Motor Insurance Policy

1. Proposal Forms
2. Classification of motors
3. Types of Covers
4. Additional Covers/Extensions
5. Scope of Cover (Comprehensive)
5.2. Covered Perils
5.3. Excluded Perils
6. Basic Policy Conditions
7. Renewals
A) Proposal Forms
 Basis for insurance contract
 Basis for proper risk assessment &
rating
 Contains information required to issue
policy
 Important facts in proposal forms
 Plate, chassis & engine numbers
 Make of vehicle
 Cubic capacity
 Year of manufacture
 Type of body (use)
 Carrying capacity (goods or persons)
 Estimated value of vehicle
B) Classification of motor
 Based on there types and uses, motors

vehicles are broadly classified into two

for insurance purposes:
 Private

 Commercial

 For insurance purposes, they are

further classified as given below
Private motor
i) Motor Vehicles Private
ii) Motor Cycles Private
C) Motor Commercial
1) Motor buses for public use
2) Motor Buses for employees’ Service
3) Motor Own Goods
4) Motor General Cartage
5) Motor tankers & tanker-trailers
6) Motor Tractors, Agricultural & forestry
7) Motor trade
8) Care Hire & Taxi
9) Motor Learners’ policy
10) Motorcycle Commercial
D) Types of Covers

1) Motor Third Party Only (TP)

2) Motor Third Party, Fire & Theft

3) Motor Comprehensive
E) Additional Covers or Policy Extensions
1) Radio, Record Players & Tape Recorders
2) Personal Accident Benefits (PAB)
3) BS
4) Loading/Unloading for Tippers
5) Public Legal Liability (PLL)
6) Increased limits for TP liability
7) Territorial Extensions
 Own damage for Djibouti
 TP liability (COMESA Yellow Card)- Djibouti & Sudan
Each required payment nominal additional
premiums
F) Basic Perils Covered
1) Accidental damage due to overturning &
collusion excluding mechanical damage
2) Loss/damage to vehicles due to fire
3) External explosion
4) Lightning
5) Theft & burglary
6) Malicious act
7) While vehicle is in transit including
damages sustained during loading &
unloading for transit
8) Cost of protection & removal up to 20% of
agreed repair cost
9) TP bodily injury or death up to limits plus
legal cost; excepting
 employees,
 insured’s household members
 Person being carried in or on, entering or getting off
the vehicle
10) TP property damage up to limits except
property in trust or carried in/on the
vehicle
11) All costs incurred with consent of insurer
12) Agreed authority limit for repair
G) Basic Exclusions
1) Accident beyond territorial limit of
Ethiopia
2) Consequential loss or loss of use
3) Wear & tear, depreciation
4) Mechanical or electrical breakdown
5) Damage caused by overloading or strain
6) Use of vehicle for racing, pace-making,
reliability test or trial, hiring
7) Drawing trailer not insured with vehicle
8) Use of vehicle for purpose other than
mentioned in policy
9) Inappropriate or invalid driving license
10) Driving under the influence of alcohol or
drugs
11) Death or injury or damage caused beyond
main roads for loading & unloading
12) Damages to bridges, viaduct, weighbridge
or to any road due to weight of vehicle
13) Death, injury or damage caused by sparks or
ashes from insured vehicles
14) Acts of banditry, shifta & guerrilla
15) Catastrophic Risks:
 Man-made risks like wars & related perils

o Civil war
o Riot, strike, civil commotion, etc
 Natural risks
 Flood, earthquake, windstorm, & so on
16) Batteries & canvas
17) Any contractual liability
H) Basic Policy Conditions
 Compliance to policy terms, conditions,

provisions & endorsements (conditions

precedent to claim)
 Immediate notice of accident giving rise to

claim to insurer & police in case of theft

 No admission of liability by insured without

insurer’s consent
 Insurer to deal with TP
 Subrogation
 Insurer’s options for form of indemnity:
cash, repair, replacement: actual S/I or mkt
value
 Insured to behave as though not insured,
both before or after claim
 Cancellation of policy by either party
 Supplementary conditions (S/I or MKT value)
 Excess accidental damage
 Another form of excess is license clause
 Age of driver
 Inexperienced driver

 Unobtainable parts
 Batteries & canvas exclusion (commercial)
 Mortgage clause
J) Renewals
 Policy expiries midnight of last date
 Renewal notice
 Acceptance or rejection by insured
 Renewal premium depends on loss ratio
 Change could be made to the existing
policy by either party
 Generally, simple procedure to renew than
to insure as new