Motor Vehicle Insrance - Merlyn Coelho

MOTOR VEHICLE INSURANCE
Bachelor of Commerce
(Banking & Insurance)
Semester VI
(2012-13)
Submitted by
MERLYN COELHO
SMT.M.M.K. COLLEGE OF COMMERCE AND ECONOMICS

BANDRA (W)
MUMBAI-50
Bachelor of Commerce
(Banking & Insurance)
Semester VI
(2012-13)
Submitted
In Partial Fulfillment of the requirements
For the Award of Degree of Bachelor of
Commerce Banking & Insurance
By
MERLYN COELHO

BANDRA (W)
MUMBAI-50

BANDRA (W)
MUMBAI-50
CERTIFICATE
(2012 2013)
This is to certify that MERLYN COELHO of B.com (Banking &
Insurance) Semester VI (2012-13) has successfully completed the project
on MOTOR VEHICLE INSURANCE under the guidance of Dr.
Ashok Vanjani.
Date:Place:-Mumbai.
(Prof. Mr. Vishal R Tomar)

Course Co-ordinator
(Dr. Ashok Vanjani)

Principal
(Prof. Dr.A.C Vanjani)

Project Guide
External Examiner
DECLARATION
Date:-
I, Miss. MERLYN COELHO the student of B.Com (Banking &

Insurance) Semester VI (2012-13) hereby declare that I have completed
the project on MOTOR VEHICLE INSURANCE successfully.
The information submitted is true and original to the best of my

knowledge.
Thank you,
Yours faithfully,
MERLYN COELHO
ACKNOWLEDGEMENT
At the beginning, I would like to thank Almighty God for his shower of
blessing. The desire of completing this dissertation was given a way by
my guide Dr. A.C Vanjani. I am very much thankful to him for the
guidance, support and for sparing his precious time from a busy and
hectic schedule.
I am thankful to Dr. ASHOK VANJANI, Principal of Smt.M.M.K.

College. My sincere thanks to Prof. FARZIN DARUWALLA who
always motivated and provided a helping hand for conceiving higher
education.
I would fail in my duty if I dont thank my parents who are pillars of my

life. Finally, I would express my gratitude to all those persons who
directly and indirectly helped me in completing dissertation.
MERLYN COELHO
DECLARATION
Date:-
I the undersigned Dr.A.C Vanjani, have guided MERLYN COELHO

for her project, she has completed the project MOTOR VEHICLE
INSURANCE successfully.
I hereby, declared that information provided in this project is true as per

the best of my knowledge.
Thank you,
Yours faithfully,
Dr.A.C Vanjani.
INDEX
SR no.
TOPIC
Page no.
1.
Executive Summary
2.
Introduction
3.
Meaning of motor vehicle insurance
4.
History of motor vehicle insurance
5.
Fundamental principles of insurance
6.
Categories for the purpose of insurance
13
7.
Need for motor vehicle insurance
17
8.
Advantages of motor vehicle insurance
20
9.
Disadvantages of motor vehicle insurance
21
10.
Prenium rating and calculation
23
11.
Factors considered for premium rating
24
12.
Types of claims of motor vehicle insurance
32
13.
Vehicle insurance in India
38
14.
Current status of vehicle insurance companies
41
15.
Case study
43
16.
Bajaj allianzs motor insurance
46
17.
Article on motor vehicle insurance
51
18.
Conclusion
54
19.
References
55
EXECUTIVE SUMMARY
The Vehicle Act of 1939 introduced compulsory general insurance to
protect those who may get injured in an accident. However, the insurance
of damage to the vehicle is not compulsory. The tariffs Advisory
Committee regulates motor vehicle insurance business in India. Motor
vehicle Insurance is one of the largest non-life insurance business in the
world. All motor vehicles are required to be registered with the Road
Transport Authorities. They are also insured for third party liability. This
is based on the premise that the motor vehicles could be either cause
injury or be a subject of damage or injury. The Motor Vehicle Act was
modified in 1988 motor vehicles require compulsory insurance because
any motor vehicle can be parked or derived in public places.
Vehicle insurance, in exchange for a premium, will pay valid claims
advising out of tariff/collisions. It is insurance purchased for cars, trucks
and other road vehicle. Its primary use is to provide protection against
physical damage resulting from traffic collision and against liability that
could also arise there from.
Vehicle insurance originated in U.K where the first vehicle policy
insurance policy was introduced into England in 1894 to cover third party
liabilities. And in 1899 the policy was extended to cover the accidental
damage similar to what is known as comprehensive policy . In India the
Vehicle Act was passed in 1939 and in 1946 the third party insurance was
introduced compulsory.
The need for compulsory vehicle insurance is obvious. There has been a
phenomenal rise in the vehicle accidents in the last 4-5 years. Much of
these are attributed to the sudden in the number of vehicles every before
being driven n roads has to be compulsorily insured. The vehicle
Motor vehicle insurance
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insurance policy represents a combined coverage of the vehicles

including accessories, loss (or) damage to his property (or) life and the
third party coverage.
OBJECTIVE OF STUDY
To understand motor vehicle insurance market in India.
To look out for strength and weakness of vehicle
insurance
industry.
To know need and importance of motor vehicle insurance.
To understand claim and premium procedure.
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INTRODUCTION
MEANING OF INSURANCE
Insurance is a policy from a large financial institution that offers a
person, company, (or) other entity reimbursement (or) financial
protection against possible future loses (or) damages.
It is important to understand for anybody that is considering buying an

insurance policy (or) simply understanding the basics of finance.
Insurance is a hedging instruments used as a precautionary measures
against future contingent loss. The instrument used for managing the
possible risks of the future.
It is bought in order to hedge the possible risks of the future which

may (or) may not take place. This is mode of financially insuring that if
such an incident happens then the loss does not affect the present wellbeing of the property insured. Thus though insurance, a person buys
security and protection. A simple example will make the meaning of
insurance easy to understand.
Example
A biker is always subjected to the risk of head injury. But it is not
certain that the accident causing him the head injury would definitely
occur. Still, people riding bikes cover their heads with helmets. This
helmets in such cases acts as insurance by protecting him/her from any
possible danger. The price paid was the possible inconvenience (or) act of
wearing a helmet, i.e. equivalent the insurance premium paid, in return
for relatively small, regular payments to the insuring body (or) insurance
company. Insurance can range from life to medical to generate
[residential, commercial property, natural incidents, burglary, etc.].
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DEFINITION OF INSURANCE
A payment of compensation for specific potential future losses in
exchange for a periodic payment
Insurance is designed to protect the financial well-being of an

individual
company (or) other entity in the case of unexpected loss.
Some forms of insurance are required by law, while others are optional.
Agreeing to the terms of insurance policy creates a contact between the
insured and the insurer.
In exchange for payments from the insured (called premiums), the

insurer agrees to pay the policy holder a sum money upon the occurrence
of a specific event. In most cases, the policy holder pays the rest.
Example
Insurance is including vehicle insurance, health insurance, disability
insurance of life and business insurance. A contract whereby, for
specified consideration, one party undertakes to compensate the other for
a loss relating to a particular subject as a result of the occurrence of
designated hazards.
MEANING OF MOTOR VEHICLE INSURANCE

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The meaning of motor vehicle insurance is very simple as it comprises of

two words i.e. motor + insurance and motor means a vehicle of any sort
which is running on the road and Insurance means to provide cover for
any unforeseen risk which may occur in day to day life. Then another
question arises what is unforeseen risk? You are walking on the road a car
hits you from the back, you get a fracture in your leg and while coming
out you never thought that you will have an accident but it happened and
this is unforeseen risk i.e. a risk of happening of an event which may
happen or may not happen. So Motor Insurance as you all know is the
insurance for motor vehicles, there are various risks which are related
with the loss or damage to motor vehicles like theft fire or any accidental
damage so as to provide coverage for this motor insurance is taken.
DEFINITION OF MOTOR VEHICLE INSURANCE

