10 things about motor insurance nobody told you

motor insurance

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It will be hard to find a household without a motor vehicle in this era. Most of the households in India would be having at least a scooter or bike, if not a car. This calls upon the need to have a deeper understanding of one of the important aspects of owning a motor vehicle – having a motor vehicle insurance policy.

First, let us understand the different types of motor insurance policies that are common for both bikes and cars.

Insurance companies primarily offer the following types of insurance policies:

Third-party liability insurance policy

If your bike lands in an accident and causes damages to another person’s vehicle or property, or if it causes injuries/death of that person, then the third-party policy will cover these liabilities. A third-party liability motor insurance policy thus means, whatever obligations you owe to another person’s damages will be covered. However, in this policy, any damages to your own vehicle will not be covered.

Comprehensive insurance policy

A comprehensive insurance, as the name suggests, offers complete protection. Here damages to your own vehicle and those to a third-party’s will be covered if you land in an accident. Furthermore, if your vehicle is stolen or damaged in a natural calamity, fire, or riots, then those damages too will be covered in this policy. If you want extended coverage, then you can opt for add-on features.

Own-damages motor insurance policy 

This is a standalone policy that covers only the damages caused to your vehicle. This policy does not cover third-party liabilities. It should be noted that driving with an Own damage insurance policy alone is illegal. You must have a third-party liability component covered insurance policy with you. Otherwise, you will be levied fine as per the Motor Vehicles Act.

5 things nobody told you about Bike insurance policy

Mandatory third-party liability policy for bikes

It is mandatory to have the third-party liability only component in your insurance policy. You can either opt for the Third-party liability-only policy or a comprehensive bike insurance online. Previously you just had to buy a one-year policy, and renew it every year. But since 2019, if you are buying a new bike, then you will have to buy a 5-year insurance policy upfront.

Premium to be paid for the insurance policy of bikes

Premium is the amount you have to pay to the insurance company for the benefits they offer through the motor insurance policy.

For a third-party policy, the premium is fixed by the Insurance Regulatory and Development Authority of India.

The rates are dependent on the cubic capacity of your bike and are as follows:

Two Wheelers with engine capacity Premium rate
Not exceeding 75cc ₹482
Exceeding 75cc but not exceeding 150cc ₹752
Exceeding 150cc but not exceeding 350cc ₹1,193
Exceeding 350cc ₹2,323

For a comprehensive policy, the premium varies for different types of bike and is dependent on the following factors:

    1. Cubic Capacity of your bike: Higher the cc the higher will be the premium.
    2. The market value of the bike: Luxury bikes garner more premium than normal bikes.
    3. Age of the bike: New bikes have a higher premium than older ones.
    4. Insured Declared Value of the bike: If you set a higher IDV the premium will be higher and vice-versa.
    5. Bike variant: Whether you are driving petrol, diesel or electric variant.
    6. Place of residence: Premium for riding bikes in metro cities will be higher than those in towns and villages.
    7. Add-ons: If you have opted any add-ons, they will cost extra.

Add-on features

You can buy extra features, known as add-ons, for your bike insurance policy. Some of the common add-ons offered by insurance companies are :

  1. Zero depreciation add-on – Depreciation costs on your bike, due to wear and tear, will be deducted from your claim amount. The depreciation costs increase as your bike ages. But if you want to ignore this depreciation costs and get the full IDV amount, you can opt for this add-on.
  2. Return to invoice add-on – If your bike is stolen or damaged beyond repair, then you can get the full invoice amount of your bike with this add-on. Thus the full amount you spend while buying the bike, including the road taxes and registration fees would be reimbursed to you.
  3. Breakdown assistance – If your bike breakdowns at any time, you can get assistance free of cost with this add-on.
  4. Consumable add-on – This will provide protection for change of engine oils, screws, nuts and bolts, grease, etc. which are otherwise not covered in the policy.
  5. Engine and Gear-box Protection Cover -You can protect your expensive engine and gear-box for an additional cost with this cover. It is normally not covered in your bike insurance policy.

