Vehicle insurance (also known as, GAP insurance, car insurance, or motor insurance)

is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to
provide financial protection against physical damage and/or bodily injury resulting from traffic
collisions and against liability that could also arise there from. The specific terms of vehicle insurance
vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer
financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from
things other than traffic collisions.

History[edit]
Widespread use of the automobile began after the First World War in the cities. Cars were relatively
fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere
in the world. This meant that injured victims would seldom get any compensation in an accident, and
drivers often faced considerable costs for damage to their car and property.
A compulsory car insurance scheme was first introduced in the United Kingdom with the Road Traffic
Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for
injury or death to third parties whilst their vehicle was being used on a public road. [citation needed] Germany
enacted similar legislation in 1939

India[edit]

A Sample Vehicle Insurance Certificate in India

Auto Insurance in India deals with the insurance covers for the loss or damage caused to the
automobile or its parts due to natural and man-made calamities. It provides accident cover for
individual owners of the vehicle while driving and also for passengers and third party legal liability.

There are certain general insurance companies who also offer online insurance service for the
vehicle.
Auto Insurance in India is a compulsory requirement for all new vehicles used whether for
commercial or personal use. The insurance companies have tie-ups with leading automobile
manufacturers. They offer their customers instant auto quotes. Auto premium is determined by a
number of factors and the amount of premium increases with the rise in the price of the vehicle. The
claims of the Auto Insurance in India can be accidental, theft claims or third party claims. Certain
documents are required for claiming Auto Insurance in India, like duly signed claim form, RC copy of
the vehicle, Driving license copy, FIR copy, Original estimate and policy copy.
There are different types of Auto Insurance in India :
Private Car Insurance In the Auto Insurance in India, Private Car Insurance is the fastest growing
sector as it is compulsory for all the new cars. The amount of premium depends on the make and
value of the car, state where the car is registered and the year of manufacture.
Two Wheeler Insurance The Two Wheeler Insurance under the Auto Insurance in India covers
accidental insurance for the drivers of the vehicle. The amount of premium depends on the current
showroom price multiplied by the depreciation rate fixed by the Tariff Advisory Committee at the time
of the beginning of policy period.
Commercial Vehicle Insurance Commercial Vehicle Insurance under the Auto Insurance in India
provides cover for all the vehicles which are not used for personal purposes, like the Trucks and
HMVs. The amount of premium depends on the showroom price of the vehicle at the
commencement of the insurance period, make of the vehicle and the place of registration of the
vehicle. The auto insurance generally includes:

Loss or damage by accident, fire, lightning, self ignition, external explosion, burglary,
housebreaking or theft, malicious act.

Liability for third party injury/death, third party property and liability to paid driver

On payment of appropriate additional premium, loss/damage to electrical/electronic

accessories

The auto insurance does not include:

Consequential loss, depreciation, mechanical and electrical breakdown, failure or breakage

When vehicle is used outside the geographical area

War or nuclear perils and drunken driving.

5 types of coverages and provide a few scenarios where you would benefit
from having a non-required coverage added to your policy along with some
tips to save some money depending on your vehicle and budget.
1. Liability Insurance

Liability insurance covers you in the event you are in a covered car accident and
it is determined the accident is a result of your actions. Liability insurance will
cover the cost of repairing any property damaged by an accident as well as the
medical bills from resulting injuries. Most states have a minimum requirement for
the amount of liability insurance coverage that drivers must have. If you can
afford it, however, it is usually a good idea to have liability insurance that is above
your state's minimum liability coverage requirement, as it will provide extra
protection in the event you are found at fault for an accident, as you are
responsible for any claims that exceed your coverage's upper limit. You wouldn't
want to run the risk of having to pay a large amount of money because your
policy limit has been exceeded.
2. Collision Coverage

If there is a covered accident, collision coverage will pay for the repairs to your
car. If your car is totaled (where the cost to repair it exceeds the value of the
vehicle) in an accident, collision coverage will pay the value of your car. .
If your car is older, it may not be worth carrying collision coverage on it,
depending on the value. On the other hand, if you have a more expensive car or
one that is relatively new, collision insurance can help get you back to where you
were before any damage to your car. Note: If you have a lienholder, this
coverage is required.
3. Comprehensive Coverage