Vehicle Insurance is a contract between the insured and the insurer in
which the insurer promises to indemnify the financial liability in event of
loss to the insureds vehicle.
HISTORY OF MOTOR VEHICLE INSURANCE

If we see in real life we can say that Motor Insurance is an important
part of General Insurance; it is the fascinating branch of insurance. This type
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of insurance has come into existence from United Kingdom in the early part
of this century. As you must be surprised to know that the first Motorcar was
introduced in England in 1894. The first motor policy to provide coverage
for third party liability was came into existence in 1895. Now you must be
wondering what is a third party liability? Third party liability includes third
party and liability incurred towards third party. Third Party means any party
other then owner /driver or the government, any liability occurring towards
third Party due to use of motor vehicle is third party liability. It can be in the
form of bodily injury to third party or damage to third party property.
So at the beginning, only third party insurance came into existence but
later on, in U.K they realized the importance of insurance in terms of motor
and with this an accidental comprehensive policy also came into existence
and later on the lines of U.K. we started using approx the same policy.
In 1903 the Car and General Insurance Corporation limited was
established mainly to transact motor insurance, after this company a lot
many other companies has come into existence to transact this business. It
has been realized that after World War I, there was a considerable increase in
the number of vehicles on the road and when we have the number of the
vehicles on the road there is an increase in the number of accidents. As the
concept of insurance was not that much in existence so lot of accidental
damages were not at all recovered and the motorists faced a lot of problems
for getting their treatments and damages to their vehicles. After realizing this
the introduction of compulsory third party insurance through the passing of
the Road Traffic Acts 1930 and 1934 was done. Later on these Acts have
been consolidated by the Road Traffic Act 1960.
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In 1939, India has also realized the importance of Motor Insurance

and Motor Vehicle Act was passed and came into existence in 1939. Earlier,
only few people knew about motor insurance but later on compulsory third
party insurance was introduce by the Act on 1st July 1946. We in India
follow the same practice as that of U.K. Today we follow a set Tariff
provided by Tariff Advisory Committee where as now in U.K. Tariff
business have been withdrawn. As Motor Vehicles Act laid the provisions in
1939 and it required some amendments that were implemented by the Motor
Vehicles Act 1988 and it became effective from 1st July 1989 and thats how
the insurance concept has come to India.
As you all know in our country crores of vehicles are plying on the
road and lot of accidents occurred daily, and due to these accidents damages
to material and third party occurs. Third party is any person other then the
owner. But the question arises how the loss is to be compensated? After
realizing all these problems it was made mandatory for all the vehicles
which are plying on the road to have an insurance which can provide
coverage to general public against the risk of loss or damage to motor
vehicles and with this the motor insurance concept has come into existence
and Act made this insurance compulsory for everyone those who are driving
the vehicle on the road so it become quite popular among people and than
motor insurance policies become available to provide a comprehensive cover
and a third party liability cover.
FEATURES
INSURANCE
OF
MOTOR
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VEHICLE
Assured best deals on your Motor Insurance

Fair and Faster claims settlement
Discounts on back to back accident free years
Instant online renewal and issuance of your Motor Policy
Quick service on breakdown/accident with instant claim status updates
24x7-customer assistance for all product queries and claims information.
OTHER SALIENT FEATURES
For claims free experience, discount available on subsequent

Renewal
Discount available if voluntary excess opted for Discount available
for membership with approved automobile association
Discount available for installing approved anti-theft device
Depreciation, for the parts needing replacement in the accident is defined
FUNDAMENTAL PRINCIPLES OF INSURANCE
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1) INDEMNITY :
A contract of insurance contained in a fire, marine, burglary or any
other policy (excepting life assurance and personal accident and sickness
insurance) is a contract of indemnity. This means that the insured, in case of
loss against which the policy has been issued, shall be paid the actual
amount of loss not exceeding the amount of the policy, i.e. he shall be fully
indemnified. The object of every contract of insurance is to place the insured
in the same financial position, as nearly as possible, after the loss, as if he
loss had not taken place at all. It would be against public policy to allow an
insured to make a profit out of his loss or damage.
2) UTMOST GOOD FAITH:

Since insurance shifts risk from one party to another, it is essential
that there must be utmost good faith and mutual confidence between the
insured and the insurer. In a contract of insurance the insured knows more
about the subject matter of the contract than the insurer. Consequently, he is
duty bound to disclose accurately all material facts and nothing should be
withheld or concealed. Any fact is material, which goes to the root of the
contract of insurance and has a bearing on the risk involved. It is only when
the insurer knows the whole truth that he is in a position to judge (a) whether
he should accept the risk and (b) what premium he should charge.
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If that were so, the insured might be tempted to bring about the event
insured against in order to get money.
3) INSURABLE INTEREST:
A contract of insurance effected without insurable interest is void. It
means that the insured must have an actual pecuniary interest and not a mere
anxiety or sentimental interest in the subject matter of the insurance. The
insured must be so situated with regard to the thing insured that he would
have benefit by its existence and loss from its destruction. The owner of a
ship run a risk of losing his ship, the charterer of the ship runs a risk of
losing his freight and the owner of the cargo incurs the risk of losing his
goods and profit. So, all these persons have something at stake and all of
them have insurable interest. It is the existence of insurable interest in a
contract of insurance, which distinguishes it from a mere watering
agreement.
4) CAUSA PROXIMA:
The rule of causa proxima means that the cause of the loss must be
proximate or immediate and not remote. If the proximate cause of the loss is
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a peril insured against, the insured can recover. When a loss has been
brought about by two or more causes, the question arises as to which is the
causa proxima, although the result could not have happened without the
remote cause. But if the loss is brought about by any cause attributable to the
misconduct of the insured, the insurer is not liable.
5) RISK:
In a contract of insurance the insurer undertakes to protect the insured
from a specified loss and the insurer receive a premium for running the risk
of such loss. Thus, risk must attach to a policy.
6) MITIGATION OF LOSS:
In the event of some mishap to the insured property, the insured must
take all necessary steps to mitigate or minimize the loss, just as any prudent
person would do in those circumstances. If he does not do so, the insurer can
avoid the payment of loss attributable to his negligence. But it must be
remembered that though the insured is bound to do his best for his insurer,
he is, not bound to do so at the risk of his l
7) SUBROGATION:
The doctrine of subrogation is a corollary to the principle of
indemnity and applies only to fire and marine insurance. According to it,
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when an insured has received full indemnity in respect of his loss, all rights
and remedies which he has against third person will pass on to the insurer
and will be exercised for his benefit until he (the insurer) recoups the amount
he has paid under the policy. It must be clarified here that the insurer's right
of subrogation arises only when he has paid for the loss for which he is
liable under the policy and this right extend only to the rights and remedies
available to the insured in respect of the thing to which the contract of
insurance relates.
8) CONTRIBUTION:
Where there are two or more insurance on one risk, the principle of
contribution comes into play. The aim of contribution is to distribute the
actual amount of loss among the different insurers who are liable for the
same risk under different policies in respect of the same subject matter. Any
one insurer may pay to the insured the full amount of the loss covered by the
policy and then become entitled to contribution from his co-insurers in
proportion to the amount which each has undertaken to pay in case of loss of
the same subject-matter.
CATEGORIES FOR THE PURPOSE OF INSURANCE

