Few weeks ago, I was travelling on my Activa wearing a Helmet. Suddenly a Policemen asked me to stop and for checking my vehicle papers and Driving License. Usually they don't bother you until there is a helmet on your head but may be it was Diwali time and they have to do what we call it "Vasooli". I had every thing - a Driving License, Vehicle Paper, Pollution Certificate and an expired date Insurance. Oops there you go. He imposed fine for not having a unexpired Insurance. I was still wondering why the hell I have to buy a vehicle insurance at the first place - After all its my luxury. Well I was wrong. Vehicle Insurance is not for you but the person you are going to hit.
Why Motor Vehicle Insurance is mandatory:
According to Motor Vehicle Act, 1988 only the Third Party Insurance is mandatory.
There are basically two types of motor insurance policies.
Type I,
Known as Third Party Insurance (Form A), is compulsory. It covers the damages done to third party or to the property of third party.
In simple words, if you met with an accident with another car, a third party policy will only pay for the repair of the other vehicle, and will pay for any medical claims or injuries suffered by the people of the other car and any passengers in your car other than you.
- But the policy doesn't cover any compensation for your car, you can add riders too in the policy which will be 100% compensated.
- Death or bodily injury to a third-party person
- Damage to third-party property
- Liability is covered for an unlimited amount in respect of death or injury and damage to third-party property, Rs 7.5 lakh under commercial vehicle and cars, Rs 1 lakh for scooters and motorcycles.
Type-II
Comprehensive car insurance is third party insurance plus some additional benefits, which will pay out in the event of your vehicle being stolen or set on fire, and also pay for any sort of damages to your vehicle.
It cover damage to insured vehicle also, it can be via lightning, burglary, riot and strike, malicious act, terrorist act, earthquake, (fire and shock) damage, flood, typhoon, hurricane, storm, tempest, inundation, cyclone and hailstorm, transit by road, inland waterway, lift, elevator or air. So, this brings us to what type of car insurance cover is best for you? As a general rule of thumb, the following points are worth noting:
If you are inexperienced and driving a costly car, comprehensive insurance can be high.
- Remember that the no-claim bonus follows the individual and not the vehicle. Resulting in availing of discount at the time of renewal of policy. The bonus ranges from 20% to 50%, depending on the number of years for which no claim has been made.
- Some aspects which policy does not consider are wear and tear, breakdowns, consequential loss, loss when driving with invalid driving licence or under the influence of alcohol, use of vehicle otherwise than in accordance with limitations as to use, etc.
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