Chapter -1

Introduction

An advertising poster for a Dutch insurance company from c. 1900–1918 depicts an armoured knight.

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to
hedge against the risk of a contingent or uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, insurance carrier or
underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The
insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the
form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the
event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms,
and usually involves something in which the insured has an insurable interest established by ownership,
possession, or pre-existing relationship.

The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insurer will compensate the insured. The amount of money charged by
the insurer to the Policyholder for the coverage set forth in the insurance policy is called the premium. If
the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a
claim to the insurer for processing by a claims adjuster. The insurer may hedge its own risk by taking out
reinsurance, whereby another insurance company agrees to carry some of the risk, especially if the
primary insurer deems the risk too large for it to carry.
 History

Methods for transferring or distributing risk were practiced by Chinese and Babylonian traders as long
ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids
would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing.
The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC,
and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his
shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel
the loan should the shipment be stolen, or lost at sea.

Circa 800 BC, the inhabitants of Rhodes created the 'general average'. This allowed groups of merchants
to pay to insure their goods being shipped together. The collected premiums would be used to reimburse
any merchant whose goods were jettisoned during transport, whether due to storm or sinkage.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts)
were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed
estates. The first known insurance contract dates from Genoa in 1347, and in the next century maritime
insurance developed widely and premiums were intuitively varied with risks.[3] These new insurance
contracts allowed insurance to be separated from investment, a separation of roles that first proved
useful in marine insurance.
Principles of Insurance :-
When a company insures an individual entity, there are basic legal requirements and regulations. Several
commonly cited legal principles of insurance include:[17]

 Indemnity – the insurance company indemnifies, or compensates, the insured in the case of
certain losses only up to the insured's interest.
 Benefit insurance – as it is stated in the study books of The Chartered Insurance Institute, the
insurance company does not have the right of recovery from the party who caused the injury
and is to compensate the Insured regardless of the fact that Insured had already sued the
negligent party for the damages (for example, personal accident insurance)
 Insurable interest – the insured typically must directly suffer from the loss. Insurable interest
must exist whether property insurance or insurance on a person is involved. The concept
requires that the insured have a "stake" in the loss or damage to the life or property insured.
What that "stake" is will be determined by the kind of insurance involved and the nature of the
property ownership or relationship between the persons. The requirement of an insurable
interest is what distinguishes insurance from gambling.
 Utmost good faith – (Uberrima fides) the insured and the insurer are bound by a good faith bond
of honesty and fairness. Material facts must be disclosed.
 Contribution – insurers which have similar obligations to the insured contribute in the
indemnification, according to some method.
 Subrogation – the insurance company acquires legal rights to pursue recoveries on behalf of the
insured; for example, the insurer may sue those liable for the insured's loss. The Insurers can
waive their subrogation rights by using the special clauses.
 Causa proxima, or proximate cause – the cause of loss (the peril) must be covered under the
insuring agreement of the policy, and the dominant cause must not be excluded
 Mitigation – In case of any loss or casualty, the asset owner must attempt to keep loss to a
minimum, as if the asset was not insured.
Insurance types :-
 Life Insurance or Personal Insurance.
 Property Insurance.
 Marine Insurance.
 Fire Insurance.
 Liability Insurance.
 Guarantee Insurance.
 Social Insurance.
 These are explained below.

Life Insurance
Life Insurance is different from other insurance in the sense that, here, the subject matter of insurance is
the life of a human being.The insurer will pay the fixed amount of insurance at the time of death or at
the expiry of the certain period.At present, life insurance enjoys maximum scope because the life is the
most important property of an individual.Each and every person requires the insurance.

This insurance provides protection to the family at the premature death or gives an adequate amount at
the old age when earning capacities are reduced.Under personal insurance, a payment is made at the
accident.The insurance is not only a protection but is a sort of investment because a certain sum is
returnable to the insured at the death or the expiry of a period.
The general insurance includes Property Insurance, Liability Insurance, and Other Forms of Insurance.Fire
and Marine Insurances are strictly called Property Insurance. Motor, Theft, Fidelity and Machine
Insurances include the extent of liability insurance to a certain extent.

The strictest form of liability insurance is fidelity insurance, whereby the insurer compensates the loss to
the insured when he is under the liability of payment to the third party.

Property Insurance
Under the property insurance property of person/persons are insured against a certain specified risk.
The risk may be fire or marine perils, theft of property or goods damage to property at the accident.