Private Car:
Motor vehicle used for social, domestic and pleasure purposes (excluding
the carriage of goods other than samples) of the insured or anyone else with
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the insureds knowledge and consent excluding use for hire or reward,
racing, pace making, speed testing, and use for any purposes in connection.
Two Wheeler:
Motorized two wheeler (with or without side car) Used for social,
domestic, and pleasure purposes (excluding The carriage of other than
samples) of the insured or anyone else with the insureds knowledge and
consent but excluding use for hire or reward, racing pace making, reliability
trial, speed testing, and use for any purpose in connection with the motor
trade.
Commercial Vehicle:
Motor vehicles other than as mentioned in the lists 1 and 2 above:
Goods carrying vehicles:
Public carries other than three wheelers.
Private carries.
Goods carrying motorized three wheelers and motor
motorized pedal cycles.(private carriers)
Goods carrying motorized three wheelers and motorized pedal
cycle.(public carriers)
Trailers: Any truck, car, carriage or other vehicle, including

agriculture implements, without means of self population, drawn or
hauled by any self propelled Vehicle is referred to as trailer for the
purpose of these guidelines.
Vehicles used for carrying passengers:

i.
Vehicles carrying passengers for hire and reward.
ii.
Vehicles carrying passengers other than hire and reward.
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Miscellaneous vehicles:
Agriculture and forestry vehicles:
Special purposes vehicles other than Goods and passengers carrying
the own damage cover for any special purpose vehicles, fitted with
specialty equipments whose value is more the value of vehicle itself,
is not to be underwritten in the motor department.
Motor Trade: road transit risks only.
Motor Trade: road risks only.
Motor Trade: internal risks only.
The vehicle insurance generally includes:

Loss (or) damage by accident, fire, lightning, self ignition, external
explosion, burglary, housebreaking (or) theft, malicious act. Liability for
third party injury (or) death, third party property and liability to paid driver
on payment of appropriate additional premium, loss (or) damage to
electrical (or) electronic accessories.
The vehicle insurance does not include:
Consequential
loss,
depreciation,
mechanical
electronically
breakdown, failure (or) breakage.

When vehicle is used outside the geographical area.
TYPES OF POLICIES
Third party liability policy:

Legal liability for third party personal injury (including injury to
passengers) and third party property damage, which is unlimited in
amount.
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Emergency treatment fees for those injured or requiring hospital

treatments.
Damage to the vehicle itself by fire, theft or attempted theft.
Legal expenses incurred by the insured can also be reimbursed with the
written consent of the insurer.
Comprehensive Policy:
This policy covers the entire range of risks as defined in the tariff.
The risks covered under this policy includes loss due to fire,
explosion, burglary, theft, earthquake, flood, cyclone, terrorist
activities, malicious acts, riots, strikes, landslides, accidental external
means, transit by road, inland, waterways, lift and air.
The losses due to mechanical breakdowns, failure, breakages, wear

&tear, depreciation, consequential losses, overloading, strain of
commercial vehicles are not under this policy.
The policy provides a limited amount of cover if personal items
belongings to the policyholder or to passengers are damaged by theft or
accidental damage. The is a limit to the amount payable for such items,
normally Rs. 1,000 to 2,000. Payments are usually made to the
policyholders even if a lost item belongs to passengers.
If the motor vehicle is disabling, the insurer also bears a reasonable cost
to the vehicle to a place of repairs. This cost is covered up to Rs. 300 in
case of motor cycle and Rs. 2,500 for other vehicles. The repairs can be
carried out without authorization of the insurer to the extent of Rs.150
for motor cycle and Rs.500 for other vehicles.
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In case of commercial vehicles the insured has to bear a sum of Rs.1,

500 in respect each accident compulsorily. It is called compulsory
excess.
NEED FOR MOTOR VEHICLE INSURANCE
In Indian conditions, the vehicles are subject to many hazards like

potholes, open manholes, puddles, untarred roads, traffic management
system, poor pedestrian management, and absence of footpaths for
pedestrians, jaywalkers, increasing number of accidents etc. which
accentuate the need for automobile insurance. Some of these hazards are
discussed below:
FOOTPATHS
As footpaths are encroached by hawker, pedestrians have a tough time
dodging vehicles to reach the other end of the road. Large potholes and
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manholes are a common sight and during the monsoon the situation can get
only worse causing untold damage to your vehicle.
DRUNKEN DRIVING
Drunken driving is another very common feature. Be it a car, a twowheeler, or even a truck, drunken driving is one of the major reasons for
increase in accidents. Through drunken driving is a punishable offence the
penalty has hardly proved to be a deterrent.
RECKLESS DRIVING
Besides, rash driving by youngsters is another of the dangerous
realities that you should consider. Majority of the youngsters drive
recklessly caring little for the law, causing serious accidents resulting in loss
of life or limb.
THEFT
Cases of stolen cars are on the rise. Experts in stealing cars are well
aware of the loopholes that can be exploited and accordingly have also been
successful I manipulating with the chasis number of vehicles in order that
they are not traced.
FIRE
Other than these there is also a danger of fire or theft of vehicle.
Therefore, vehicle insurance under such unsafe conditions is a must not only
to cover the financial liability that may arise from an accident in which the
other party is injured. The cost of repairs that you would have to pay to the
other party in case of an accident may be exorbitant. Besides if the accident
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involves hospitalization too, the expenses can go through the roof. It would
be a great burden if all these costs are borne by the individual. The insurance
company can indemnify against such losses and the financial liability arising
thereof.
If the auto insurance is not made compulsory, there is a strong
possibility that some may not buy these voluntarily. This is because most of
them think that the cost of accidents or losses will fall on others or they
underestimate the risk the loss. Economic arguments for compulsory
insurance laws in these people to consider more of the costs of their actions
when deciding whether to drive, what kind of car to buy, how safely to drive,
and so an.
The economic rationale for insurance may be that it affects peoples decision
to drive. Some people are likely to forgive driving if the insurance is made
compulsory insurance is made compulsory since it acts as a financial
disincentive. Another could be that it encourages people to drive safely,
which may reduce of risk. Those who criticize compulsory auto insurance
plead that it results in lowering the disposable income or it results in
lowering the disposable income or it results in a shift of income from lower
group to the higher group. for dubious advantages.
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ADVANTAGES
Accidents Happen: accidents happen on the road all the time and
whether you are involved in a small bang up or a serious crash, having
auto repair insurance can be one less thing to worry about after the stress
and shock inevitable after an accident. Not only can auto repair
insurance give you peace of mind when you are bout on the road,
depending on the level of cover you choose, you can also be covered for
repairs due to environment accidents such as water damage or tree
branches falling on your car.
Your Vehicle Will Be Longer: if you are someone who seldom buys a
new car, if something happens to your vehicle then you are going to
want it fixed properly. When you have auto repair insurance you can be
sure you will be able to afford the best possible repairs for your vehicle
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if the worst were to happen. This means you dont have to waste time
and money doing DIY repairs to your vehicle, and can instead be sure
the repairs carried out on your car will be of a high quality.
Cover is Inclusive: if you shop around for auto repair insurance you
will be able to find very inclusive cover. Affordable auto insurance
doesnt mean you have to miss out on any extras, and your policy can
easily include a loan vehicle, and gap insurance to cover the additional
costs of replacing a new vehicle such as dealer delivery or registration
you may also be able to negotiate insurance discounts on your auto
repair policy if you are a safe driver, have a good driving record and are
not in a high risk category, i.e. not under 25 years old.
DISADVANTAGES
High cost:
the plain and simple fact is that comprehensive auto
insurance is expensive. The insurer wants to hedge their liability against

the entire above situation, and if a customer is in a high-risk, the
premium costs for the policy can go even higher. Buyers need to keep a
close eye on their premiums when buying comprehensive auto insurance
to make sure they are not over-investing in keeping a vehicle streetworthy.
A lot of extras: another feature of comprehensive auto insurance is that it
tends to include a lot of features that buyers will end up paying for. Take
a look at the attached insurance riders on a policy, such as provisions
for emergency roadside service or rental car options, and cancel these as
necessary to avoid being overcharged, unless you think that you will need
these services every time your vehicle breaks down.
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Over-hyped policies: theres nothing worse than paying a lot of money

for car insurance and then finding out that it doesnt cover the specific
events that you are submitting a claim for policy. That can be the case
with policy. That can be the case with policies that bill themselves as
comprehensive without truly covering the common situations a driver
may face on or off the road. Read the fine print in comprehensive car
insurance agreements to make sure that your claims will be covered when
they occur.
Other alternatives: some drivers may not know that you dont need
comprehensive auto insurance to cover basic damages to your vehicle. In
some cases, insurance types billed as basic collision can take care of
road costs without all of the other extras. Collision coverage options are
good for cars that are garaged and less vulnerable to vandalism or other
events.
LIABILITIES
Any liability arising in respect of death or bodily injury to any person
including owner of the vehicle or his authorized person in the carriage.
Any liability incurred in respect of damage to any person or property of a
third party.
Any liability incurred in respect of the death or bodily injury of any
passenger of a public service vehicle.
Liability for bodily injury or death of passengers who are carried for hire
by reason of a contract of employment.
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The policy should carry a no faults liability limited to a sum of

