Motor Insurance
Vehicle insurance or motor insurance is meant for cars, two wheelers and other road vehicles. A motor package policy protects the insured vehicle against the damages caused due to accidents and natural disasters.In addition to the own vehicle damage, motor vehicle insurance also provides the mandatory coverage for third-party liabilities.Simply put, a comprehensive vehicle insurance allows for worry-free drives by curbing your vehicle repair expenses and helping you adhere to the law when on road.
Having valid motor insurance is compulsory in India to protect vehicle owners from potential financial risks. It is the best form of security that you can acquire to prevent significant expenses that result after an accident. The Government poses the compulsion for the safety of the individuals who travel via motor vehicles daily.No one can deny that buying a vehicle is the second most expensive investment in a person’s life after home. Thus, protecting the investment against unforeseen events is crucial. Considering the hike in the vehicle repair charges and the risks involved in driving, an unfortunate accident can put a big hole in your pocket.
WHY MOTOR INSURANCE?
- Legal Requirement- The first reason is, of course, to follow the laws and regulations of the Government. A person should oblige to buy a motor insurance policy with minimum coverage before taking the vehicle out on the road.
- Third-party Damage Coverage- With sufficient coverage, you can pay for the damages that occurred after a collision with a third-party. Without motor insurance, you’ll have to pay from your pocket, and an appropriate amount of coverage can take care of such expenses.
- Security Against Theft- Theft is one of the most significant threats on a vehicle. But with a vehicle insurance policy, you are protected against theft, vandalism, and all man-made harmful activities.
- Damage Expense Coverage- Paying outright for vehicle damage repairs will affect your financial condition. However, you can pay for such damages with the insurance even though the amount is hefty as long as you have enough coverage.
- Insurance against Personal Injuries- Not every vehicle owner is lucky to get out of accidents without suffering from injuries. The motor insurance policy will pay for all the minor and major injuries that might occur due to accidents.
Personal Accident Compensation for Owner-Driver
Currently, all car owners are required to buy a personal accident cover of Rs.15 lakh as per the guidelines issued by IRDAI or the Insurance Regulatory and Development Authority of India. The IRDAI has fixed the compensation of PA cover at Rs. 15 lakh following an order from the Madras High Court in September 2018
No Claim Bonus (NCB)
NCB is essentially a discount on your insurance premium that you can avail when you renew your policy. If you do not make any claims for a few years consecutively, you can accumulate up to 50% discount on premiums. Well, it works almost like a rewards system. You start by gaining a 20% NCB discount if you haven’t made any claims for your first policy year. Consequently, you keep gaining an additional 5% from your second consecutive year of making no claims. This can go about a reduction of 50% in your sixth consecutive year.
TYPES OF MOTOR INSURANCE
- Comprehensive motor insurance – A comprehensive vehicle insurance policy provides coverage against the third-party legal liabilities as well as the losses or damages to the insured vehicle during an accident or mishap. It covers the vehicle against natural and man-made disasters, including road accidents, fire, theft, earthquake, storm, flood etc.
- Third-party motor insurance – Third-party motor insurance is mandatory in India as per the law. It protects the policyholder against legal liabilities arising due to an accident involving his/her vehicle. It means that in case an insured vehicle causes bodily injuries, death or property damage to a third-party, the insurer will take care of the legal liability.As this doesn’t cover the vehicle itself, only third party cover is not recommended for any vehicle. Even if you hardly take your vehicle out on the road, there’s still risk of theft and parking damages. If you choose this type of policy, you’ll have to pay for any damages to your vehicle yourself.
- Standalone OD cover – Introduced by the IRDAI, the standalone Own Damage (OD) cover policies allow the vehicle owners to get coverage against the losses or damages caused to their vehicle due to natural or man-made disasters. This type of policy can be purchased by those who already have a third-party cover from a different or the same insurer.
Ad-ons for your motor Insurance:
- Zero Depreciation/ Bumper to Bumper – Bumper to bumper insurance, nil depreciation or zero depreciation is a type of car insurance policy that offers complete coverage to your vehicle irrespective of the depreciation on its parts. So, when there is a loss or damage caused to your vehicle after an accident, the insurer will not deduct the depreciation value from the coverage amount (excluding car batteries and tyres). The best part is that your motor insurer will pay the entire cost of replacing the vehicle’s body parts. Bumper to bumper car insurance or full-body insurance provides full coverage for all rubber, fiber, and metal parts of your car without deducting the depreciation value. However, it will not cover engine damage resulting from oil leakage or water ingression. Any expenses incurred on mechanical breakdown, consumables or oil change are also not covered. Also, there are limitations on the number of claims that you can file in a year.
- Return to Invoice/Invoice Protect- Return to invoice, also known as RTI, is an add-on cover that offers compensation equivalent to your vehicle’s invoice value. To put it simply, it provides the purchase value of your car (when you bought it) in case of total loss due to theft or complete damage
- Key Replacement Cover- The key replacement add-on cover helps you in case you misplace your original car keys by covering the expenses related to replacements of locks or keys. The policy ensures the reimbursement of the key replacement costs as in this technologically advanced era, getting a key replaced is a costly affair. But, by just paying a little extra amount annually, you can be protected against expensive car keys replacement costs.
- Engine Protection Cover- Engine protect cover is an add-on cover that gives you coverage for damages incurred by the engine of your car due to due to water ingression, leakage of lubricating oils, differential parts or gearbox or engine failure due to an attempt to start a wet engine. It is applicable only with standalone own-damage or comprehensive insurance plans.
These are just some major covers, there are many other add-on covers.
