Why car insurance is a must - Team-BHP

navdeep · 7th May 2007, 14:00

Insurance, suddenly, has taken centre-stage because of the increasing penchant of individuals towards all kinds of loans. With the consumer becoming more loan-friendly, the obvious fallout has been the requirement to stack up on insurance as well.
However, taking insurance has not been made mandatory by most banks. Of course, there is an occasional bank that might insist (read request) you to take an insurance policy, if you are taking a home loan. But legally, they cannot force you to take one.
But the only purchase where it is mandatory to have an insurance is in case of purchasing automobiles. That is, it is imperative that you have car insurance as soon as you purchase your car.
In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every owner of a vehicle plying on public roads to take an insurance policy to cover the amount, which the owner becomes legally liable to pay as damages to third parties as a result of accidental death, bodily injury or damage to property. Also, it is necessary for you to always carry the certificate of insurance in the vehicle as proof.
There are basically two types of motor insurance policies. Type I, which is better known as Third Party Insurance (Form A), is the one which is compulsory. This covers the policyholder against damage to a third-party's property or the third parties themselves.
In simple words, if you were to run into another car and cause damage to that car and injure the occupant(s) of that car, a third party only policy will pay for the repair of the other vehicle, and will pay for any medical claims or injuries suffered by the occupant(s) of the other car and any passengers in your car other than you.
But this policy does not cover the costs of repairing your own vehicle. However, you could add some riders to this policy that would cover for your legal liability to pay compensation for:

Death or bodily injury to a third-party person
Damage to third-party property

Liability is covered for an unlimited amount in respect of death or injury and damage to third-party property for Rs 7.5 lakh under commercial vehicle and cars and Rs 1 lakh for scooters and motor cycles
Moreover, there are additional riders for third-party fire and theft as well. That is, if your vehicle is stolen or is set on fire, these riders cover them as well.
Type-II policy, better known as the comprehensive car insurance cover (Form B) covers payout for third-party damages and injuries, will pay out in the event of your vehicle being stolen or set on fire, and will also pay for any damage to your own vehicle (regardless of whose fault the accident was).
In addition to the coverage under liability only, this policy covers loss or damage to the insured vehicle and its accessories due to fire, explosion, self-ignition or lightning, burglary, riot and strike, malicious act, terrorist act, earthquake, (fire and shock) damage, flood, typhoon, hurricane, storm, tempest, inundation, cyclone and hailstorm, transit by road, inland waterway, lift, elevator or air. So, this brings us to what type of car insurance cover is best for you? As a general rule of thumb, the following points are worth noting:
If you are young and driving an inexpensive first car then you will probably find the cost of comprehensive motor insurance very high. For instance, a 20 year-old buys a second-hand car for Rs 1.5 lakh. In this case, the cost of a comprehensive policy would be higher as compared to the cost for a third-party fire and theft policy.
Of course, if there is an accident and you are at fault and your car is badly damaged, then it you will have to pay for the repair or replacement of the car. But if you are young and driving a more expensive car, then it will make sense for you to have comprehensive insurance.
Remember that the no-claim bonus follows the individual and not the vehicle. So you will be able to garner good discounts on renewal of the policy. The bonus ranges from 20 per cent to 50 per cent, depending on the number of years for which no claim has been made.
Some important exclusions under this policy include wear and tear, breakdowns, consequential loss, loss when driving with invalid driving licence or under the influence of alcohol, use of vehicle otherwise than in accordance with limitations as to use, etc.
Now, you can do online processing of claims and premium payments. This implies that life is going to become much easier for the end user.

Why car insurance is a must

caliper · 14th May 2007, 00:11

What I'd like to know is which insurance company is offering only liability insurance. I'd rather take liability insurance, and put the premium money for comprehensive in a Fixed Deposit for the off chance of needing it.

BaCkSeAtDrIVeR · 23rd June 2008, 23:19

Quote:

Originally Posted by caliper

What I'd like to know is which insurance company is offering only liability insurance. I'd rather take liability insurance, and put the premium money for comprehensive in a Fixed Deposit for the off chance of needing it.

Better a late answer than no answers at all!!! :-)

All insurance companies are supposed to provide third party only cover. I do not know if the newer, non-psu ones will accept third party only cover, since it tends to be more expensive (in terms of risk / premium ratio) for them. (hence their reluctance to cover older vehicles).

I suggest that you specifically verify that you get unlimited coverage for both personal damage / loss to third parties (ie., injury to persons) AND property loss.

Edit:- It is an offence to drive a vehicle without third party insurance coverage. You have to keep a copy of the insurance policy along with the registration paper, tax and your (the driver's) driving license on the vehicle. But insurance companies will ask you to produce the vehicle, if you are renewing after the date of renewal - so you will be forced to drive the vehicle all way to the insurance co. office if you are late to renew your insurance. (I am speaking of PSU insurers).

sriturl · 24th June 2008, 00:17

Quote:

Originally Posted by BaCkSeAtDrIVeR

It is an offence to drive a vehicle without third party insurance coverage. You have to keep a copy of the insurance policy along with the registration paper, tax and your (the driver's) driving license on the vehicle. But insurance companies will ask you to produce the vehicle, if you are renewing after the date of renewal - so you will be forced to drive the vehicle all way to the insurance co. office if you are late to renew your insurance. (I am speaking of PSU insurers).