Marine Insurance
Marine insurance provides protection against loss of marine perils. The marine perils are a collision with
a rock, or ship, attacks by enemies, fire, and captured by pirates, etc. these perils damage, destruction or
disappearance o’ the ship and cargo and non-payment of freight.So, marine insurance insures ship (Hull),
cargo and freight.

Previously only certain nominal risks were insured but now the scope of marine insurance had been
divided into two parts; Ocean Marine Insurance and Inland Marine Insurance.The former insures only
the marine perils while the latter covers inland perils which may arise with the delivery of cargo (gods)
from the go-down of the insured and may extend up to the receipt of the cargo by the buyer (importer)
at his go- down.

Fire Insurance
Fire Insurance covers the risk of fire. In the absence of fire insurance, the fire waste will increase not only
to the individual but to the society as well.With the help of fire insurance, the losses arising due to fire
are compensated and the society is not losing much.

The individual is preferred from such losses and his property or business or industry will remain
approximately in the same position in which it was before the loss.The fire insurance does not protect
only losses but it provides certain consequential losses also war risk, turmoil, riots, etc. can be insured
under this insurance, too.

General Insurance
The general Insurance also includes liability insurance whereby the insured is liable to pay the damage of
property or to compensate for the loss of persona; injury or death.This insurance is seen in the form of
fidelity insurance, automobile insurance, and machine insurance, etc.

Social Insurance
The social Insurance is to provide protection to the weaker sections of the society who are unable to pay
the premium for adequate insurance.Pension plans, disability benefits, unemployment benefits, sickness
insurance, and industrial insurance are the various forms of social insurance. Insurance can be classified
into four categories from the risk point of view.

Personal Insurance
The personal insurance includes insurance of human life which may suffer loss due to death, accident,
and diseaseTherefore, the personal insurance is further sub-classified into life insurance, personal
accident insurance, and health insurance.

Property Insurance
The property of an individual and of the society is insured against loss of fire and marine perils, the crop
is insured against an unexpected decline in deduction, unexpected death of the animals engaged in
business, break-down of machines and theft of the property and goods.

Guarantee Insurance
The guarantee insurance covers the loss arising due to dishonesty, disappearance, and disloyalty of the
employees or second party. The party must be a party to the contract.His failure causes loss to the first
party. For example, in export insurance, the insurer will compensate the loss at the failure of the
importers to pay the amount of debt.

Other Forms of Insurance

Beside the property and liability insurances, there are other insurances which are included in general
insurance.The examples of such insurances are export-credit insurances, State employees insurance, etc.
Miscellaneous Insurance
The property, goods, machine, Furniture, automobiles, valuable articles, etc. can be insured against the
damage or destruction due to accident or disappearance due to theft.

There are different forms of insurances for each type of the said property whereby not only property
insurance exists but liability insurance and personal injuries are also insurer.

Features of Insurance
From the above explanation, we can find these following characteristics which are, generally, observed in
the case of life, marine, fire and general insurances.

1. Sharing of Risk
Insurance is a device to share the financial losses which might befall on an individual or his family on the
happening of a specified event.The event may be the death of a breadwinner to the family in the case of
life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general
insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The loss arising from these
events, if insured are shared by all the insured in the form of premium.

2. Co-operative Device
The most important feature of every insurance plan is the co-operation of a large number of persons
who, in effect, agree to share the financial loss arising due to a particular risk which is insured.Such a
group of persons may be brought together voluntarily or through publicity or through solicitation of the
agents

An insurer would be unable to compensate all the losses from his own capital. So, by insuring or
underwriting a large number of persons, he is able to pay the amount of loss.Like all cooperative devices,
there is no compulsion here on anybody to purchase the insurance policy.

3. Value of Risk
The risk is evaluated before insuring to charge the amount of share of an insured, herein called,
consideration or premium. There are several methods of evaluation of risks.If there is an expectation of
more loss, a higher premium may be charged. So, the probability of loss is calculated at the time of
insurance.
4. Payment at Contingency
The payment is made at a certain contingency insured. If the contingency occurs, payment is made.Since
the life insurance contract is a contract of certainty, because the contingency, the death or the expiry of
the term, will certainly occur, the payment is certain. In other insurance contracts, the contingency is the
fire or the marine perils etc., may or may not occur.So, if the contingency occurs, payment is made,
otherwise, no amount is given to the policy-holder. Similarly, in certain types of policies, payment is not
certain due to the uncertainty of a particular contingency within a particular period.

For example, in term-insurance the, payment is made only when the death of the assured occurs within
the specified term, maybe one or two years. Similarly, in Pure Endowment payment is made only at the
survival of the insured at the expiry of the period.

