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Motor Insurance

Motor Insurance

Motor insurance is a crucial policy that covers cars, two-wheelers, and commercial vehicles. This policy financially secures you against losses or damages to your vehicle caused due to natural calamities such as earthquakes, floods, typhoons etc. or man-made disasters such as theft, burglary, riots, strikes, etc.

There are three different motor insurance policies: comprehensive motor insurance, third-party insurance and own-damage insurance. The Motor Vehicles Act, 1988 mandates vehicle owners to purchase third-party insurance that covers third-party liabilities to drive/ride on the Indian roads.

Bajaj Finance partners with top insurance companies offering online motor insurance for easy purchase and renewal of the policy at affordable premiums.

Types of Motor Insurance Policies

Here are different types of motor insurance policies:

Private car insurance policy

This policy insures the car against loss or personal damage due to fire, natural disasters, theft, and other mishaps. In addition, it offers cashless claims and other benefits. The premium amount varies based on the make and value of the car. Private car insurance policy can be further classified into liability only or package policy.

Two-wheeler insurance policy

A two-wheeler insurance policy covers scooters and bikes. It protects two-wheelers against damages caused due to accidents, disasters, fire, theft and other risks. It provides personal accident cover for the owner rider and passengers.

Commercial vehicle insurance

All the vehicles used for commercial purposes and not for personal use are categorised under commercial vehicle insurance. Trucks, buses, heavy commercial vehicles, light commercial vehicles, multi-utility vehicles, agricultural vehicles, taxi/cab, ambulances, auto-rickshaw, etc., are some vehicles that are covered under this insurance. It provides financial coverage in case of theft, damage, third-party liability, and personal accident cover. Under commercial vehicle insurance, there are also policies specifically for heavy vehicles. The heavy vehicle insurance policy can be taken for vehicles like bulldozers, cranes, trailers and other such vehicles.

Types of Motor Insurance Coverages

Here are different types of coverages offered under the motor insurance policy:

Third-party coverages

It is compulsory to avail of a third-party car or bike insurance policy under the Motor Vehicles Act, 2019. One is legally bound to buy this policy or else will be charged with a penalty. This insurance covers injury or death caused to a third person by your vehicle along with damage caused to property. This insurance covers only the third-party liabilities and does not provide any financial cover for the owner's vehicle or theft.

Own-damage coverages

Own-damage coverage is optional. However, it is one of the essential insurance coverages as it covers damages caused to the policyholder’s vehicle. Get coverage for minor and major damages caused due to natural calamities such as storms, earthquakes, floods or man-made disasters like vandalism, riots, theft etc.

Comprehensive coverages

A comprehensive coverage is an all-inclusive coverage that offers both own-damage and third-party coverages. Additionally, it also offers add-on coverages that include zero-depreciation cover, engine protection cover, roadside assistance, consumable cover and passenger cover.

What Is Not Covered In The Motor Insurance Policy?

Here are some of the exclusions under the motor insurance policy:

  • Damage caused post the expiry of the policy
  • Any damage caused when the person driving doesn't have a valid driving license
  • Damage caused due to driver's negligence
  • Any accidental loss or damage caused outside the geographical area mentioned in the policy
  • Damage caused while the person driving was under the influence of alcohol or any intoxicating substance
  • Damage caused to the vehicle due to war, terror attacks, invasion, foreign enemy action, civil war, mutiny, rebellion, hostilities, radiation, or nuclear material/weapons
  • Mechanical or electrical breakdown, wear and tear of the vehicle

Why Should You Buy Vehicle Insurance?

Here are some of the reasons why you should buy a vehicle insurance:

  • It protects the vehicle owner against damages caused to his/her vehicle
  • It covers third-party liability as per law against the owner of the vehicle
  • Provides cover for physical injury
  • Third-party insurance is a statutory requirement
  • The vehicle owner is legally liable for any injury or damage to third-party life or property caused by or arising out of the use of the vehicle in a public place
  • The Motor Vehicles Act, 1988, mandates every vehicle owner to have a third-party insurance to drive or ride on the Indian roads

Eligibility Criteria For Motor Insurance Policy

Here are the eligibility criteria to purchase two-wheeler or four-wheeler insurance policy:

  • The vehicle should be registered under your name.
  • You should have a registration certificate.
  • You should have a valid driver’s license.
  • You should have an updated Pollution Under Control (PUC) certificate.

Frequently Asked Questions (FAQs) For Motor Insurance

Q1: How is the motor insurance premium calculated?