Rs.50,000 in case of death, Rs.25,000 in case of permanent disability and
Rs.6,000 in case of damage to the property. No fault liability is based on
the premise that the injured party does not have to prove any fault in
order to claim this amount under the policy.
War (or) nuclear perils and drunkard driving.
PREMIUM RATING AND CALCULATION

CALCULATION OF PREMIUMS
In case of Comprehensive Insurance Cover, for the
purpose of premium, vehicles are categorized as
follows:
a)
PRIVATE CAR
This is used for personal purpose. The premium is computed on the

following basis:
Geographically area of use and cubic capacity
Value of the vehicle.
Accessories are to be specified separately under electrical and nonelectrical items.
b)
TWO-WHEELER
It is used for personal only. Premium is calculated on cubic capacity

and value of vehicle. Accessories are to be specified. Theft of
accessories is not covered, unless the vehicle is stolen at the same time.
c)COMMERCIAL VEHICLE
This is a vehicle used for hire and is classified as follows:
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Goods-carrying commercial vehicle: In this case premium is calculated

on carrying capacity-gross vehicle weight and value of the vehicle.
Accessories extra, as specified.
Passenger-carrying commercial vehicle: In this case premium is
calculated on carrying capacity of the vehicle-number of passengers and
value of the vehicle. Accessories extra, as specified.
FACTORS CONSIDERED FOR PREMIUM RATING

Vehicle insurance pricing has always been a matter of controversies to
the consumers, service providers and regulators. Vehicle claims have
increased significantly in India since last 10 years. Vehicle insurance rates
charged to different customers reflect differences in the discounted in the
expected costs of providing coverages. In order to classify different
persons into homogeneous group with respect to expected claim costs,
insurers generally use rate classification system that includes:
Drivers classes that reflect the characteristics of individual insured,
and
Territorial rating to reflect expected differences in claims costs for
people that live in different geographical areas (holding individual
characteristics constant).
Of course, physical damages rates also depend upon the value and type of
vehicle. Liability insurance rates sometimes also depend on the type of
vehicles, given evidence that certain vehicles are more likely to be involved
in at-fault accidents.
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The major factors considered in establishing driver classes and the use
of territorial rating factors are:
Drivers Classes: The parameters are Age, Gender and Martial status,
Use of vehicle, driving education and driving record. The insured in
younger age group, the males, the married ones and new and
inexperienced drivers have on averages high accidental claims. The
loading on the premium increases by the numbers and amount of
accident claims.
Territorial Rating: Large cities have higher average claims costs
followed by suburban areas, smaller cities and smaller towns or rural
areas. In India, the geographical areas have been classified into Group
A and Group B.
Vehicle Classification: Vehicles are generally classified on the basis of
its technical specification, its value or use.
Technical Specification: the typology of a vehicle is more or less based
on its cubic capacity or gross vehicle weight and its carrying capacity.
Heavier vehicles are more exposed to accidents since the restaurant
damages they incur are more. Similarly, vehicles with higher carrying
capacity expose more passengers to risk. Therefore, heavier vehicles
attract higher premium rate. In private cars, taxis and motorcycles, the
factor is the cubic capacity. The more the cubic capacity, the higher
premium rate. Whereas in goods-carrying commercial vehicles and
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passengers-carrying commercial vehicles, the criteria are gross vehicle

weight and passenger carrying capacity respectively.
The Value of the Vehicle: The premium rate is applied on the value of
the vehicle to arrive at the premium payable. It is the owner/ insured
who has to select a value of the vehicle and declare the same for
insurance. This value is known as the insureds estimated value (IEV) in
motor insurance and represents the sum insured.
Normally, this value is arrived at by considered the age of the vehicle
and its present purchase price. A Maruti 800 was purchased in 1998 for
Rs. 1, 80,000/- Considered the conventional 10% depreciation each year
and the present purchase price of a similar vehicle at Rs. 2, 00,000/- the
IEV for year 2000 is Rs. 1, 80,000/- less 20% for Rs, 2, 00,000= Rs. 40,
000
IEV= Rs. 1, 40,000
However, this is not sufficient for deriving the correct IEV of the
vehicle in terms of vehicle insurance. In vehicle insurance, the basis for
payment of claims is the market value of the vehicle at the place and
time of loss. This market value may be understood as, the price that the
vehicle would fetch in the second-hand market. The 1998 model
mentioned above may fetch a price of say, Rs. 1, 50,000. In situations,
the correct IEV for the Maruti of 1998 model should be Rs. 1, 50,000.
The Use of the Vehicle: risk exposure varies in relation to the use the
vehicle is put to. Private car are lesser exposed than taxis, as the latter is
used extensively for maximum revenue. Taxis therefore attract a higher
premium rate. Similarly, goods carrying vehicles, which are used as
Page 25
carries and transport, only their owners goods attract a lower premium,
than those used as carriers for transporting goods for hire.
The Geographical Area of Operation: The area of operations of a
vehicle has a direct bearing on the premium rate, this is so because,
certain areas of operation are more congested with high densities of
population and road traffic than others and poses higher exposure to
accidents. For this purposes, the traffic differentiates two zones in India,
i.e., Zone A and Zone B, for private cars and taxis. Zone A represents the
Chennai region and Mumbai city. In Zone B, the densities of population
and road traffic are more and more hence attract a higher premium rate.
Such differential rating does not apply to commercial vehicles such
as trucks and buses, as these vehicles normally travel throughout India
for their operation. However, a discount is allowed on the premium for
commercial vehicle used as contract carriage, school buses, public and
private buses used for carrying passengers/workers and operate within a
radius of 501 kilometers from the city limits.
Details of states under Zone A and Zone B
Andhra Pradesh
Goa, Daman,Diu
Gujarat
Karnataka
Kerala
Madhya Pradesh
Zone A
Andaman & Nicobar
Arunachal Pradesh
Assam
Bihar
Delhi
Haryana
Page 26
Zone B
Mumbai city
Nagaland
Orrisa
Punjab
Rajasthan
Sikkim
Maharashtra
(excluding Mumbai city)
Pondicherry
Tamil Nadu
Himachal Pradesh
Lakshadweep Island
Manipur
Mizoram
Tripura
Uttar Pradesh
West Bengal
The claims experience: Unfavorable claims experience is obviously a

bad risk, the tariff has adopted a system called the No claim discount,
to give discount for good claim experience and a loading for bad
experience. The claim experience of expiring years policy is the basis
for allowing discount or charging a loading.
MOTOR VEHICLE INSURANCE CLAIMS