Last time my insurance was expired, and I didnt renew for some time, Royal Sundaram sent over their agent to get the pictures of the vehicle.
I am sure now a days PSU agents would also do that.

That is because you do not claim for any damages on your vehicle which happened during the un-insured period.

Sahil · 8th July 2008, 04:00

In the event of someone bumpings into you,if he/she claims 3rd party insurance to repay you,would you loose on your NCB?

Also how does one prove he is liable for a 3rd party insurance...these land up in endless arguments..

GTO · 8th July 2008, 14:14

Logically, NO. If the other party is paying you from their insurance, you are not claiming on your insurance and thus, the NCB should continue.

7th May 2007, 14:00	#1 (permalink)
navdeep BHPian Join Date: Sep 2006 Location: Pune Posts: 856	Why car insurance is a must Insurance, suddenly, has taken centre-stage because of the increasing penchant of individuals towards all kinds of loans. With the consumer becoming more loan-friendly, the obvious fallout has been the requirement to stack up on insurance as well. However, taking insurance has not been made mandatory by most banks. Of course, there is an occasional bank that might insist (read request) you to take an insurance policy, if you are taking a home loan. But legally, they cannot force you to take one. But the only purchase where it is mandatory to have an insurance is in case of purchasing automobiles. That is, it is imperative that you have car insurance as soon as you purchase your car. In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every owner of a vehicle plying on public roads to take an insurance policy to cover the amount, which the owner becomes legally liable to pay as damages to third parties as a result of accidental death, bodily injury or damage to property. Also, it is necessary for you to always carry the certificate of insurance in the vehicle as proof. There are basically two types of motor insurance policies. Type I, which is better known as Third Party Insurance (Form A), is the one which is compulsory. This covers the policyholder against damage to a third-party's property or the third parties themselves. In simple words, if you were to run into another car and cause damage to that car and injure the occupant(s) of that car, a third party only policy will pay for the repair of the other vehicle, and will pay for any medical claims or injuries suffered by the occupant(s) of the other car and any passengers in your car other than you. But this policy does not cover the costs of repairing your own vehicle. However, you could add some riders to this policy that would cover for your legal liability to pay compensation for: Death or bodily injury to a third-party person Damage to third-party property Liability is covered for an unlimited amount in respect of death or injury and damage to third-party property for Rs 7.5 lakh under commercial vehicle and cars and Rs 1 lakh for scooters and motor cycles Moreover, there are additional riders for third-party fire and theft as well. That is, if your vehicle is stolen or is set on fire, these riders cover them as well. Type-II policy, better known as the comprehensive car insurance cover (Form B) covers payout for third-party damages and injuries, will pay out in the event of your vehicle being stolen or set on fire, and will also pay for any damage to your own vehicle (regardless of whose fault the accident was). In addition to the coverage under liability only, this policy covers loss or damage to the insured vehicle and its accessories due to fire, explosion, self-ignition or lightning, burglary, riot and strike, malicious act, terrorist act, earthquake, (fire and shock) damage, flood, typhoon, hurricane, storm, tempest, inundation, cyclone and hailstorm, transit by road, inland waterway, lift, elevator or air. So, this brings us to what type of car insurance cover is best for you? As a general rule of thumb, the following points are worth noting: If you are young and driving an inexpensive first car then you will probably find the cost of comprehensive motor insurance very high. For instance, a 20 year-old buys a second-hand car for Rs 1.5 lakh. In this case, the cost of a comprehensive policy would be higher as compared to the cost for a third-party fire and theft policy. Of course, if there is an accident and you are at fault and your car is badly damaged, then it you will have to pay for the repair or replacement of the car. But if you are young and driving a more expensive car, then it will make sense for you to have comprehensive insurance. Remember that the no-claim bonus follows the individual and not the vehicle. So you will be able to garner good discounts on renewal of the policy. The bonus ranges from 20 per cent to 50 per cent, depending on the number of years for which no claim has been made. Some important exclusions under this policy include wear and tear, breakdowns, consequential loss, loss when driving with invalid driving licence or under the influence of alcohol, use of vehicle otherwise than in accordance with limitations as to use, etc. Now, you can do online processing of claims and premium payments. This implies that life is going to become much easier for the end user. Why car insurance is a must __________________ eXpect the uneXpected \| Diesel For Men

8th July 2008, 04:00	#5 (permalink)
Sahil Senior - BHPian Join Date: May 2004 Location: Bombay Posts: 3,069	In the event of someone bumpings into you,if he/she claims 3rd party insurance to repay you,would you loose on your NCB? Also how does one prove he is liable for a 3rd party insurance...these land up in endless arguments.. __________________ ______________ __________ ______ __

8th July 2008, 14:14	#6 (permalink)
GTO Team-BHP Support Join Date: Feb 2004 Location: Bombay Posts: 18,786 View My Garage	Logically, NO. If the other party is paying you from their insurance, you are not claiming on your insurance and thus, the NCB should continue. __________________ GTO Work backward from your imagination, not forward from the past! Please don't PM for support. Use the Contact Form instead. Please read the NEW Team-BHP FAQ section for all your queries.

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14th May 2007, 00:11	#2 (permalink)
caliper BHPian Join Date: May 2007 Location: India Posts: 151	What I'd like to know is which insurance company is offering only liability insurance. I'd rather take liability insurance, and put the premium money for comprehensive in a Fixed Deposit for the off chance of needing it.