE REGARDING QUANTUM OF CLAIM AMOUNT HAS TO BE REFERRED TO AN ARBITRATOR TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER IS 12 MONTHS FROM DATE OF SUCH DISCLAIMER.
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THANKS

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