Motor Insurance

Private Car

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 What is Motor Insurance?
Description of Cover Type of Cover Nature of Cover
Cover against Damage to the Own Damage Compulsory
Owner’s Vehicle
Third Party Property Damage Legal Liability Compulsory
Extra P A Cover to Occupants Legal Liability Optional (but Recommended)
P A Cover to Owner who Drives Legal Liability Compulsory
the Vehicle
NCB Protection Own Damage Add On Cover

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 Factors to Motor Insurance
• Insured Declared Value(IDV) of the vehicle
• Age of the Vehicle
• Cubic Capacity of the Vehicle
• Zone of Registration
• Discounts – NCB, AAI, ARAI & Market Discount
• Additional Fixtures – Electronic fittings, CNG Kit etc…

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 Premium Calculation – Step by Step
1. Compute the current IDV after applying necessary depreciation.

2. Derive the Own Damage premium by multiplying IDV and the corresponding value from
the Rating Matrix.

3. If discounts need to be given, make necessary provision for the same. The final amount is
the Final OD Premium – denoted as ‘A’.

4. Legal Liability is another name for Third Party(TP) Insurance. Compute the base TP Premium.

5. Apply the necessary cover for PA, WLL etc… The final amount is TP total denoted as ‘B’

6. The Service Tax is computed for the total of A+B at 10.3% denoted as ‘C’.

7. The final premium is A+B+C.

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 Rating Matrix – Own Damage Section

Zone B Zone A
Age of the Vehicle
Cubic Capacity Cubic Capacity
up to 1000cc 1000 - 1500cc above 1500cc up to 1000cc 1000 - 1500cc above 1500cc
up to 5 years 3.039% 3.191% 3.343% 3.127% 3.283% 3.440%
5 - 10 years 3.191% 3.351% 3.510% 3.283% 3.447% 3.612%
above 10 years 3.267% 3.430% 3.594% 3.362% 3.529% 3.698%

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 Rating – Legal Liability / 3rd Party
CC Premium
up to 1000cc 670
1000 - 1500cc 800
above 1500cc 2500
Other coverage to be included:

1. Extra PA Cover to Un Named occupants

2. PA Cover to Paid Driver
3. Wider Legal Liability to Paid Driver

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 Terms Explained – Motor Insurance
Terminology Explanation
Insured Declared Value (IDV) Current value / Market value of the vehicle
Offered Discount specific to the insured for safe
No Claim Bonus (NCB) driving. Valid up to 90 days on break in and 3 years
to transfer to a new vehicle.
In event of an accident resulting in a loss to a third
Third Party Property Damage (TPPD) party’s property is payable up to a maximum of Rs.
7.5 Lac.
The insured agrees to bear a portion of the loss on
every claim during the course of the year – such
Voluntary Deductible
agreement is eligible for a discount up to a
maximum of Rs. 2,500/-
To record pre-existing damages of the vehicle when
Vehicle Inspection Report (VIR) the insurance lapses and to ensure saving on claim
of such damages.

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