8 Ways You Can Reinvent Auto Insurance Without Looking Like An Amateur

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auto insurance
Auto Insurance Essential

                                             

Is it mandatory to have an auto insurance ?

As per provisions of ‘Motor Vehicles Act 1988’ it is mandatory for every owner of ‘any vehicle’ plying on public roads in India to have a valid ‘auto insurance policy’. Here, ‘any vehicle’ means irrespective of the purpose for which the vehicle is being used whether for social, pleasure, domestic, transportation or any other purpose. The reason is simple. When a vehicle is involved in an accident and causes damage to life or properties of a third party(s) the owner becomes legally liable to pay damages for the accident and the policy covers the amount of such damages.

Motor Insurance may be broadly divided into two categories :

i) Third Party Motor Insurance : Third party motor insurance covers any damage or injury caused by the insured to another vehicle and its passengers. Third party motor insurance is the basic insurance which is mandatory by the ‘Motor Vehicles Act 1988’ and does not cover the owner(insured) and damage to his/her vehicle. It also does not provide cover if the car or the belongings of the owner is stolen or damaged. The ‘Motor Vehicles Act’ also says that the claim may be lodged under ‘no fault liability claims’ which means that the ‘claimant’ is under no obligation to prove negligence on the part of the vehicle that caused the accident.

ii) Comprehensive Motor Insurance : Third party insurance only covers damage and injury caused to the third party by the vehicle of the insured but what if your vehicle is stolen or damaged due to natural calamities such as flood or man made situations like riot, arson? Here is the need for a ‘Comprehensive Auto Insurance’.  Comprehensive insurance covers damage to the car of the insured other than collision.

However, having a ‘Comprehensive Policy’ is pricey. Bank financing for new vehicles purchase always make it mandatory for the borrower to have a ‘comprehensive policy’. If you have purchased a new vehicle with your own money, it is also wise always to have a ‘comprehensive policy’ cover. Otherwise any damage or theft may prove to be dearly. If your car is more than 5 years old it may not fetch a very good price and you may have a second thought whether to have a ‘comprehensive insurance’ cover or not.

A Comprehensive Policy Covers The Following Situations :

  • Vandalism like riot, arson, unrest
  • Theft
  • Burglary
  • Fire
  • Flood
  • Damage caused by collision with an animal
  • Damage caused by falling objects or missiles
  • Damage caused by severe weather conditions like flood, hurricane, tornado, cyclone
Without a comprehensive cover, you shall have to bear the entire cost of repair in case your car is damaged for some reason other than ‘collision’. As far as the ‘high price’ of modern cars is concerned it is always prudent to have a comprehensive policy.

Two Wheeler Insurance :

                                       

Many people think buying a ‘comprehensive policy’  for a two wheeler is a wastage of money. They might prove to be wrong in the event of a theft or damage or injury to self. To keep your bike and yourself always safe and secured, a ‘comprehensive coverage’ is always a good deal. 

Coverage :

  • Loss or damage to two wheeler against natural calamities – fire, explosion, lightning, earthquake, cyclone, storm, flood, inundation or landslide.
  • Loss or damage to two wheeler against man made incidents – theft, burglary, riot, arson, looting, vandalism, terrorist attack, damage caused in transit by rail, road, air, inland waterways.
  • Personal accident cover – some companies provide personal accident cover for the owner/driver while driving and for pillion rider also with a little extra premium. 
  • Third party legal liability – protection against legal liability arising out of accident while driving, resulting in injury, permanent disability or death to third party(s).

Exclusions :

  •  Normal Wear & Tear
  • Mechanical or Electrical Failure
  • Periodical Servicing
  • Driving by a person without a valid driving licence, racing or violating traffic rules
  • Driving by a person under the influence of drug/liquor
  • Loss or damage due to war or nuclear attack
  • Loss or damage to accessories – by burglary, theft unless the vehicle is stolen at the same time
  • Wear & Tear of consumables – tyres & tubes, bulbs unless the vehicle is damaged at the same time