5. Payment of Fortuitous Losses

Another characteristic of insurance is the payment of fortuitous losses. A fortuitous loss is one that is
unforeseen and unexpected and occurs as a result of chance. In other words, the loss must be
accidental.The law of large numbers is based on the assumption that losses are accidental and occur
randomly. For example, a person may slip on an icy sidewalk and break a leg. The loss would be
fortuitous. Insurance policies do not cover intentional issues.

6. Amount of Payment
The amount of payment depends upon the value of loss occurred due to the particular insured risk
provided insurance is there up to that amount. In life insurance, the purpose is not to make good the
financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event.If the event
or the contingency takes place, the payment does fail due if the policy is valid and in force at the time of
the event, like property insurance, the dependents will not be required to prove the occurring of loss
and the amount of loss.

It is immaterial in life insurance what was the amount of loss was at the time of contingency. But in the
property and general insurances, the amount of loss, as well as the happening of loss, is required to be
proved.

7. A large Number of Insured Persons

To spread the loss immediately, smoothly and cheaply, a large number of persons should be insured. The
co-operation of a small number of persons may also be insurance but it will be limited to the smaller
area.The cost of insurance to each member may be higherSo, it may be unmarketable. Therefore, to
make the insurance cheaper, it is essential to insure a large number of persons or property because the
lessor would be the cost of insurance and so, the lower would be premium.

In past years, tariff associations or mutual fire insurance associations were found to share the loss at a
cheaper rate. In order to function successfully, the insurance should be joined by a large number of
persons.

Insurance is a form of risk management primarily used to hedge against the risk of potential financial
loss. Again insurance is defined as the equitable transfers of the risk of a potential loss, from one entity
to another, in exchange for a premium and duty of care.

Need of Insurance
Insurance is a way of managing risks. When you buy insurance, you transfer the cost of a
potential loss to the insurance company in exchange for a fee, known as the premium.
Insurance companies invest the funds securely, so it can grow, and pay out when there’s a claim.

Insurance helps you:

Own a home

, because mortgage lenders need to know your home is protected. It covers you for repairs and
replacement of any damage that’s covered in your policy. It provides protection against theft,
damage from perils like fire and water, and financial responsibility that could result from a
visitor or guest being accidentally injured on your property.

Drive vehicles
, because few people could afford the repairs, health care costs and legal expenses associated
with collisions and injuries without coverage. Auto insurance is also a legal requirement.

Maintain your current standard of living

if you become disabled or have a critical illness. It covers your day-to-day costs and larger
expenses like your mortgage while you focus on your health and recovery.

Cover health care costs like prescription drugs, dental care, vision care and other health-related
items.

Provide for your family in the event of a death.

There are life insurance options for short and long-term needs that protect your family’s home,
mortgage, lifestyle and the cost of post-secondary education for children.

Run a small business or family farm by managing the risks of ownership.

Get owner, business and employee coverage, and provide group benefits and retirement plans
for employees.
 Chapter -2

Motor Insurance

Meaning :-
Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is insurance
for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial
protection against physical damage or bodily injury resulting from traffic collisions and against
liability that could also arise from incidents in a vehicle. Vehicle insurance may additionally offer
financial protection against theft of the vehicle, and against damage to the vehicle sustained
from events other than traffic collisions, such as keying, weather or natural disasters, and
damage sustained by colliding with stationary objects. The specific terms of vehicle insurance
vary with legal regulations in each region.

Coverage Levels
Vehicle insurance can cover some or all of the following items:

 The insured party (medical payments)

 Property damage caused by the insured
 The insured vehicle (physical damage)
 Third parties (car and people, property damage and bodily injury)
 Third party, fire and theft

In some jurisdictions coverage for injuries to persons riding in the insured vehicle is available
without regard to fault in the auto accident (No Fault Auto Insurance)

 The cost to rent a vehicle if yours is damaged.

 The cost to tow your vehicle to a repair facility.
 Accidents involving uninsured motorists.

Different policies specify the circumstances under which each item is covered. For example, a
vehicle can be insured against theft, fire damage, or accident damage independently.

If a vehicle is declared a total loss and the vehicle's market value is less than the amount that is
still owed to the bank that is financing the vehicle, GAP insurance may cover the difference. Not
all auto insurance policies include GAP insurance. GAP insurance is often offered by the finance
company at time the vehicle is purchased.