DOCUMENTENTATION:
Following Documents generally required for settlement of motor claims.
However depending on the merits of the case, a particular document may not
be an alternate document could be used to serve the purpose of the insurer.
1. Claim form required to be completed.
2. Registration Certificate: the details usually verified from the RC can
instead be obtained from purchase details of the vehicle if the
circumstances so warrant.
3. Driving License: as per policy condition the driver is required to hold an
effective driving license both in terms of the period validity and the class
of vehicle that is being driven at the time of the accident. The MV Act
provides for a grace period of 30 days after expiry of a license during
Page 27
which period the license may be accepted as effective, provided the

holder has not been qualified from holding a license. For loss sustained
by parked vehicles, driving license may be relevant.
4. Load Challan/Trip Sheet: to verify that the load carried was within the
permissible limits and trip sheet giving details of number of passengers
carried in the vehicle.
5. Fitness Certificate: the fitness certificate indicates the roadworthiness of
a commercial vehicle.
6. Report to police: a copy of the FIR and Panchanama is required
wherever third parties are involved in an accident.
7. Survey Report: surveyor ascertains the damage, assess the quantum of
payable claim, verify vehicular documents and confirm that the
loss/damage being claimed for is in conformity with the narration of the
accident. Wherever replacement of p [arts is allowed surveyors with the
narration of the accident. Wherever replacement of parts is allowed
surveyors physically verify serial numbers as appearing on major parts,
which carry such numbers.
PROCEDURE:
In order to proceed for claim, the insured immediately informs the
insurer.
The policy documents are verified to ensure that the policy is force and
the loss is entered in the claims register and the claim form is issue to the
insured to be completed and returned.
The insurer, immediately on receipt of intimation of loss, either in writing
or over telephone, a surveyor is appointed based on the estimate.
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In case of major accidents, the insured would be asked to arrange for

photographs of the vehicle at the spot of the accident, showing all the
external damages and the number. Plate of the vehicle. The photo
expenses are to be reimbursed upto Rs. 500. Alternatively, the insured
may inform the nearest office of the insurer to arrange for such
photographs.
The survey report is examined and settlement is done based on surveyors
recommendations.
If reinspection after repair is considered necessary it may be conducted
by the same surveyor who has assessed the loss.
Conventionally, the payment is made to the repairer directly.
If for any reason, to be specified, the driving license cannot be produced,
the claim may be considered only on the basis on non-standard basis.
SALVAGE DISPOSAL :
Damages automobile parts replaced as part of a motor insurance claim
shall be kept in safe custody by the garage or company. Company shall
arrange disposal as per prescribed norms set out herein.
A salvage committee shall be constituted to handle salvage issues and
the same usually comprise of:
o A designated senior manager
o Designated claims manager
o Finance/accounts manager
Damaged items lying with the garage shall be collected by the company
on the regular basis and kept at a designated yard produced by the
company.
Salvage items shall be available for sale to third parties on as is where
is basis.
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The shall be kept on display for inspection by prospective buyers, who

will be asked to submit their offers iv sealed envelopes together with a
tender deposits to be decided by the claims committee based on the
latters assessment of the expected salvage valve.
The salvage buyers submissions shall be opened in the presence of the
salvage committee. The salvage committee shall exercise their
discretion in the sale of the salvage.
The approved bidder shall be advised to make payments against cash
receipt in cash or, by demand draft, or, bankers cheque favoring the
company within a stipulated period failing which the bidder for the
salvages together with his tender deposit.
TYPES OF CLAIMS OF MOTOR VEHICLE INSURANCE

PARTIAL LOSS CLAIMS FOR MOTOR INSURANCE.
1. Submission of bills/cash can be dispensed with for claims upto
Rs. 50,000 in respect of private cars and two wheelers only, subject
to.
The survey report correctly indicating the cost of parts allowed for
replacement
Claims being settled on the basis of a report of reinspection after repairs
by the surveyors certifying that the repairs and replacements have to be
obtained and verified.
2. If surveyor confirm replacement of the engine and chassis if

Page 30
allowed for replacement and indicates the new numbers,

claims may be settled whilst simultaneously advising the insured
that.
As per the provision of the Motor Vehicles Act, the new numbers have to
be incorporated in the RC book.
Insurance company be informed about the incorporation of the new
numbers in the RC book for endorsing on the policy document to
facilitate settlement of future claims.
Where the vehicle is totally damaged or when the net cost of repairs is
almost close to the market value of the IEV the claim could be considered
to be a total loss. Such total loss claims should be encouraged on net of
salvage basis i.e., salvage being retained by the insured and an
appropriate amount towards salvage value as determined by the surveyor
in consultation with the company be deducted from the total loss amount.
However, if the insured to retain the salvage, arrangements should be
made for the safe custody is informed vehicle to prevent further loss or
damage. The RTO should be informed by Registered AD post. An
inventory on the major parts should also be taken for its disposal as per
companys guidelines for disposal of salvage.
THEFT CLAIMS FOR MOTOR INSURANCE.

1. Partial Loss due to Theft: Theft of parts/ accessories from a vehicle
should be reported to the police immediately by the insured. If parts are
found missing or changed after recovery of stolen vehicle this be
recorded in Panchanama / recovery memo. Final police investigation
Page 31
report will also be required. However, if the competent authority is

satisfied about the genuineness of the loss, final investigation report may
be waived provided the insured sends a registered AD letter to the
SP/ACP requesting that the insurer should be informed of any recovery.
2. Total Loss due to Theft: Unless claims setting authority is fully
satisfied, investigation of the theft to be arranged by an investigator who
may be appointed with specific terms of reference.
3. The following documents should be collected from the insured in
addition to a certified copy of the FIR, for considering on account
payment of the admissible claim after expiry of 90 days from the date of
loss.
Surrender of the Registration Book and the Tax Book to the insurer duly
transferred in the name of the insurers. The RTO is to be informed about
the theft of the vehicle and this should be entered in Tax Book so that
further tax will not accrue.
Letter of indemnity and subrogation.
Ignition keys of the vehicle.
Certificate of insurance and the original insurance policy, if not stolen
with the vehicle.
Specially worded discharge voucher.
4. The balance payment may be released on receipt of the Final Police
Investigation Report or on expiry of a suitable waiting period from the
date of the on account payment, after obtaining the discharge voucher
in full and final settlement of the claim.
5. the police and the registration authorities and the NCRB should be
notified in writing about disposal of the claim on total loss basis
Page 32
following theft of the vehicle. They should be requested to advise from

the police regarding recovery of the vehicle, necessary steps for taking
possession of the vehicle from the police custody should be taken and, if
necessary, an advocate should be appointed for filing recovery
application in the court.
6. Municipal Authorities, where applicable and the RTO should be advised
by registered letter with Acknowledgement. Due to record non use of
the vehicle on account of theft and about the cancellation of the Insurance
Certificate.
7. If the vehicle is recovered subsequently, the insured will have the option
to repay the claim amount already paid and retain the recovered vehicle.
If the vehicle is found damaged, the insured will be indemnified against
loss of damage. The insured should be advised to obtain recovery memo
from the police and to get the vehicle surveyed at the police station
before taking delivery, as mentioned under loss theft claims.
8. In cases of criminal breach of trust each case should be dealt with an
individual basis depending upon facts of each case and subject to legal
opinion.
THIRD PARTY BODILY INJURY CLAIMS: FATAL AND NON