Circumstances in which you cannot file a claim

Under certain cases, if you land in an accident, you cannot file an insurance claim. They are:

  1. If you are caught in an accident driving under the influence of alcohol.
  2. If you do not have a valid license.
  3. If you are driving with just a learner’s license.
  4. Any damages that are not a direct result of the accident.
  5. Contributory negligence.

Repercussions of not having a policy 

  1. If caught without a valid motor insurance policy, you will be liable to pay a fine of Rs.2000/-.
  2. Second-time violation for driving without insurance is Rs.4000/.
  3. Subsequent violations can even lead to imprisonment of up to 3 months.
  4. Legal liabilities in the event of an accident will not be covered.
  5. You will lose No Claim Bonus if you don’t renew your insurance on-time.

5 things nobody told you about Car insurance policy

Mandatory third-party policy

As per the Motor Vehicles Act of 1988, it is mandatory to have the Third-party liability component in your car insurance policy. While buying a new car, you will have to buy a 3-year third-party component policy upfront. Previously you just had to buy an insurance policy valid for one year and then renew it yearly. But this policy has since changed due to the increasing number of car accidents.

Premium amount for cars

Since the premium is the cost you have to pay for the benefits offered by the insurance company, it is dependent on certain factors

For third party liability only policy, the premium is fixed by IRDA.

It is only dependent on the Cubic capacity of your vehicle.

Private cars with engine capacity Premium rate
Not exceeding 1000cc ₹2,072
Exceeding 1000cc but not exceeding 1500cc ₹3,221
Exceeding 1500cc ₹7,890

For comprehensive policy, the premium depends on the following factors:

  1. Cubic capacity of the car: Higher the cubic capacity, higher will be the premium.
  2. The market value of the car: Luxury cars garner more premium than normal cars.
  3. Age of the car: New cars have a higher premium than older ones,
  4. Insured Declared Value: If you set a higher IDV the premium will be higher and vice-versa.
  5. Car variant: Whether you are driving petrol, diesel, or electric variant.
  6. Place of residence: Premium for riding cars in metro cities will be higher than those in towns and villages.
  7. Add-ons: If you have opted any add-ons, they will cost extra.
Add-on features

You can buy extra features, known as add-ons, for your car insurance policy. Some of the common add-ons offered by insurance companies are :

  1. Zero depreciation add-on – Depreciation costs on your car, due to wear and tear, will be deducted from your claim amount. The depreciation costs increase as your car ages. But if you want to ignore this depreciation costs and get the full IDV amount, you can opt for this add-on.
  2. Return to invoice add-on – If your car is stolen or damaged beyond repair, then you can get the full invoice amount of your car with this add-on. Thus the full amount you spend while buying the car, including the road taxes and registration fees would be reimbursed to you.
  3. Passenger add-on– If something happens to your co-passenger, this addon will cover it.
  4. Tyre protect add-on – Tyre protection is not a part of a comprehensive insurance policy. You can additionally add this protection with this add-on.
  5. Breakdown assistance – If your car breakdowns at any time during the day, you can get assistance free of cost with this add-on.
  6. Consumable cover– This will provide protection for change of engine oils, screws, nuts and bolts, grease, etc. which is otherwise not covered in the policy.
  7. Engine and Gear-box Protection Cover -You can protect your expensive engine and gear-box for an additional cost with this cover. It is normally not covered in your insurance policy.

Circumstances in which you cannot file a claim

Under certain cases, if you land in an accident, you cannot file an insurance claim. They are:

  1. If you are caught in an accident driving under the influence of alcohol.
  2. If you do not have a valid license.
  3. If you are driving with just a learner’s license.
  4. Any damages that are not a direct result of the accident.
  5. Contributory negligence.

Repercussions of not having a policy

  1. If caught without a valid insurance policy, you will be liable to pay a fine of Rs.2000/-.
  2. Second-time violation for driving without motor insurance is Rs.4000/.
  3. Subsequent violations can even lead to imprisonment of up to 3 months.
  4. Legal liabilities in the event of an accident will not be covered.
  5. You will lose No Claim Bonus. You can either do your car insurance renewal online, or you can get in touch with your insurance agent to get it renewed.