Motor vehicle insurance law in India

Motor vehicle insurance law in India is governed by the Motor Vehicles Act, Insurance Act and
aspects of insurance contracts governed by the Indian Contract Act, Transfer of Property Act and
a few others. Motor vehicle insurance is the insurance coverage of the risk of third party arising
out the use of motor vehicle and also for covering the risk of damage caused to the vehicle.
Taking insurance policy for coverage of certain risks are made compulsory and coverage for
other risks are optional at the instance of the owner. Accordingly, motor vehicle insurance
policies can be divided into two, namely, compulsory insurance policy (Act policy) and
comprehensive policy.

Act liability insurance

A motor vehicle in a public place is potentially a dangerous and lethal instrument. Even when it
is without its engine or without petrol, if it is moved down on an incline, even unintentionally, it
can cause considerable damage and human injury. Hence, unlike other properties which may be

insured or not at the option of the owner, a motor vehicle is required by law to be insured in
respect of the user's liability for death, bodily injury or damage to property of third party. These
kinds of insurance contracts are based on indemnity and only cover the damage, and the whole
insurance amount is not given every time.

As sometimes the driver of the vehicle is often a person of small means and injured person goes
without adequate compensation, insurance of motor vehicle covering the third party risk is
made compulsory in India and the Motor Vehicles Act provides that, vehicle should not be used
in public place without having insurance policy covering third party risks.Third party risk means
risk covered for bodily injury, death and damage of property of third party. Third party means
any person except owner or passenger in the private vehicle. So pillion rider of the motor cycle,
passengers in private cars, jeeps etc. are not third party. However, passengers in public vehicle
such as bus. contract carriage vehicle, taxi etc. are also third party and hence covered by third
party or statutory policy.

The occupants of private vehicles and pillion riders are not covered by the Act policy. However,
they can be covered by paying additional premium of insurance. If additional premium is not
paid to cover the risk of occupants of private vehicle and pillion rider, insurance company will
not be liable to compensate such victims. However, Supreme court held that if the policy is
package/comprehensive policy, then the occupants of private vehicles and pillion rider are
covered, even if the additional premium of coverage of such person is not paid.

Why to Buy Motor Insurance?

There are many reasons to buy a motor insurance cover for a vehicle. Some of the primary
reasons can be listed as follows.

 The main reason to buy motor insurance cover is that it is required by the law. In case of
an unexpected accident, a vehicle owners must be liable for the damages caused to a
third party. According to the Motor Vehicle Act of 1988, it is illegal to drive a vehicle in
public without having a proper third-party cover.
 While the legal liability is taken care with a third-party insurance cover, it is also
necessary to have protection for one’s own self and vehicle. Eventualities like accidents
and thefts may inflict a huge financial strain on a vehicle owner. During these times, a
comprehensive motor insurance cover can be helpful in covering all the losses.
 A motor insurance helps you avoid legal actions during an accident. The stress related to
car accidents can be eliminated when you have adequate motor insurance cover for your
vehicle. The expertise of an insurance company in handling accidents will come in handy
if you are in the middle of an accident claim.
  A comprehensive motor insurance cover not only protects the vehicle, but it also acts as
a supplement to your health insurance cover. Personal injury protection is one of the
features of most motor insurance policies. This can also be opted as an add-on cover
when purchasing a motor insurance policy.
 With an adequate motor insurance cover, you don’t have to worry about every single
issue that may affect your vehicle. It brings you the much needed peace of mind against
most forms of threats against your vehicle.

Key Features of Motor Insurance

Some of the key features of motor insurance can be listed as follows.

 Most motor insurance policies protects you and your vehicle from all kinds of manmade
and natural disasters.
 There are multiple add-on covers available to provide extra protection for your vehicle.
Some of these rider policies can be extremely beneficial when it comes to vehicle
maintenance.
 The premium charges for motor insurance is calculated based on the IDV of the vehicle.
During the time of renewal, the IDV is calculated again based on the depreciation of the
vehicle.
 Premium discounts can be enjoyed by vehicle owners by choosing a higher deductible.
Deductible refers to the amount of money you are willing to pay from your own hand
during a claim. Many insurers allow flexible options when it comes to choosing a
deductible for your motor insurance policy.
 No claim bonus is available with most motor insurance policies. If no claims have been
made during a particular policy period, policyholders can enjoy no claim bonus in the
form of premium discounts.
 Cashless car insurance benefit is available in the select network of garages affiliated to
the insurance company. When the vehicle is serviced in these garages, vehicle owners
have to pay only for the deductible amount opted by them.
 Almost all major motor insurance service providers provide online services when it
comes to paying premiums and filing for claims. With this benefit, getting an insurance
cover is no longer a cumbersome activity.

