MOTOR INSURANCE A OVERVIEW

SNAPSHOT
Motor vehicles act 1988 Motor vehicle Definition Classification of Motor vehicle Types of liability Coverage Conditions Exclusions Premium Rating Third party claims

MOTOR INSURANCE ACT 1988

Motor vehicle act passed in 1939 and amended in 1988. MV act 1939 introduced compulsory insurance As per sec. 146 of MV act 1988 no motor vehicle can ply in a public place without having an insurance policy complying with the requirements of MV act.

MOTOR INSURANCE
What is a Motor Vehicle ? Motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimeters

MOTOR INSURANCE
CLASSIFICATION OF VEHICLES
Private Cars Motor Cycle & Motor Scooters Commercial Vehicles

y y y
(For The Purpose Of Motor Insurance)

Goods Carrying Passenger Carrying - Taxis, Buses Miscellaneous - Ambulances

TYPES OF LIABILITIES / LOSSES

LOSS OR DAMAGE TO VEHICLE - Own damage THIRD PARTY LIABILITY - Death or injury of a third party or property damage of a third party

MOTOR INSURANCE
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)

Damage to the vehicle itself and Theft of parts or the theft of the vehicle itself. B (Financial losses)

REQUIREMENTS OF MV ACT 1988

The liabilities which require to be covered as per sec.147 of MV act. Liability in respect of death or bodily injury to any person Liability in respect of damage to property of any third party Liability in respect of death or bodily injury of a passenger in public service vehicle Liability under w.c. act in respect of death or bodily injury to driver, cleaner, conductor or ticket examiner or coolies/ workers carried in goods vehicle.

TWO TYPES OF LIABILITIES

No fault liability Under section 140 of MV act 1988 no fault liability in case of death is Rs.50,000/- and Rs.25000/- for permanent disablement. No fault means the claimant need not prove negligence on the part of the motorist. liability is automatic. Fault liability Under sec.166 of MV act actual liability as decided by the court.

LIMITS OF LIABILITY

In respect of death or bodily injury to any person unlimited or the amount of liability incurred

TYPES OF POLICIES
A POLICY : TO COVER LIABILITY AS PER MV ACT. LIABILITY POLICY B POLICY : TO COVER OWN DAMAGE LOSSES & ACT LIABILITY. NEW TARIFF CALL THIS - PACKAGE POLICY THE POLICY CAN ALSO BE EXTENDED TO COVER ADDITIONAL LIABILITIES AS PROVIDED IN THE TARIFF.

COVERAGE UNDER OWN DAMAGE

B - POLICY COVERS FOLLOWING RISKS Fire, Explosion, Self-ignition Burglary, Housebreaking, Or Theft Riot & Strike Earthquake Flood, Typhoon, Hurricane, Storm, Tempest Accidental External Means Malicious Act Terrorist Activity Transit By Road, Rail, Inland Waterway Landslide/ Rockslide

EXCLUSIONS UNDER B POLICY

Consequential Loss Depreciation Wear & Tear Mechanical Or Electrical Breakdown, Failures Of Breakages Damage To Tires Unless The Vehicle Is Damaged At The Same Time. Loss When The Vehicle Driven Under The Influence Of Intoxicating Liquor Or Drugs In motor cycle loss of or damage to accessories by burglary housebreaking or theft unless the vehicle is stolen at the same time is excluded. In commercial vehicle damage caused by overloading or strain of the vehicle is excluded

GENERAL EXCEPTIONS
Any accident outside the geographical area specified in the policy, that is India Contractual liability Any accident when the vehicle is used not in accordance with the limitations as to use clause Vehicle is driven by any person other than as stated in the driver s clause War and nuclear risk

LIABILITY TO THIRD PARTIES

The insured s liability for damage to property of third parties is limited to rs.6000/- whilst liability for death of or bodily injury to third party is unlimited. Legal cost & expenses borne by the company. Entire liability subject to the provisions of MV act 1988 & other conditions, exclusions and exceptions of the policy.

CONDITIONS

Notice of loss in writing No admission, offer or promise of payment or indemnity to be made by the insured without the written consent of the company. Insured to take all reasonable steps to safeguard the vehicle after accident. Cancellation - company may cancel the policy by giving 7 days notice. pro-rata Insured may also cancel a policy by giving 7 days notice - short period Contribution Arbitration clause Company s option to repair, reinstate or replace or parts or pay in cash out of loss or damage - liability not to exceed the insured estimated value.

CONDITIONS
Contribution Arbitration clause Company s option to repair, reinstate or replace or parts or pay in cash out of loss or damage - liability not to exceed the insured estimated value.

PREMIUM RATING
All vehicles - premium rates are based upon cubic capacity, Insured s declared value (I.D.V.) Zone of operation. Age of vehicle (revised tariff) Goods carrying vehicles - Rates are based on gross vehicle weight means total weight of the vehicle and load certified by the registering authority. Passenger carrying vehicle - Carrying capacity

PREMIUM RATING
Zones of Operations For Private Cars, Motor Cycles, Passenger Carrying 4 wheel upto 6 passengers. Zone - A Delhi, Calcutta, Mumbai, Chennai, Ahmedabad, Hyderabad, Bangalore, Pune Zone B - Rest of India For Commercial Vehicles Zone - A - Delhi, Calcutta, Mumbai, Chennai Zone - B - All States Capital Zone - C - Rest of India

PREMIUM RATING
INSURED DECLARED VALUE For total loss / Constructive total loss claims the IDV will not change during the currency of the policy period. Where the damage/ loss exceeds 75% of the IDV the claim could be considered as total loss / constructive total loss.

