Motor Insurance- Simplified

Motor Insurance in India deals with the insurance covers for the loss or damage caused to the automobile or its parts due to natural and man-made calamities. It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability. There are certain general insurance companies who also offer online insurance renewal options for the vehicle. Motor Insurance in India is a compulsory requirement for all new vehicles used whether for commercial or personal use.  The claims of the Auto Insurance in India can be accidental, theft claims or third party claims. 

Types of Motor Insurance:

Broadly there are two types of insurances policies that offer motor insurance cover:

  1. Liability Only Policy (Statutory requirement)
  2. Package Policy (Liability Only Policy + Damage to owner’s Vehicle usually called O.D Cover)

It is always advised to choose package policy. Because if you take only a Liability Only Policy, damage to your vehicle will not be covered. Covering your vehicle is a safe choice.

What Motor Insurance covers:

The damages to the vehicle due to the following perils  are usually covered under OD section of the Motor Insurance policy:

  1. Fire, Explosion, Self- Ignition, Lightning
  2. Burglary/Housebreaking / Theft
  3. Riot & Strike
  4. Earthquake
  5. Flood, Storm, Cyclone, Hurricane, tempest, inundation, hailstorm, frost
  6. Accidental external means
  7. Malicious Act
  8. Terrorism acts
  9. While in Transit by Rail/ Road, Inland waterways, Lift, Elevator or Air
  10. Land slide / Rock slide

What Motor Insurance excludes:
 Most of the unexpected events are covered in the Motor Insurance. But still there are some occasions where the claim will be rejected. You have to note that the claim may get dishonored under the following coditions.

  • Not having  a valid Driving License
  • Under Influence of intoxicating liquor/ drugs
  • Accident taking place beyond Geographical limits
  • While Vehicle is used for unlawful purposes
  • Electrical/Mechanical Breakdowns.

Basis of Sum Insured:

For Own Damage:
The Sum Insured(SI) under a Motor Insurance policy reflects the present market value of the motor vehicle determined based on the concept known as Insured's Declared Value(IDV). Insured's Declared Value is the value arrived at based on the Manufacturer's present value and depreciation based on the Age of the Vehicle.

For Third Party:
Coverage is as per requirements of the Motor Vehicles Act, 1988 . Compulsory Personal accident cover for owner-driver is also included. Policy can also be extended to cover various other risks like Personal Accident to occupants of vehicle, Workmen's Compensation to Driver, etc over and above the cover available to him under statute.

This is an extract from the IRDA consumer education website. The sole intention of this article is to provide more knowledge to the customers about motor insurance in India.

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