Why You Must Compare Before Buying Motor Insurance Policies?

In this day and age, the sheer number of insurance companies that offer motor insurance is
truly overwhelming. Sometimes, choosing the ideal motor insurance policy can be a difficult
process due to the range of options available in the market. In this case, the best thing you can
do is to compare the motor insurance policies available and choose the best one suitable for
your specific requirements. When comparing policies, do not always go for the cheapest one in
the market. Make sure that the benefits offered by a motor insurance policy is adequate for
your requirements. Here is a list of thing you must compare before taking a motor insurance
policy.

 Cost - The price of the policy is one of the most important things to look when taking
motor insurance. Before choosing a policy, make sure that the premium charges are
within the your budget.
 Features - This is the next important thing you must check before taking up a policy. The
range of features available under motor insurance vary from product to product. It is
crucial to choose a policy with all your desired features within the affordable price range.
 Insurance company - If you are doing an in-depth research on motor insurance, your
search must not end at cost and features. The reputation of the service provider is also a
factor to be considered. Check the insurance company’s claim settlement ratio, financial
position, service quality, etc. These factors will help you understand the stability of the
insurance service company in the market.

Where and How to Buy Motor Insurance?

Most people opt for convenience along with affordability. With the advent of internet,
purchasing a motor insurance policy is no longer a difficult process.

 Dealerships - Most automobile dealers have exclusive tie-ups with motor insurance
companies. When you buy a new car, your car dealer may offer you the insurance
service of a partner company. If the terms are agreeable, you can go ahead and opt for
the insurance cover provided by the dealer.
 Online service providers - You can find an overwhelming number of insurance service
providers offering various motor insurance products in the market. If you have a specific
insurance service provider in mind, you can go to their website and choose the product
offered by them. Buying insurance online is one of the easiest ways to choose the right
product for your needs.
 Third-party aggregators - If you are not sure about which insurer to choose, you can visit
the website of third-party aggregators like Bankbazaar to get a glimpse of all products
available. Think of this process like you are shopping on Flipkart or Amazon. You can
check the price and features of all products at the same place and choose the suitable
one without any hassle.
  Offline method - Even with all the technological advancement, there are still some
people who prefer the offline method of buying insurance. You can also visit the branch
office of an insurance service provider and choose the products offered by them. The
insurer may require some documents regarding the vehicle ownership and registration.
Once you have submitted these documents, you can purchase insurance from the
service provider.

Online purchase and renewal has become the most popular option in the recent days. Most
vehicle users in our country have access to the Internet. Even if you are not tech savvy, you can
contact the company’s helpline to guide you in the online purchase process. While offline
method is still used, it has its own set of limitations. One major downside with it is that you
cannot compare policies of other service providers. Also, offline purchase can be a little more
expensive than online motor insurance purchase.

How to File a Motor Insurance Claim?

Motor insurance claims are typically filed after various events such as third-party liability, own
damage claim, theft claim, etc. The process involved in filing a claim can be given as follows.

Third-party liability
A third-party liability claim arises when a third party’s vehicle gets damaged during an accident.
If your vehicle is involved in an accident, it is necessary to report it immediately to the police.
The insurer must also be notified soon after the accident. Following a successful claim, the
insurer will compensate the third-party for the damages incurred.

If your vehicle gets damaged in an accident, you can get the insurance details from the vehicle
owner and file for a third-party claim. If you manage to establish negligence on the part of the
inflictor, the insurance company of the vehicle owner will compensate for the damages
sustained.In addition to vehicle damages, third-party liability insurance also provides
compensation for personal injuries and death of the third party. If you have a comprehensive
insurance policy, your insurer may engage in subrogation with the third party’s insurer to get
reimbursed for the losses caused.

Own-vehicle damage
It goes without saying that own-vehicle damages are covered only by a comprehensive
insurance policy. If you only have third-party liability insurance, you cannot claim compensation
for the damages incurred to your own vehicle. The process for filing a claim with an insurer for
own vehicle damage is pretty straightforward. It goes as follows.

 Filing a complaint with the police (for accidents)

 Registering the claim with the insurance company
 Estimation of damages by a surveyor assigned by the company
 Assessment of repair value at a garage
 Submission of all documents to the company
 Receiving compensation upon valid requests

During accidents, the surveyor must know the damages caused to the vehicle before it is
repaired. Hence, it is important not to move the vehicle from the damage location without the
insurance company’s approval. If you have cashless service facility, you can take your vehicle to
a garage that comes under the insurer’s network and get it serviced there.

