What is Auto Insurance?
Under India Motor Vehicles Act 1988, it is mandatory to have minimum ACT ONLY Auto Insurance policy, to drive any vehicle on the PUBLIC ROAD. Every type of vehicle including personal, commercial or business purpose should be compulsorily insured. Auto Insurance is fundamentally a contract between a vehicle Owner (INSURED) and the Insurance Company in which INSURED pays a fixed amount i.e. premium for a policy issued by the Insurance Company that will give INSURED financial protection against THIRD PARTY liability in case INSURED is sued for an accidental damage to Third Party vehicle or Property. There is OWN DAMAGE Policy which cover, over and above ACT ONLY Policy which not only gives protection against Third Party losses/damages but also covers any accidental losses or damages to the Insured vehicle including loss or damages by theft of the vehicle. Insurance is created to protect you from unexpected and unlikely events to save you against financial expenses, emotional torture, stress and inconvenience.
What is definition of Two Wheelers? Two Wheelers are vehicles used solely for social, domestic, pleasure purposes and business or professional purposes but not for carriage of goods other than samples.
What are types of Policies?
The Indian Motor Tariffs, as amended in July 2002 provides for two types of Policy forms. They are
(i) ACT ONLY (Third Party) Insurance Policy :
This type of policy only covers the third person who has been injured or Death or his property has been damaged in an accident where the Insured is accountable. It covers the insured person's liability to Third Parties' loss caused by an accident involving the vehicle of the insured. This refers to the minimum risks that are to be covered under the Motor Vehicles Act 1938 (Act Liability). It doesn’t cover the expenses, damage, theft or injuries of the owner or owner’s vehicle. This type of Policy is made compulsory by the law of India for any vehicle operating on public Road. It covers Unlimited Liability cover in case of death or bodily injury to a third party and also covers damage to third party property up to Rs.7.5 lakh
The quote that you get for ACT ONLY cover is the sum of its components which include:
(i) (A) The basic ACT ONLY / Third-Party premium as follows: The basic premium for third-party depends on the Engine cubic capacity of the Two Wheeler Act Only Premium Rates revised by IRDA from 01st April, 2018. Not exceeding 75cc Rs. 427 Above 75cc but not exceeding 150cc Rs. 720 Above 150cc but not exceeding 350cc Rs. 985 Above 350 cc Rs. 2323
(B) Premium for Personal Accident Owner Driver Cover – Rs. 50 For a premium of Rs. 50, Personal Accident Cover for the owner Driver gets compensation up to a maximum Sum Insured of Rs. 1,00,000 in case of: Nature of Injury Scale of compensation
1 Death 100%
2 Loss of two limbs or sight of two eyes or one limb and sight of one eye 100%
3 Loss of one limb or sight of one eye 50%
4 Permanent total disablement from injuries other than named above. 100%
Optional pillion Rider Cover for Rs. 1,00,000 is available on paying extra premium
(c) 18% GST.
(ii). Own Damage (Comprehensive) Insurance Policy : This type of Policy has a wider scope and covers all the above mentioned Third party liability along with the insured person’s accidental damages to Insured’s vehicle due to accident, theft, and expenses and injuries to Insured. This type of policy can be extended to increase benefits as an additional feature by paying additional premium. The own damage premium depends on Insured Declared Value (IDV), engine capacity and vehicle registered RTO. The IDV is the value of the Two Wheeler based on its ex-showroom price and depreciation percentage. An add-on cover depends on your Two Wheeler requirement and thus is a variable. The GST is charged on the Own Damage premium
The quote that you get for comprehensive coverage is the sum of its components which include:
Third-Party premium or add on with Pillion Rider coverage.
Own Damage premium
Premium for Personal Accident Owner Driver Cover – Rs. 50
Charges for additional coverage (add-ons) like (1) Zero depreciation : For the repair or replacement expenses of plastic, rubber, glass and other materials which would otherwise not be covered in a regular policy
Goods & Services Tax – 18%
What is normally covered in Own-Damage Comprehensive Two Wheeler Insurance?
I. Fire, explosion, self-ignition or lightning
II. Flood, Typhoon, Hurricane, Storm, Tempest, Inundation, Cyclone, Hailstorm
III. Burglary, housebreaking or theft –The Insurance company shall pay equal to IDV
IV. Riot, strike and terrorism
V. Earthquake (fire and shock damage)
VI. Accidental external means
VII. Malicious Act
VIII. Terrorist Activity
IX. Whilst in transit by road, rail, inland waterway, lift, elevator or air
X. Landslide, Rockslide
What is normally NOT covered in Two Wheeler Insurance?
1) Loss or damage if policy is not in force
2) Accidental damages caused when the Two Wheeler was used for illegal activities
3) Gradual wear and tear of Vehicle and its parts and damages due to war or nuclear risks
4) Electrical / mechanical breakdown
5) Loss or damage to vehicle when driven by a person without a valid license
6) Loss or damage to vehicle as a result when driver was under the influence of intoxication due to drugs, alcohol etc.
7) Loss or damage to vehicle as a result of abuse, misuse, and in contravention of manufacturers guidelines
8) Use of two wheeler for the purpose which is not meant for use.