What Is Motor Vehicle Insurance And How Does It Work?

What Is Motor Vehicle Insurance And How Does It Work? – We all have heard about insurance policies, and the growth of insurance is not hidden from us. Motor vehicle insurance stands out among various policies like life insurance, child insurance, crop insurance, etc., motor vehicle insurance is also one of them.

Vehicles bring a unique blend of exhilaration and joy to people’s lives, forging a profound connection that often transforms them into cherished members of the family. Vehicles are very expensive also and come with a lot of risk, this make the motor vehicle insurance a mandatory one in India unlike other insurance policies because the risk of A vehicle’s impact extends beyond its owner, affecting all those who come into contact with it, weaving a tapestry of influence that touches lives far and wide.

The motor vehicle insurance is an important document that every vehicle owner has to take at the time of purchasing the vehicle and has to renew it time to time. It provides protection and covers the damages incurred by the insured vehicle.

What Exactly Is a Motor Vehicle Insurance?

Motor insurance, as employed in the insurance sector, is a form of coverage designed for various vehicles, encompassing motorcycles, cars, and commercial trucks. This insurance shields you financially against unforeseen events such as accidents or natural disasters, a legal necessity for all vehicles on Indian roads, be it cars, scooters, or motorcycles.

Features of Motor Vehicle Insurance

Motor vehicle insurance’s features depend upon the policy chosen by the insured. Here, we are mentioning some of the common features of the motor vehicle insurance:

  • Buying of motor vehicle insurance is easy, whether it is online or offline.
  • Wherever you are, it is very easy to renew the insurance policy online.
  • The insured has the flexibility to effortlessly add or remove additional coverage options as needed.
  • It covers the damages caused by accident, fire, theft, etc.
  • It provides cashless claim facility.

Types of Motor Vehicle Insurance

Motor vehicle insurance is typically categorized into three main types:

Car Insurance

  • In India, it’s mandatory for vehicle owners to obtain comprehensive motor insurance, providing protection against theft, natural disasters, accidents, fire, and other mishaps, including personal injuries. Moreover, it extends coverage to third-party injuries and damages, ensuring holistic security.

Bike or Two-Wheeler Insurance

  • The Indian government requires the purchase of this insurance coverage, which covers two-wheeled vehicles like scooters and bikes. The two-wheeler is protected from damage caused by mishaps, catastrophes, fire, theft, etc. as well as any damage or harm to third parties. They also offer a personal accident insurance choice, mandatory for the owner-rider and accessible to passengers.

Commercial Vehicle Insurance

  • All non-personally used automobiles are covered by this insurance. This insurance type covers any automobiles that are not driven for personal purposes. This insurance policy covers a wide range of vehicles, including trucks, buses, heavy and light commercial vehicles, multi-utility vehicles, agricultural vehicles, taxis, ambulances, and auto rickshaws, among others.

Motor Insurance Coverage In India

Third Party Coverage

  • This type of coverage comes into play when you and your vehicle are at fault for the accident, providing assistance to the third party or the victim involved in the collision. This kind of auto insurance coverage offers the insured (you) no financial advantages.
  • IRDA (Insurance Regulatory and Development Authority) mandates that all automobile categories require third-party auto insurance coverage.

Comprehensive Coverage

  • This kind of motor insurance guards the policyholder (you) from financial loss brought on by damage to or theft of the insured car. A comprehensive insurance plan typically covers third parties as well. It may also be viewed as a supplement to third-party coverage.

Pay as you Drive

  • The latest IRDA regulations introduce an innovative motor insurance plan, allowing premium payments based on actual kilometers driven by the policyholder. Depending on how far the insured anticipates driving throughout the term of the policy, the premium is chosen at the time of purchase. It includes both comprehensive insurance coverage and third-party liability.

Damages that are Included

Following are the risks cover under motor vehicle insurance:

  • Earthquakes
  • Riots
  • Landslides
  • Storms
  • Floods
  • Terrorism
  • Fire and Burglary
Also check out: What Is The Property Insurance And How It Works?

Damages that are Excluded

The following situations are not covered under any motor vehicle insurance:

  • When driver drives after consuming the alcohol.
  • When the person driving does not have a valid driving license.
  • When the vehicle is used for any kind of illegal activity or for the purpose that is not mentioned in the policy.
  • When the place of damage or loss is outside the territory of India.

Things To Keep In Mind While Buying A Motor Insurance

In India, it’s a legal mandate to buy third-party motor insurance, but opting for a comprehensive plan brings you a range of advantageous perks. The following considerations should be made while buying auto insurance online:

  • Verify that the insurance coverage offered by the plan you choose is enough.
  • For further advantages, add the available add-ons that the insurer is offering to the base insurance.
  • Verify that the chosen policy offers personal accident protection.
  • Look further to learn about the claim settlement ratios of various auto insurance companies.
  • To get the best insurance protection, learn about the zero-depreciation add-on and include it in your policy.
  • When purchasing auto insurance, carefully read the policy’s terms and conditions.

IRDAI (Insurance Regulatory and Development Authority of India) Motor Vehicle Rules: Recent Update

IRDAI consistently revises regulations to enhance and reduce motor insurance costs, benefiting vehicle owners. Some of the IRDAI updates you should be aware of are listed below:

  • According to an IRDAI regulation from 2018, only third-party insurance needs to be purchased for a minimum of three years for cars and five years for two-wheelers. (IRDAI 2018 regulation).
  • Third-party motor insurance with comprehensive coverage must be purchased for three and five years.
  • Offering insurance coverage for third parties for durations of three and five years, with an added year of comprehensive protection, in accordance with the IRDAI’s 2020 regulatory update.
  • For personal vehicles, the insurance amount is determined by the manufacturer, road tax, and on-road cost.
  • The premium amount will also depend on the policyholder’s driving habits. The IRDAI has standardized No Claim Bonus within the range of 20-50%.
  • Electric vehicle insurance premiums will be 15% less expensive to pay. Long-term insurance can also be transferred by the owners from one company to another.

How to Claim Motor Vehicle Insurance Benefits?

Filing a motor vehicle insurance claim can differ from one individual to another. However, the general steps to file a claim typically include the following:

Claim for damage to the vehicle of insured

  • In this situation, you must give the insurer a thorough estimate of the loss you have suffered. The surveyors will determine the cause of the loss, examine the damaged vehicle, and submit their survey report after the claim is submitted. You’ll get your insurance benefits after your claim is approved.

Claim for third party

  • Once the third party or insured provides notice, an attorney will handle the case. They will gather essential documents, including the police report, and seek all relevant accident details.
Also read: What Is Whole Life Insurance Policy?