Thef
Following the theft of a vehicle, the police must be informed immediately and an FIR must be
obtained. The insurance company must also be notified immediately after the theft of the
vehicle. The following list of documents must be submitted to the insurer in order to make a
successful claim against the theft of a vehicle.

 Original policy document and claim form

 Original registration certificate of the vehicle
 Original certificate concerning the payment of taxes
 FIR copy of the theft
 No objection certificate from the financier
 Letter of subrogation

Once these documents are submitted, the insurer will start processing the claim. The validity of
the claim will be verified by the company. As a rule, the keys of the vehicle must be surrendered
to the insurer while filing the claim.

Benefits of Motor Insurance

It is mandatory to have the basic motor insurance cover in India. However, it is not a good idea
to take insurance just for the sake of legal obligation. There are tremendous benefits that can be
obtained from this policy against various threats to your vehicle. Some of the key benefits of
motor insurance can be given as follows.

It protects your vehicle from damages.

Vehicular damages can come in many forms. It may occur due to accidents, floods, riots, fire,
bad weather, etc. A comprehensive cover will help you get reimbursement against these
damages incurred to your vehicle. In addition to this, you also have the option of taking add-on
covers to maximize your protection.

It eliminates third-party liability.

If you are at fault during an accident, you are liable to compensate for the damages caused to a
third party. Third-party insurance is mandatory in India. Getting caught in an accident without a
proper third-party cover will land you in all kinds of legal troubles. In addition to paying for the
damages from your pocket, you may also have to face charges for not having insurance.

It compensates dependents when accidents result in death.

Motor insurance does not stop at compensating for the damages incurred to a vehicle. A
comprehensive cover also provides compensation to the dependents in case of fatal accidents.
In addition to life and health insurance benefits, this compensation will come in handy for a
grieving family.

It covers vehicles against thef.

When you lose your vehicle to theft, it will cause a huge financial strain. The compensation
amount offered against the theft of a vehicle can be used to replace the vehicle. In order to get
this compensation, the vehicle owner must produce an FIR copy along with a list of other
documents as mentioned in the policy schedule. Compensation for theft will be provided only
when the police could not located the vehicle within a reasonable time.

Exclusions from Motor Insurance Policy

Most motor insurance policies come with a list of general exclusions for which the insurer is not
liable to provide any compensation for the insured vehicle owner.

Policy not in-force:

For an insurance policy to be valid, it must be renewed before the end of the policy term. If the
policy has lapsed (even by one day), the insurance company is not under obligation to entertain
any claims from the policyholder.

Driving without a valid license :

 It is compulsory for all motor vehicle drivers in India to have a valid license. Driving without a
valid license is a legal offense, and the insurance company is not liable to provide any
compensation in this case.

Driving under influence:

Driving under the influence of drugs or alcohol is a major offense that could land a person in all
kinds of trouble. When an accident occurs while the driver was under the influence of alcohol,
the insurance company is not liable to cover the expenses incurred.

Consequential loss:
Consequential damages occur to a vehicle due to some of the actions taken by the vehicle
owner. The actions taken by the vehicle owner may be intentional or unintentional, but it will
not be covered by the policy.

Damages due to war and nuclear risk: Any damages to the vehicle occurring out of war, warlike
activities, mutiny, nuclear radiation, etc. are not covered by any motor insurance policies.

Deliberate accident:
If an accident is caused deliberately by the vehicle owner, the insurance company is not liable
to pay for the damages caused to the vehicle.

Contractual liability:
Consider a scenario where a policyholder enters into a contract with another person. If the
other person is driving the vehicle at the time of accident, the motor insurance policy will not
pay for the damages.

General wear and tear:

All vehicles undergo a certain amount of depreciation when they are continuously used by
vehicle owners. However, the insurance company is not liable for the general wear and tear
caused to a vehicle.

Mechanical or electrical breakdown:

The insurer is not liable to pay for any damages other than what caused by accidents. For
general malfunctions and non-accidental engine failures, there is no compensation available.

Injuries to passengers:
A comprehensive motor insurance cover provides coverage only for injuries sustained by the
driver during an accident. Passengers who are present in the vehicle along with the driver are
not covered under this policy.

If a claim is rejected by an insurance company under any of these exclusions, the insured vehicle
owner has the right to take up the issue in court. If no case is filed in the court within 12 months
of rejection, the claim cannot be recovered by the insured person.