Motor Insurance explained in 2 minutes

In our day-to-day lives, I am sure you must have across these terms; Vehicles insurance or Car insurance or Auto insurance or Motor Insurance! Well, it’s all the same. This 2 minutes read decodes the in and out of the Motor Insurance in a very simple yet lucrative way!

Let’s see how…

First in first; what exactly is Motor Insurance?

Motor insurance is nothing but a type of insurance cover purchased either for a private or a commercial vehicle to offer a financial protection against any damage or a loss.

Let’s now dive deep into two categories of Motor Insurance…

1. Third-party liability motor insurance

A third-party liability cover is mandatory as per the Motor Vehicles Act, 1988. This type of motor insurance plan is also known as the ‘act only’ cover.  Simply because the type of coverage that it offers helps to reduce the car owners worries.

How?

It offers coverage against-

• Third-party legal liability: Offers death compensation to the third-party in case of an accident. This compensation however derived with a detailed enquiry and analysis of the Motor Accident Claims Tribunal. Offers coverage right from any minor bruises till fractures in case of injuries to the third-party. Offers coverage in case of partial of total permanent disability to the third-party in case of an accident.
• Property damage: Offers coverage up to Rs.7.5 lakh to the third-party property in case of any damage or      loss during an accident.
• Personal Accident Cover for the Owner Driver: Offers coverage in case of any bodily injuries suffered by the owner-driver of the vehicle.

The compensation is simplified in a tabular format below:

Third-party motor insurance does not offer coverage against the below:

• Any accidental loss or liability occurred in the geographical area not specified
• Any loss occurred due to a contractual liability
• If the car was driven by a person who is not the registered owner-driver of the car
• Any loss or damage occurred due to war or invasion or use of radioactive contamination or weapons

2. Comprehensive Motor Insurance

We learnt that a third-party motor insurance is mandatory as per the Indian law. Whereas a comprehensive motor insurance would specifically be your choice, whether you wish to opt for it or not! However, experts recommend going for a Comprehensive cover for the hosts of benefits that it has to offer.

Comprehensive motor insurance offers coverage to the third-party as well as damages occurred to your vehicle due to the below instances:

• Fire
• Theft
• Vandalism
• Man-made disasters
• Natural disasters
• Civil disturbances
• Road accidents.

Remember that a third-party motor insurance wouldn’t offer coverage for these. Therefore, a comprehensive insurance as the name suggests deals or covers almost all the elements!

You can also opt for add-on covers such as an engine protection cover, zero depreciation cover, NCB protection cover, invoice cover, etc. These add-ons can be purchased by paying an extra premium apart from the base premium.

It is however advisable to opt one only as per your requirement!

Motor Insurance Policy also covers:

• Personal Accident Cover for Private Cars: The personal accident cover of Rs.15 lakh at a mere premium payment of Rs.750 has been made mandatory to the owner driver of the car.

Your take?

Well, with the types of coverage that a Motor Insurance offers, it is advisable to opt for a Comprehensive Motor Insurance Policy. Nevertheless, the choice is yours. You may however can’t afford to forget the ‘compulsory’, Third-party insurance for your vehicle plying on the Indian roads!