Three Types of Motor Insurance Explained

Team Digit, 18 Jan 2019

For any car owner in India, it is mandatory to be insured under some sort of car insurance policy. This includes the two-wheelers too. Having a motor insurance policy before the vehicle hits the road is compulsory under the rules by Government of India. A non-insured person will have to face the consequences of the law.

Individuals who are not insured under any type of insurance can face trials, can be jailed or fined and may also incur a huge loss financially in the unfortunate event that an accident. To be on the safer side, all vehicle owners are advised by sellers to get insured as soon as possible.

Since having car insurance has become compulsory for all vehicle owners, the players in the market are expanding by the day. There are a number of insurance plans in the Indian market. These insurance plans all differ from one another in terms of their inclusions, exclusions, coverage, premium amount and even the period for coverage.

In India, there are primarily three types of motor insurance that is available depending on the type of car that is owned by a person. The motor insurance varies from one car type to another depending on the following:

·       The purpose for which the vehicle is used,

·       the type of car that is owned by a person

·       the additional coverage that is associated with the primary insurance policy

1. Private Motor Insurance - This type of car insurance plans are for those individuals who have a private car and use it for their own transport. This is meant for those individuals who use their vehicle solely for transporting from one place to another and not for any other commercial purposes. A private car insurance plan safeguards the vehicle from natural and man-made disasters that may damage the vehicle in any way. The plan also provides coverage against theft. The damage that the insured vehicle does to a third party in terms of medical bills and property damage can also be enhanced through these plans. The private motor policy has several add on coverage plans that can be bought to enhance the overall protection of the insured vehicle.

2. Commercial Motor Insurance - This type of vehicle insurance is meant for those vehicles that are used for commercial purposes. Vans, Mini-vans, trucks are some of the vehicles that can be insured under this type of policy. Those who own a business and need vehicle assistance for the same are required to have commercial motor insurance with every vehicle that they own.

3. General Motor Insurance - This type of insurance is available for all types of vehicles be it private vehicles or commercial ones. Even those vehicles that are used for public transport can be insured under a general motor insurance plan. Special types of vehicles such as a tractor, excavator, shovels, agricultural mobile rig, etc. can also be insured under this type of general insurance plan.

In India, there are a number of motor insurance plans that are available which are unique from one another in terms of coverage, features, inclusions, and exclusions.

Some of the basic coverage of any motor insurance that is available in India include:

  • The repairs of the insured vehicle due to any loss or damage caused to it as a result of fire, lightning, burglary, malicious act, any form of accident, etc.
  • Liability coverage for the damages caused to any third party due to the insured vehicle.
  • Through additional coverage and increased premium, any sort of engine damage, roadside assistance and part-repairs for the insured vehicle can also be taken care of.

Every motor insurance plan has their own set of inclusions and exclusions that are stated in the policy documents. Though these inclusions and exclusions may vary from one plan to another, some common terms that are present in all plans. Some of the common inclusions of a car insurance plan include:

  • Protection and repair of damages caused to the insured vehicle as a result of natural calamities like floods, thunderstorm, landslide, earthquake, lightning, etc.
  • Protection and repair of damages caused to the insured vehicle as a result of man-made disasters such as theft, burglary, riots, terrorism, fires, etc.
  • If the insured vehicle is stolen, then the insurance company will pay for the claims on the insured vehicle.
  • Personal accident cover for compensating the insured who has been injured as a result of an accident caused by the insured vehicle. This inclusion includes paying for the medical expenses of the insured and financially assisting the individual in the event of the loss of a limb or death.

Some of the exclusions that are present in all motor insurance plans include:

  • The plan will not take care of any damages that are caused to the insured vehicle if it is driven by an individual who is underage, does not have a valid license, who is under the influence of alcohol or drugs or by someone who is using the insured vehicle for illegal purposes.
  • If the damages on the car look like they have been done on purpose, then the insurance company will not take care of the repairs.
  • Any type of war or nuclear risk that damages the insured vehicle.
  • If the damages are caused to the insured vehicle due to oil leaks or the wear and tear of tires, then the costs are not taken care of by the insurance company.
  • If the insured vehicle is being driven outside of the designated physical area that the plan covers, i.e., outside the Indian territory, then the plan will not take care of the damages that are caused to the vehicle.

Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.

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