FATAL FOR MOTOR INSURANCE.
1. Intimation of Claim: Intimation about an accident resulting into third
party claim is received through various sources:
Insured directly or by mention in passing whilst lodging own damage
claim.
Claimant
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MACT/Courts by notice
Through accident report from police in Form 54 prescribed under Central
Motor Vehicles Rules, 1389.
2. Investigation: Investigation about the accident to collect the relevant

data to quantify reasonable and just compensation as per the specified
formats in respect of all third party claims is mandatory. The companies
should ensure that this investigation helps the insurance company in
finalizing out of court settlement at the earliest.
3.
Appointment of Advocate: On receipt of notice from the MACT a

competent advocate from the panel may be appointed if necessary. The
following relevant documents and information should be given to
him/her immediately to enable him /her to draft written statement (w/s)on
behalf of the company and ensure that the proper defense is taken where
necessary and no frivolous statements are made.
4. Policy Copy: Duly certified true copy of the complete policy with the
relevant clauses and endorsements as actually attached with the original
issued covering the vehicle at the material time of accident.
5. Driving license: In case it has been observed that driver was not duly
licensed the necessary information should be given to the advocate.
Through under Section 149(2) of the MV Act, 1988, Insurance Company
has no liability if the driver is not duly license rests on insurance
Page 34
company and this obligation is required to be discharged fully to the

satisfaction of the court.
6. Compliance Policy Conditions: If a breach of a specific condition has

been observed it should be brought to a notice of the Advocate to enable
proper defense if possible.
7. a) Written statement on behalf of the insurance company incorporating

all defenses available as enumerated under Section 149 of MV Act should
be promptly filed.
b) Wherever necessary when there is collusion between the insured and
the claimants or when the insured fails to defend claim, the companys
advocate must be instructed to obtain the MACTs permission under Section
170 of the MV Act to defend the claim on merits.
8. Payment of No Fault Liability Claims: If Liability under affected

policy is established after taking into consideration the foregoing
defenses, company should take immediate steps to deposit No Faulty
Liability amount as per Section 140 of the MV Act, 1988.
9. payment of Fault Liability Claims: Companies may initiate action to

settle such claims either through
Jald Rahat Yojna
Lok Adalats
Page 35
Direct negotiation with the claimant through DICC & RICC.
10.Jald Rahat Yojna: Section 152 of MV Act, 1988 authorizes insurance

company to settle motor third party non-fatal bodily injury claims where
claimant is an adult without claimants taking recourse to MACTs.
Industry has already Launched the Scheme since 1991.
VEHICLE INSURANCE IN INDIA

Vehicle insurance in India is a compulsory requirement for all new
vehicles used whether for commercial (or) personal use. The insurance
company has tie-ups with leading automobile manufactures. They offer their
customers instant vehicle quotes. Vehicle premium increases with the rise in
the price of the vehicle. The claim of the vehicle insurance in India can be
accidental, theft claims (or) third party claims. Documets required would
include duly signed claim form, FIR copy, driving license copy, original
estimate and policy copy.
India is witnessing a boom in car and bike sales and it could not have
come at a better time. The burgeoning middle class and the improvement in
roads and highways have only accentuated the vehicle sales. The spill over
Page 36
effect of this boom has let the motor insurance portfolio of insurance
companies also on the growth highway.
SCENARIO PRE-2001 ERA - DEALER'S AND INSURER'S
PERSPECTIVE
In fact, it will be interesting to know what happened prior to 2001 and I
would like to highlight some of the issues prevalent at that time. Let's first
look at it from the dealers' perspective. The concerns were
They used to get commission as little as 5% and that too in non-financed
cars.
Only 18% of the car policyholders used to make claims.
There was no system to chase renewals and the only interaction point
with the insurance company was the development officer.
In short, insurance was a low priority for the dealer as well as the
manufacturer.
On the other hand from the insurer's perspective, motor insurance was a
loss-making portfolio and at best a nuisance. There was no real strategy to
control claims and the poor customer interface was accentuated with
excessive dependence on independent surveyors. There was no data
capturing or analysis for customer segmentation.
PARADIGM SHIFT IN 2001
The liberalisation in 2001 lead to a paradigm shift and changed the
perspective of how dealers, motor manufacturers viewed motor insurance.
Page 37
We at Bajaj Allianz adopted a dealer centric business model, where

commission income was increased, and introduced better customer
convenience by enabling policy issuance at dealership location. As a result,
body shop income increased by 100%. We also had strategic partnership
with auto manufacturers like Maruti Udyog Limited and Ford Motors. We
are looking at this portfolio with a strong commitment and our focus would
be on data capturing/ analysis besides our core competence in claims
management and service.
CURRENT SCENARIO
The scenario is much different today and motor insurance gets its due
importance. Motor insurance today constitutes 60% of the portfolio for most
of the general insurance companies in the world. The trend would be the
same in India also. In 5 years, the motor insurance is slated to increase from
Rs. 8,000 crores to Rs. 20,000 crores. Currently, it is 41 % of the total
general insurance business up from 36% five years back. The current state of
motor insurance as prevailing today can at best be summarised as below Insurance has become the important driver for dealer profitability and
customer satisfaction;
Motor insurance especially private cars, is an area which all insurers want
to develop;
Page 38
Continuous increase in cost and charges for labour & parts and higher
awards for third party claims are pushing the claims ratio up.
The next paradigm shift could happen when de-tariffing happens. The
fastest growing regions are Deihi, Andhra Pradesh, Karnataka,
Maharashtra and Gujarat.
CURRENT STATUS OF VEHICLE INSURANCE COMPANIES IN

INDIA
Whether one uses his company vehicle or is a proud vehicle owner,
vehicle insurance is an essential requirement for all new vehicles. This
applies for both commercial and personal use. Vehicle insurance includes
loss or damage of the vehicle by any kind of accident, fire, lightning, self
ignition, external explosion, burglary or theft, or by any malicious act.
Vehicle insurance company also pays for grounds like riots, strikes, terrorist
act, and natural calamities like earthquake, cyclone, and flood.
Automobileindia.com furnishes you information on the policies of different
vehicle insurance company.
Page 39
Most vehicle insurance company in India has comprehensive policies

to help their customers. Some of them have also tied up with top automobile
manufacturer for a fast insurance process. Vehicle insurance companies have
separate plans for two wheelers, four wheelers and commercial vehicles.
Some of the top vehicle insurance companies in India are United India
Insurance Company, HSBC India, Bajaj Allianz, ICICI Lombard, and the
new India insurance company. Automobileindia.com contains information
on the renowned vehicle insurance company in India.
Popular Vehicle Insurance Company in India
1) Bajaj Allianz
Bajaj Allianz is one of the top rated vehicle insurance companies in
India. It offers a number of attractive features in its vehicle insurance
policies such as
One of the main features of Bajaj Allianz vehicle insurance is that it
offers 24/7 service by phone and provides online assistance on all days
including national holidays.
Through Bajaj Allianz, customer can go instant claims assistance and
check instant updates of their claims status through mobile messaging
or through 24/7 call centers across the nation. Bajaj Allianz offers
towing facility in case of a break down or accident.
The users can also transfers their existing No Claims Bonus from any
vehicle insurance provider and the bonus may range from 20%- 50%.
2) ICICI Lombard
ICICI Lombard on other hand has separated policies vehicle insurance
and two-wheeler. Vehicle insurance policy of ICICI Lombard includes
Page 40
Personal accident cover of up to Rs. 2 lakhs for owner driver of the

vehicle.
While travelling in mounting or dismounting from the car and also a
personal accident cover for the passengers in the car, in addition to
loss or damage of car and third party liability.
For two-wheelers, ICICI Lombard offers a compulsory personal accident
cover of Rs. 1 lakh for individual owner and driver of the vehicle, while
travelling, in addition to, insurance for loss, accident, and third party
liability.
CASE STUDY
Claims settlements
CLIENT
REWA Tollway Private Limited belongs to the well known IJM Group of
companies. IJM have their Head Office in Malaysia. IJM is engaged in
construction activities in India and are located in Hyderabad.IJM
Corporation Berhad has formed its subsidiary known as REWA Tollway Pvt
Ltd. exclusively for development, construction, strengthening and widening
of roads between Rewa - Jaisingnagar - Shahdol Amarkantak Road (246
KM) and Satna - Maihar - Umaria Road (141KM) in Madhya Pradesh. The
project period is 18 Months.
INSURANCE
Page 41
The above two Road projects were covered by BAJAJ ALLIANZ