The following are the most significant elements that influence motor insurance premiums:

1. Insured Declared Value (IDV)
2. Make and model of the car
3. Deductibles
4. Seating capacity
5. Cubic capacity
6. Previous insurance history
The type of coverage has an impact on the premiums. Do compare insurance premiums to obtain the best deal. Third-party premium amounts are decided by the IRDA.

Q2: What is the period of the motor insurance policy?

A vehicle insurance policy is typically valid for one year and must be renewed prior to the expiration date to avoid a lapse in coverage. Always pay your car insurance premium before the due date to ensure that your vehicles are covered. In the event of a policy lapse, the insured vehicle will be subjected to a new inspection before renewal. Furthermore, once the comprehensive insurance coverage gets lapsed after 90 days from the date of expiry, you will not receive the No Claim Bonus benefit.

Q3: What is a "No Claim Bonus" in vehicle insurance?

A policyholder receives a No Claim Bonus (NCB) if he hasn't filed any claims throughout the insurance period. The comprehensive insurance plan in India varies between 20-50%, according to current laws. A third-party motor insurance plan does not qualify for the NCB. At the time of the vehicle transfer, the insurance plan can be transferred to a new insurance provider, but NCB can't be transferred. The new buyer is responsible for paying the outstanding balance. The NCB can be used by the car's original/former owner when acquiring a new vehicle.

Q4: If I change my motor insurance policy provider, would my No Claim Bonus be migrated?

Yes, if the policyholder changes their motor insurance carrier at the time of renewal, they are eligible for the NCB. All you'd have to do is show verification of the NCB you've earned from your existing insurance provider. You can show an authentic copy of your expired policy as well as a certification showing you haven't filed a claim against the (expiring) insurance plan. Proof of this can be found in a renewal notification or a letter from your former insurance provider stating that you are eligible for the NCB.

Q5: What is a deductible in motor insurance?

The deductible is the amount that must be paid out of pocket if a claim is filed. In general, there is a standard or mandatory deductible for most automobiles such as two-wheeler vehicles or cars and commercial vehicles, such as trucks. It depends on the carrying capacity or cubic capacity of the vehicle. However, in some situations, the insurance carrier may impose a larger deductible based on the vehicle's age or the frequency with which the claims are filed.

Q6: Are there any specific premium rates for different cities in India?

The location where the automobile is registered is considered while deciding the premium of the motor insurance taken. Don't mix up the registration location with the location where the vehicle is operated. For instance, if your automobile is registered in Chennai, the applicable charges for Zone A would be charged. Even if you shift to another town or city, the same charges would be applied. Likewise, if an automobile is registered in a town, Zone B premium charges are applicable. If the car owner later relocates to a metropolis, he will only be charged the Zone B rate.

Q7: In case I fit an LPG or CNG kit in my vehicle, is it necessary to update the insurance provider about that?

If you installed an LPG or CNG kit in your car, you must notify the Road Transport Authority's office where the car was registered so that the appropriate adjustments in the registration certificate can be made. The motor insurance provider should also be notified so that it can provide coverage for the kit in the Own Damage Section for an additional price based on the kit's worth.

Q8: What documents are required to submit a vehicle insurance claim?

The documents listed below are required by the majority of motor insurance companies. But first, carefully read the fine language of your policy and double-check:

1. Duly filled claim form
2. Photostat copy of automobile's Registration Certificate
3. The original estimate of loss
4. Original invoice and payment receipt of the repair. If you have availed of the cashless facility, a repair invoice is required to be submitted.
5. FIR is required if you file a claim for vehicle loss/theft
6. The keys are required to be submitted along with a non-traceable certificate in case you are filing theft claims.

Q9: Can I renew my motor insurance policy online?

Yes, you can renew your automobile insurance coverage online by going to the official website of your insurer or an insurance broker.

Q10: What is a motor insurance cover note?

A motor insurance cover note is a temporary Certificate of Insurance (COI) provided to the policyholder until the actual COI is delivered by the insurer. The cover note is issued for the time being after the policyholder has submitted the proposal form and paid the premium towards the chosen policy. It is valid for up to 60 days from the date of issuance and your insurer must provide the original policy document within this interim period. This cover note serves all the purpose of a valid insurance policy such as you can show this temporary certificate to the traffic policy at the time of checking. Also, you can claim coverage in case of an accident or theft.

Q11: Do we need to transfer insurance to the name of the purchaser after selling the vehicle?

Yes, the ongoing motor insurance policy must be transferred to the buyer's name if you decide to sell your two-wheeler, four-wheeler, or commercial vehicle. The buyer should apply for the insurance transfer within 14 days of vehicle sale. You can also transfer your policy to a different vehicle, but the buyer will need to acquire a new policy for the transferred vehicle.