Motor Insurance in India

Are you amongst those who passionately plan every action and risk? Has any damage or a loss of your things ever gone beyond your capacity to control and bear the repairs? None of us would ever want this to happen. As humans, we wish to have the maximum curb and command on things. Imagine you visit a guest’s place and happen to slip that cup of tea all over your dress. You never expected this but now the damage has been done. Will you leave that dress forever or drop it for dry cleaning? For sure we will leave it for washing and cleaning.

Similarly, own damage insurance is when you want to plan the damage control of your vehicle in the event of unforeseen losses. Careless attitude and too many vehicles on the road make the probability of damage to the vehicle higher. So, when your car or any vehicle is ruined due to an accident, fire or theft, and other such factors, it is considered as Own Damage of the vehicle. And when you get into an insurance contract with the insurer who would possibly bear these losses against the premium paid, it is called Own Damage Insurance.

In the same manner, when you pay for the own damage premium for your vehicle, you get assurance for repairs and reimbursements from your insurer. The OD premium provides you protection in case of:

• 1. Accidental damages caused by external means.
• 2. Burglary, Theft and Housebreaking.
• 3. Fire, Explosions, Implosions, Lightning, and self ignition.
• 4. Natural calamities like flood, typhoon, cyclone, hailstorm, etc.
• 5. Earthquake, landslide and rockslides.
• 6. Transit of vehicles by rail, road, air, or inland waterways.
• 7. Terrorism Attacks, Riots and Strikes, or Malicious Damage.

In the Indian market, the motor insurance product offers coverage for Own Damages and Third-Party Liabilities.

You can either buy two of these together making it a Comprehensive Policy or just a standalone, mandatory Third Party Liability Policy or an optional, standalone Own Damage policy (Starting from 1st September-2019 given that you already have a seperate Third-Party Liability Policy active).

The total amount of coverage offered, at the time of claim, will depend on the conditions specified in the policy and obviously your insurance plan. Every year the extent of coverage and own damage premium changes because the value of the vehicle depreciates.

The Own Damage Premium either for a four-wheeler or a two-wheeler is based on:

• 1. Make, Type and Age of the vehicle.
• 2. The Declared Value of the Vehicle.
• 3. Cubic Capacity of the Engine.
• 4. Geographical Zone

Let us look at the mathematical computation of the Own Damage Premium, but before you should know the basis of the calculation.

OD premium - IDV X [Premium Rate (decided by insurer)] + [Add-Ons (eg. bonus coverage)] – [Discount & benefits (no claim bonus, theft discount, etc.)]

IDV - Showroom Price of the Vehicle + Cost of Accessories (if any) - Depreciation as per (IRDAI)

It is our consciousness that always alerts us to take precautionary measures. Everything does not fall in our control when we are driving on the road. Hence, it is better to be wise and choose a comprehensive motor policy to prevent financial burdens at the time of a significant crunch.