GENERAL INSURANCE CO. LTD. under two different CAR Policies
alongwith ALOP insurance.
WHAT HAPPENED?
In the month of September 2003, Satna in Madhya Pradesh experienced
unprecedented rains. During these unprecedented rains heavy losses were
reported in Satna .This act of god had caused the wide spread
flood/inundation at various places including insured's construction site. The
rain carried over the silt and mud, contaminated the material
mainly Granular Sub-base (GSB), Wet
Mixed
Macadam (WMM), Dense Bituminuous (DBM) and SDBC laid on road

where work was in progress along with entire stretch. As a result sections of
the road were severely damaged.
ROLE OF BAJAJ ALLIANCE

Immediately on receipt of claim intimation from brokers, a preliminary
surveyor was appointed through our Bhopal Office. Based on the
preliminary survey findings and the estimates, surveyors M/s Cunningham
& Lindsey, Bombay were deputed by our Head Office for final survey on
21/10/2003. In consultation with the insured at Hyderabad, the final
surveyor visited the site from27/10/2003 to 3/11/2003. After the first visit,
series of joint meetings were held with the Insured at Mumbai and
Hyderabad. Again one more visit was made to the site by the final surveyors
for detailed inspection, along with the insured's representatives and our
officials. An initial On A/c payment for Rs. 50 lakhs was on 17/2/04to
Page 42
enable the insured to mobilize resources to restart operations. In the last

week of February the client finalized their estimate of claim and on
10/03/04evaluated the repair works progress. The actual loss was assessed &
arrived at for the two projects and the claims was assessed and finalized for
Rs. 6.4 crores on 10/3/04 itself. On 12/3/04
Rs. 3 crores was released based on the verbal agreement arrived on 10/03/04
and without waiting for the final survey report. The balance amount is being
paid in the following week upon submission of the certified bills and survey
reports.
LESSONS LEARNT
Be alive to the clients' aspirations and empathize with them. A disaster has
occurred in an area where the clients on-going project was located. Any
delay in remobilizing resources could have led to penalties being levied on
the insured for delay in project completion arising out of their contractual
agreements. Immediate action on our part has ensured that the project gets
completed within the time frame.
Concocted Evidence of Death

Application for deceased person of 34 years, an executive in a firm and
Income Tax payee, by a widow, 3 minor children, unmarried sister and
dependent parents for Rs. 2,60,00,000. The award was made for Rs. 1,
62, 00,000.
The Post Mortem (PM)Report said, Cardiac Arrest Probably due to
excessive bleeding
The company suspected unusual hurry in delivering award.
Page 43
The applicant brought an execution order immediately after the passing

of dead line for payment of Motor Accidents Claims Tribunal (MACT)
award.
Investigation
The deceased person has fallen from terrace of his bung low, was
having high blood Pressure (BP) and was admitted to a private nursing
home, before he was brought for admission to the government hospital.
The deceased person has heavy debts, was in the habit of lavish living
and had a brother-in-law who was a lawyer.
On appeal, the case was dismissed for concocted evidence of death.
BAJAJ ALLIANZ'S MOTOR INSURANCE

Bajaj Allianz is a joint venture between Allianz AG one of the world's largest
insurance companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler
manufacturers in the world. Bajaj Allianz is into both life insurance and
general insurance.
Allianz Group is one of the world's leading insurers and financial services
providers. Founded in 1890 in Berlin, Allianz is now present in over 70
countries with almost 174,000 employees. Bajaj group is the largest
manufacturer of two-wheelers and three-wheelers in India and one of the
largest in the world.
Today, Bajaj Allianz is one of India's leading and fastest growing insurance
companies. Currently, it has presence in more than 550 locations with over
60,000 Insurance Consultants.

Page 44
Technology has made our daily life simpler in various ways.Motor vehicle is
an invention which has made daily commuting easy. It is convenient and fast
and saves our time. Though it is easy to own vehicle it is expensive
maintaining a motor vehicle especially in case of damage caused to your
vehicle due to some unavoidable circumstances or accidents. Bajaj Allianz's
Motor Vehicle policy helps you in maintaining your vehicle in such
situations.
UNIQUE FEATURE
For claim free experience, discount available on subsequent renewal.
Discount available if voluntary excess opted for
Discount available for membership with approved automobile
association
Discount available for installing approved anti-theft device
Depreciation, for the parts needing replacement in the accident is
defined
ADVANTAGES
Standardized labour costs
Highest standards of service
Hassle-free inspection procedures
Page 45
BENEFITS
Cashless settlement of repair claims at preferred garages.
Immediate receipt of policies
Speedy claim settlement
Highest standard of services at the preferred garages
Hassle-free documentation and inspection procedures
Quick settlement of major losses such as theft/total loss
A NEW ERA IN MOTOR INSURANCE OF BAJAJ ALLIANZ

More and more motor insurance customers understand that favorable
premiums are not enough. Bajaj Allianz offers the most comprehensive
benefits system and the most valuable services in the market.
Customers holding more than one policy with Bajaj Allianz are entitled to a
free credit card
Bajaj Allianz is now offering a set of new benefits to both its existing and
potential motor insurance customers. Hungary's market-leading insurance
company has a 50 percent share of motor third party liability policies,
according
to
the
most
recent
half-year
figures.
Bajaj Allianz offers eight new different partner benefits, plus premium
discounts connected to the method and frequency of payment. Loyalty and
other benefits make the new services even more attractive to every customer.
Page 46
Through the benefits, it is possible to get a premium discount of up to 33

percent.
EASY ACCESS
The company's national network makes personal contact easy through more
than 100 company-owned service units and over 900 contracted body repair
shops. The company's call center and Internet customer care facility offer a
wide range of services: giving information, concluding transactions, starting
claims settlement or registering data changes.
Since Bajaj Allianz introduced its new premium system on October 30, most
telephone calls and clicks have been about premium calculations for third
party insurance. Within the first three days, 130,000 customers received their
individual quotes.
HELP AND CREDIT CARDS

Customers have also been informed about the company's brand new
services: policy holders are entitled to free assistance, a right that is not
restricted to accidents. If the policy holder's vehicle breaks down, the call
center will also take his call and send assistance.
It is also a significant novelty that customers holding more than one policy
are entitled to a free credit card with the Allianz Foreign Trade Bank MKB
Page 47
without a separate credit rating. The deal includes a special insurance for the
goods purchased with the card. Additionally, there is a discount of three to
eight percent off the liability insurance premium.
ACTIVE CLAIMS SETTLEMENT

Active claims settlement is probably Bajaj Allianz most significant product
development. While even these days several market players only compete by
offering "service-free" premiums, it is perhaps the most important factor in
the change of eras that Bajaj Allianz does not abandon its customers and
provides extras much beyond the obligatory.
The improvement benefits not only the car owner who is highly dependent
on his car: 70 percent of vehicle owners use their cars on a daily basis, as a
survey conducted by Bajaj Allianz this year shows. Furthermore, according
to the same survey, on average two more people depend on the same car.
In the case of an accident caused by somebody else, every Bajaj Allianz
customer holding both third-party and fully-comprehensive insurance with
Allianz Hungria can file the accident claim directly with Bajaj Allianz.This
means it's not necessary to approach the insurance company of the other
party to get his car repaired. Furthermore, his damage-free status remains
unchanged.
Page 48
EUROPEAN MOBILITY PROGRAM

Active claims settlement is an integral element of the European mobility
program, which Bajaj Allianz introduced in May 2004 to enhance the service
quality in the Bajaj motor insurance market. Significant discounts introduced
at that time are now coupled with additional discounts in third party
insurance and active claims settlement.
This might give a real boost to the Bajaj vehicle insurance market and could
support the Bajaj convergence with Europe.
AN ARTICLE ON MOTOR VEHICLE INSURANCE