BONUS/ MALUS
BONUS A discount in the premium is allowed at renewal if there is no claim during the policy year. MALUS Loading in the premium is charged if there is a claim.

*In revised tariff - Only BONUS.

BONUS/MALUS
SCALE OF BONUS ( Revised Tariff) No claim for ONE FULL YEAR -- 20% No claim for 2 consecutive year -- 25% No claim for 3 consecutive year -- 35% No claim for 4 consecutive year -- 45% No claim for 5 consecutive year -- 50% With every claim the No Claim Bonus comes back to NIL.

THIRD PARTY PROPERTY DAMAGE COVER

Limits of TPPD cover for the liability premium are as follows : Comm. Vehicle (excl. 3 wheelers & Taxi) 7.5 lacs Commercial . Veh.(3 Wheelers & Taxi) 7.5 lacs Private Cars 7.5 lacs Two Wheelers 1.0 lac

*cover can be restricted to Rs.6000/- only and premium reduced by

Rs.200/- Rs.150/- Rs.100/- & Rs.50/- respectively

PREMIUM RATING
ADDITIONAL COVERAGES Electronic Extra Fittings (A/C, Tape etc.) not originally fitted with the vehicle - Rate - 4% of the value. CNG/LPG Kits fitted to vehicle with RTO authorization. Rate - 4% of the value of kit. Wider Legal Liability to paid drivers, cleaners, conductors, coolies - Rs.25 per person. Optional PA Cover for Occupants
y y y

Private Car Rs.5/- for 10,000 Motor Cycle Rs.7/- for 10,000 Comm. Vehicle Rs.6/- for 10,000
*Maximum cover Rs.2,00,000/-

Compulsory PA cover for owner driver -(Registered owner holding effective

driving license ) y Motor Cycle y Private Car

Comm. Vehicle

1 lac 2 lacs 2 lacs

----

Rs.50 Rs.100 Rs.100

PREMIUM RATING
DISCOUNTS Automobile Association Discount - 5% of the Net Premium sub. to a max. of Rs.200 for Private Car & Rs.50 for Motor Cycle. Discount for Anti Theft Devices Vehicles fitted with Anti Theft devices approved by ARAI, Pune

*Automotive Research Association of India

MOTOR CLAIMS - OWN DAMAGE

TYPES OF LOSSES Partial Loss Total Loss
Actual Total Loss - When the vehicle is totally damaged or fully burnt or damaged to such an extent that it can not be repaired. y Constructive Total Loss - When the damaged vehicle can be repaired but repairs will not be economical i.e. cost of repairs may be more than the actual value of the vehicle.
y

MOTOR CLAIMS - OWN DAMAGE

REPORTING After an accident resulting in damage / loss to the vehicle it has to be immediately reported to the office. The claim is registered and a claim form is issued The claim form duly filled & signed by the insured along with estimate of repairs has to be submitted to the office.

*The insured is normally free to choose the repairer where he would like to repair the vehicle.

MOTOR CLAIMS - OWN DAMAGE

ASSESSMENT An independent automobile surveyor is appointed to survey and assess the loss. - In case the estimate is below Rs.25000/- an in-house surveyor may be appointed . A surveyor inspects the vehicle, takes the photographs, inspects the damages, discusses with the repairer the cost of replacement of parts and labour charges and submits his report. After the survey is complete the repairer is authorized to repair the vehicle.

MOTOR CLAIMS - OWN DAMAGE

SETTLEMENT After completion of repairs vehicle is re-inspected A settlement is normally based on the recommendations of the surveyor contained in the survey report. The survey report is examined by the officer concerned & claim is settled according to the terms & conditions of the policy, taking into account - the depreciation applicable - Salvage - Compulsory excess - Additional excess , if any

MOTOR CLAIMS - OWN DAMAGE

Documents Required

Claim Intimation Letter Claim Form Duly Filled & Signed Estimate Of Repairs Survey Report Valid Driving Licence R.C. & T.C. Book Of The Vehicle Fitness Certificate ( Commercial Vehicle) Permit ( Commercial Vehicle) Police Report(comm.Veh. & Major Losses Of Pvt. Cars & Motor Cycles) Final Bills Of Spare Parts & Labour Charges Satisfaction Note From The Insured

MOTOR CLAIMS - OWN DAMAGE

PAYMENT Normally the insured is expected to make the payment to the repairer and seek reimbursement from the company. However, in some cases the claim is directly paid to the repairers after obtaining satisfaction voucher from the insured.

MOTOR T.P. CLAIMS

Under Section 165 of MV Act 1988, state government is empowered to set up one or more Motor Accident Claims Tribunals.(MACT) for each district. Where MACT has been set up all Motor Third party claims fall within the jurisdiction of MACT only For Death, Injury or Third Party property damage petition has to be filled in MACT within a specified time. Death or Injury claims are under two sections - Section 140 - No Fault Liability (NFL) - Section 166 - Fault Liability No fault liability claims are disposed off very fast. The petitioner only has to prove
y

That there was a motor accident

Accident resulted in death or permanent disablement. y The vehicle involved was insured
y

In Detariff Era Vibrant Motor Insurance Market Will Emerge If the lawmakers periodically review old laws, the courts burden would be lighter Thanks Rajendran Pradeep Kumar

*Reference www.indiakanoon.com www.Irda.org www.iirmworld.org