What if something happens to your car that is unrelated to a covered accident weather damage, you hit a deer, your car is stolen - will your insurance company
cover the loss? Liability insurance and collision coverage cover accidents, but not
these situations. These situations are covered by Comprehensive (other than
Collision) coverage.
Comprehensive coverage is one of those things that is great to have if it fits in
your budget. Anti-theft and tracking devices on cars can make this coverage
slightly more affordable, but carrying this type of insurance can be costly, and
may not be necessary, especially if your car is easily replaceable. Note: If you
have a lienholder, this coverage is required.
4. Personal Injury Protection

While Comprehensive coverage may be something you dont need to purchase,

Personal Injury Protection (PIP) is something you should. The costs associated
from an accident can quickly add up, and in order to cover those costs Personal
Injury Protection is available. With this coverage, your medical bills along with
those of your passengers will be paid, no matter who is at fault for an accident.
Note: This coverage is not available in all states.
5. Uninsured /Underinsured Motorist Protection

While state laws mandate that all drivers should be insured, this is unfortunately
not always the case. Another issue that can arise is that while a driver may have
liability insurance, many states have relatively low minimum coverage
requirements that may not be enough to cover all of the expenses of an accident.
So, if someone is legally responsible for damages related to an accident, you
won't receive any payment if they do not have coverage or you will receive less
than you need to cover the cost of damages if your damages exceed their
coverage amount. This is the type of situation where Uninsured and
Underinsured Motorist Protection would help with expenses.

Why Buy Motor Insurance

Motor insurance gives protection to the vehicle owner against (i). damages to his/her vehicle and (ii). pays for any

Third Party Liability determined as per law against the owner of the vehicle. Third Party Insurance is a statutory
requirement. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by
or arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is
a punishable offence in terms of the Motor Vehicles Act, 1988.

What Motor Insurance to Buy

Types of Motor Insurance:
Broadly there are two types of insurances policies that offer motor insurance cover:
1.

Liability Only Policy (Statutory requirement)

2.

Package Policy (Liability Only Policy + Damage to owners Vehicle usually called O.D Cover

Remember that if you take only a Liability Only Policy, damage to your vehicle will not be covered. Hence, it would be
prudent to take a Package Policy which would give a wider cover, including cover for your vehicle.
What Motor Insurance covers:
The damages to the vehicle due to the following perils are usually covered under OD section of the Motor Insurance
policy:
a.

Fire, Explosion, Self- Ignition, Lightning

b.

Burglary/Housebreaking / Theft

c.

Riot & Strike

d.

Earthquake

e.

Flood, Storm, Cyclone, Hurricane, tempest, inundation, hailstorm, frost

f.

Accidental external means

g.

Malicious Act

h.

Terrorism acts

i.

While in Transit by Rail/ Road, Inland waterways, Lift, Elevator or Air

j.

Land slide / Rock slide

What Motor Insurance excludes:

The following contingencies are usually excluded under the Motor Insurance Policy:

Not having a valid Driving License

Under Influence of intoxicating liquor/ drugs

Accident taking place beyond Geographical limits

While Vehicle is used for unlawful purposes

Electrical/Mechanical Breakdowns.

Basis of Sum Insured:

For Own Damage:
The Sum Insured under a Motor Insurance policy reflects the value of the motor vehicle determined based on the
concept known as Insured's Declared Value. Insured's Declared Value is the value arrived at based on the
Manufacturer's present value and depreciation based on the Age of the Vehicle.
For Third Party:
Coverage is as per requirements of the Motor Vehicles Act, 1988 . Compulsory Personal accident cover for ownerdriver is also included. Policy can also be extended to cover various other risks like Personal Accident to occupants of
vehicle, Workmen's Compensation to Driver, etc over and above the cover available to him under statute.

How to Buy Motor Insurance and From Whom

Insurance Intermediaries

Insurance is a complex product representing a promise to compensate the insured or third party according
to specified terms and conditions in the event of the occurrence of a covered contingency. In most insurance
transactions there is usually an intermediary - an insurance agent (individual or corporate) or an
insuranceBROKER .

Insurance intermediaries serve as a bridge between consumers (seeking to buy insurance policies) and
insurance companies (seeking to sell those policies).