WHY CAR INSURANCE IS A MUST
Kairav Shah in Mumbai
May 07, 2007
Insurance, suddenly, has taken centre-stage because of the increasing

penchant of individuals towards all kinds of loans. With the consumer
becoming more loan-friendly, the obvious fallout has been the requirement
to stack up on insurance as well.
However, taking insurance has not been made mandatory by most banks. Of
course, there is an occasional bank that might insist (read request) you to
take an insurance policy, if you are taking a home loan. But legally, they
cannot force you to take one.
Page 49
But the only purchase where it is mandatory to have an insurance is in case

of purchasing automobiles. That is, it is imperative that you have car
insurance as soon as you purchase your car.
In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every
owner of a vehicle plying on public roads to take an insurance policy to
cover the amount, which the owner becomes legally liable to pay as damages
to third parties as a result of accidental death, bodily injury or damage to
property. Also, it is necessary for you to always carry the certificate of
insurance in the vehicle as proof.
There are basically two types of motor insurance policies. Type I, which is
better known as Third Party Insurance (Form A), is the one which is
compulsory. This covers the policyholder against damage to a third-party's
property or the third parties themselves.
In simple words, if you were to run into another car and cause damage to
that car and injure the occupant(s) of that car, a third party only policy will
pay for the repair of the other vehicle, and will pay for any medical claims or
injuries suffered by the occupant(s) of the other car and any passengers in
your car other than you.
But this policy does not cover the costs of repairing your own vehicle.
However, you could add some riders to this policy that would cover for your
legal liability to pay compensation for:
Death or bodily injury to a third-party person
Damage to third-party property
Page 50
Liability is covered for an unlimited amount in respect of death or injury and

damage to third-party property for Rs 7.5 lakhs under commercial vehicle
and cars and Rs 1 lakh for scooters and motor cycles
Moreover, there are additional riders for third-party fire and theft as well.
That is, if your vehicle is stolen or is set on fire, these riders cover them as
well.
Type-II policy, better known as the comprehensive car insurance cover
(Form B) covers payout for third-party damages and injuries, will pay out in
the event of your vehicle being stolen or set on fire, and will also pay for any
damage to your own vehicle (regardless of whose fault the accident was).
In addition to the coverage under liability only, this policy covers loss or
damage to the insured vehicle and its accessories due to fire, explosion, selfignition or lightning, burglary, riot and strike, malicious act, terrorist act,
earthquake, (fire and shock) damage, flood, typhoon, hurricane, storm,
tempest, inundation, cyclone and hailstorm, transit by road, inland waterway,
lift, elevator or air. So, this brings us to what type of car insurance cover is
best for you? As a general rule of thumb, the following points are worth
noting:
If you are young and driving an inexpensive first car then you will probably
find the cost of comprehensive motor insurance very high. For instance, a 20
year-old buys a second-hand car for Rs 1.5 lakhs. In this case, the cost of a
comprehensive policy would be higher as compared to the cost for a thirdparty fire and theft policy.
Of course, if there is an accident and you are at fault and your car is badly
damaged, then it you will have to pay for the repair or replacement of the
Page 51
car. But if you are young and driving a more expensive car, then it will
make sense for you to have comprehensive insurance.
Remember that the no-claim bonus follows the individual and not the
vehicle. So you will be able to garner good discounts on renewal of the
policy. The bonus ranges from 20 per cent to 50 per cent, depending on the
number of years for which no claim has been made. Some important
exclusions under this policy include wear and tear, breakdowns,
consequential loss, loss when driving with invalid driving licence or under
the influence of alcohol, use of vehicle otherwise than in accordance with
limitations as to use, etc.
Now, you can do online processing of claims and premium payments. This
implies that life is going to become much easier for the end user.
CONCLUSION
India is witnessing a boom in car and bike sales and it could not have
come at a better time. The burgeoning middle class and the improvement in
roads and highways have only accentuated the vehicle sales. The spill over
effect of this boom has let the motor insurance portfolio of insurance
companies also on the growth highway.
Todays consumer has became more conscious about his health and
wealth also they are becoming more demanding due to awareness of
insurance therefore, Motor insurance companies are facing challenges of
Best service level at the lowest price. This creates competitions between
Page 52
insurance
companies.
However,
Insurance Companies
are
trying
to overcome the challenges by providing 24/7 assistance to customers for all

product queries and claims information.
As compared to Insurance abroad, motor insurance companies in India

still have a long way to go. Since, India is booming in car and bike sales and
even with the awareness of motor insurance in people motor insurance
company is going to have a better time in future.
REFERENCES
BOOKS:
1. Elements of Banking and Insurance- Sethi & Bhatia
2. Automobile insurance- Georges Dionne
WEBSITES:
1. www.bajajallianz.com
2. www.policybazaar.com
3. www.google.com
NEWSPAPER :
Page 53
Article from Business standard- Kairav Shah in Mumbai
Page 54

Motor Vehicle Insrance - Merlyn Coelho

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MOTOR VEHICLE INSURANCE

SMT.M.M.K. COLLEGE OF COMMERCE AND ECONOMICS

SMT.M.M.K. COLLEGE OF COMMERCE AND ECONOMICS

SMT.M.M.K. COLLEGE OF COMMERCE AND ECONOMICS

(Prof. Mr. Vishal R Tomar)

(Dr. Ashok Vanjani)

(Prof. Dr.A.C Vanjani)

I, Miss. MERLYN COELHO the student of B.Com (Banking &

The information submitted is true and original to the best of my

I am thankful to Dr. ASHOK VANJANI, Principal of Smt.M.M.K.

I would fail in my duty if I dont thank my parents who are pillars of my

I the undersigned Dr.A.C Vanjani, have guided MERLYN COELHO

I hereby, declared that information provided in this project is true as per

Meaning of motor vehicle insurance

History of motor vehicle insurance

Fundamental principles of insurance

Categories for the purpose of insurance

Need for motor vehicle insurance

Advantages of motor vehicle insurance

Disadvantages of motor vehicle insurance

Prenium rating and calculation

Factors considered for premium rating

Types of claims of motor vehicle insurance

Vehicle insurance in India

Current status of vehicle insurance companies

Bajaj allianzs motor insurance

Article on motor vehicle insurance

insurance policy represents a combined coverage of the vehicles

Motor vehicle insurance

It is important to understand for anybody that is considering buying an

It is bought in order to hedge the possible risks of the future which

Motor vehicle insurance

A payment of compensation for specific potential future losses in

exchange for a periodic payment

Insurance is designed to protect the financial well-being of an

company (or) other entity in the case of unexpected loss.

In exchange for payments from the insured (called premiums), the

MEANING OF MOTOR VEHICLE INSURANCE

The meaning of motor vehicle insurance is very simple as it comprises of

DEFINITION OF MOTOR VEHICLE INSURANCE

HISTORY OF MOTOR VEHICLE INSURANCE

Motor vehicle insurance

In 1939, India has also realized the importance of Motor Insurance

Assured best deals on your Motor Insurance

OTHER SALIENT FEATURES

For claims free experience, discount available on subsequent

FUNDAMENTAL PRINCIPLES OF INSURANCE

Motor vehicle insurance

2) UTMOST GOOD FAITH:

Motor vehicle insurance

CATEGORIES FOR THE PURPOSE OF INSURANCE

Trailers: Any truck, car, carriage or other vehicle, including

Vehicles used for carrying passengers:

Motor vehicle insurance

The vehicle insurance generally includes:

breakdown, failure (or) breakage.

Third party liability policy:

Motor vehicle insurance

Emergency treatment fees for those injured or requiring hospital

The losses due to mechanical breakdowns, failure, breakages, wear

In case of commercial vehicles the insured has to bear a sum of Rs.1,

NEED FOR MOTOR VEHICLE INSURANCE

In Indian conditions, the vehicles are subject to many hazards like