What is Insurance

 What is Insurance

Insurance is a legal contract between two parties where by one party called Insurer/Underwriter (Insurance Company) undertakes a fixed amount of liability on the happening of certain event. The other party called Insured pay in exchange a fixed some called premium.

The Principle of Insurance are:-

Utmost Good Faith – Insured should reveal to the insurer all the material facts about the subject matter

Insurable Interest – In the subject of Insurance ,the Insured must have Insurable Interest

Principle of Indemnity - It means a guarantee or assurance to put the insured in same position in which he has immediately prior to the happening of the uncertain event

Principle of Contribution - Insured can claim compensation only to the extent of actual loss either from any one insurer or all insurers

Principle of Subrogation – Once the insured is compensated for the loss due to damaged to property insured, then the right of ownership of such property passes on to the insurer

Principle of Loss Minimization – It is the duty of the insured to take all possible steps to minimize the loss to the insured property on the happening of uncertain event

Principle of Proximate Cause - It means when a loss is caused by more than one cause, the proximate or the nearest cause should be taken into consideration to decide the liability of the insurer

What is Motor Insurance

Motor Insurance is a contract between the vehicle owner and the insurance company which provides coverage for damage of Theft of the vehicle legal responsibility of customer to others (Property and Bodily harm)

Insurance of Motor vehicle is compulsory under the state of India and Insurance coverage which is the minimum requirement as prescribed by the Motor Vehicle Act 1988 is known as “Act “Insurance

Motor Insurance is governed by

The Insurance Act, 1938

The Motor Vehicle Act, 1988

The Indian Motor Tariff (IMT)

What are the types of Motor Insurance Policies sold to the Customers

Liability only Policy: For any motor vehicle plying on the road this cover is statutory requirements under the motor vehicle Act, 1988.

Standard Comprehensive Policy (Package Policy): It covers all risks covered under Motor liability policy plus loss or damages caused to vehicle due to external means

Common Reasons why Motor Insurance Claim May be rejected

Repairing of the Vehicle before intimation of claim to Insurance company & Inspection of damages by Insurance surveyor

Forgot to change the Insured name in the policy copy in case of used car/Second hand car

Forgot to get the endorsement done in the policy about any modification in the vehicle like installation of CNG/LPG kit in the vehicle if the same is fitted as an additional fitment to vehicle

Driving the vehicle without valid vehicle class of driving license

If vehicle is registered as a Private Car and is used for commercial purpose

Delay in intimation of claim to insurance company without any valid reason

Over Seating and loading in the vehicle than the permissible limit

Driving the vehicle without valid vehicle documents like Registration/Permit/Fitness etc.

Drink & Drive

Misrepresentation of facts while buying the policy or while lodging the insurance claim

What Motor Insurance Covers:-

Subject to a deduction for depreciation at the rates mentioned below in respect of parts replaced

For all rubber/nylon/Plastic parts - 50%

For fiber Glass components - 30%

For all parts made of Glass - Nil

What is an Add On Cover under Motor Insurance

Add on Covers are available for enhancing the protection after paying a small additional premium along with the basic cover, customer can get extra protection for their car with various add on covers, which can be customized to suit their need.

What are the various types of Add on Covers sold by the Insurance Companies

Zero Depreciation/Nil Depreciation –It covers without any deduction for depreciation on the value of parts being replaced which was approved by the surveyor

Engine Protector – It covers any damages to engine internal parts because of any consequential or Hydrostatic loss ( Damaged due to engine Oil Drain out or Water enter into engine internal parts) since such engine damages are not covered under normal comprehensive policy

Return to Invoice –Under this cover company will pay current Invoice price of same make and model in the event of Total loss/Constructive loss and in case of obsolete model the last selling price of the vehicle will be considered and this cover may slightly differ from Insurance company to company because few companies paid Invoice Value and few companies are paid On Road Price of the vehicle

Key Replacement –Under this cover company will pay replacement of Key Set in case of loss of key and there is a capping amount depending upon insurance company to company

Loss of Income/Daily Allowances/Garage Cash-Under this cover if insured is required to Hire another vehicle till the time vehicle is under repair insurance company will reimburse such cost of hire fixed amount per day depending upon Tonnage/ IDV and Class of vehicle and there is a capping of no of days and covers depending upon Insurance company to company

Consumables Coverage –The Consumables in car insurance are those items that are subject to the constant wear and tear ,they are continuously consumed by the car during its life or rendered unfit for further consumption upon dismantling which was not covered under normal motor package policy but under this cover company will pay such replacement cost

Road Side Assistance Coverage – It covers in the event of any brake down ,mechanical failure ,battery services, flat tyre services ,fuel delivery services etc on the road or at the home

No Claim Bonus Protection- Under this cover NCB allows you to have a certain amount of “at fault” accidents without affecting the bonus. So if you have an accident, the NCB remains intact even if your insurer can't claim their costs back and this cover depending upon insurance company to company