IsuranceBROKERS

are licensed by the IRDA and governed by the Insurance Regulatory and

Development Authority (Insurance Brokers) Regulations, 2002. Individual insurance agents and corporate
agents are also licensed by the IRDA and governed by the Insurance Regulatory and Development Authority
(licensing of Individual Insurance Agents) Regulations, 2000 and the Insurance Regulatory and

Development Authority (Licensing of Corporate Agents) Regulations, 2002, respectively. These Regulations
lay down the Code of Conduct for the respective intermediaries.

An intermediary has a distinct role to play in the entire life cycle of a product, from the point of sale through
policy servicing, up to claim servicing. An intermediary shall provide all material information with respect to a
proposed cover to enable the prospect to decide on the best one. The intermediary is expected to advise the
prospect with complete disclosures and transparency.. After the sale is effected, the intermediary must
coordinate effectively between the customer and the insurer for policy servicing as well as claim servicing.

IRDA has prescribed regulations for protecting the interests of policyholders casting obligations not only on
Insurers but also Intermediaries. These prescribe obligations at the point of sale as well as policy servicing
and claims servicing.

Tips on dealing with Insurance Intermediaries

While dealing with Insurance Intermediaries, check out the following:

Ask for and check whether the person holds a valid license and is authorized for the particular business. For
example the Intermediary should be licensed to sell life insurance or general insurance or both (holding a
composite license). A referral always helps.

Check whether he or she has a good knowledge of various insurance products/policies

He or she should understand your needs and what you are seeking. Always ensure that you consider only
products that you can afford. Beware of tall promises and over-selling tactics. Consider only what you can
afford.

Ask questions and understand the policy terms and conditions of the policy the Intermediary is trying to
explain to you.

You must be satisfied that you understand what your commitments are. What are the payments or amounts
that you have to bear not only when you take the policy but when you surrender it or when you make a
claim.

Ask for brochures and sales literature pertaining to the product you are considering or the intermediary is
trying to sell. Get the intermediary to explain the full facts of the products, scope of cover and exclusions, as
applicable.

Insist on quality delivery and timely service. You can judge this by the turnaround time of the intermediary
during the period of pre-sale when he or she is dealing with you.

Fill up the proposal form yourself. Never ever sign on a blank proposal form. If you find terms in the proposal
form that you do not understand, ask the intermediary to explain it to you.

When you make premium payments through an Intermediary, check whether heis authorized to do so by the
insurance company and insist on a duly signed receipt immediately.

After receipt of your policy, go through it thoroughly and if you do not understand certain terms contact your
intermediary and get them explained. Remember, for life insurance and for health insurance policies of a
term of three years or more, there is a free-look period within which you may return the policy if you do not
agree with the terms and conditions therein.

Ask the intermediary questions about documents and procedures involved in making a claim and
understand them completely. In the event of a claim, there may be other agencies you may have to intimate
apart from the insurance company. Get complete details about what you are expected to do.

Dos and Don'ts for Motor Insurance

Motor Insurance: Some Dos and Donts
Travelling by road is a reality and filled with danger. An accident can destroy life and families. Insurance helps with
timelyFINANCIAL

aid in case of such a tragedy. Some forms of motor insurance is mandatory under the law so you

should keep informed about motor insurance.

Here are some Dos and Donts for buying Motor insurance
Dos
When you buy a motor insurance policy you should:

Know that you can buy this policy through anyone and there is no compulsion to buy it through your vehicle
dealer

Fill the proposal form yourself even if the vehicle dealer is arranging for the insurance

Fill the proposal form carefully and factually and thoroughly

Keep a copy of the completed proposal for your records

Read the policy brochure/ prospectus carefully to know what is covered and what is not

Ask for information about add-on covers that may be available and choose what suits you

Give documents such as RC Book, Permit and Driving Licence to the insurance company for verification

Ensure that you keep these documents updated from the authorities concerned

Donts

Dont let anyone else fill your proposal form

Dont leave any column blank

Dont forget to renew your policy without any break

Dont forget to ask for the correct procedure when you buy a used car that already has insurance.

Dont make false declarations about the actual use of the vehicle you are insuring

General Advice for Motor Insurance

When you decide to buy an insurance policy:

Check if the company selling the policy is registered with IRDA

Make sure you buy the policy through a genuine licensed agent orBROKER . Ask for an identity card or
licence

You can also buy policies from the company directly

Read the policy brochure/ prospectus carefully and get to know what the policy covers and does not cover