MOTOR

INSURANCE
 Covered Perils

There are three different types of

cover with entirely different
content
• Motor own damage
• Motor liability
• Passenger accident
• Motor Own Damage:
Insurance (full or partial) for damage
to the policyholder’s own vehicle
• Motor liability: liability insurance for
losses( material damage and
personal injury) to third parties
caused by licensed vehicles.
• Personal accident: accident
insurance for personal injury (driver
,private vehicles, and passengers)
Underwriting considerations
Motor own damage insurance
 – Classification of Motor Risks
• Motor risks may be broadly
classified as motor vehicles and
motor trade risks.
 • Motor Vehicles
• Def. A motor vehicle means a
mechanically propelled vehicle
intended or adapted for use on
roads.
• For underwriting ad rating
purposes, motor vehicles are
classified in accordance with their
use and type as follows
• Commercial vehicles
• Commercial Vehicles are vehicles
which are constructed or adapted for
the carriage of goods and passengers
• They are subdivided as follows:
• Goods Carrying Vehicles
• These are vehicles such as
• pick-ups, trucks,
• tankers including their trailers used for the
carriage of goods. They are further subdivided
as:-
• Own goods vehicles; and
• General cartage vehicles.
• Own goods vehicles are vehicles used for the
carriage of insured’s own goods whilst general
cartage vehicles are vehicles used for the carriage
of goods for hire and reward
• Passengers Carrying Vehicles
• These are vehicles such as taxis,
minibuses, buses, etc. used for the
carriage of passengers. They are
further subdivided as:-
• public service vehicles; and
• own service vehicles
• Private Vehicles
• A vehicle is classified as private vehicle if it is
used solely for social, domestic, pleasure and
professional purpose or business calls of the
insured.
• The term “Private use” does not include use
in connection with the motor trade, racing,
commercial traveling, hire and reward and
the carriage of goods in connection with any
trade or business
• Public service vehicles are vehicles
used for the carriage of passengers
for hire or reward. These are further
subdivided as:
• public and private hire vehicles; and
• buses
• Public and private hire vehicles are
passenger carrying vehicles such as
taxis and minibuses with a seating
capacity not exceeding twelve seats
including the driver’s seat. They are
further subdivided as:-
• Public hire vehicles; and
• Private hire vehicles
• Public hire vehicles are vehicles that are licensed
and made available on roads for hire by the
general public whilst private hire vehicles are
those vehicles which are not licensed as taxis and
therefore not available on roads for hire by the
general public but directly hired by the user from
car hire firms with or without drivers.
• Buses are passengers carrying vehicles having a
seating capacity exceeding twelve including the
driver’s seat.
• Own service vehicles are passenger carrying
vehicles used for the carriage of insured’s
employees for service. The seating capacity in
respect of own service vehicles could be less than
twelve
• Agricultural and Forestry Vehicle
• Motor Cycles
• Motor Trade
Vehicles of Special Construction

Ambulances,
• fire trucks
• mobile cranes,
• ready-mixed concrete carriers,
• breakdown vehicles,
• site clearing and leveling plants such as
dampers, excavators, dozers and graders,
etc..
 Motor Insurance
• Motor Insurance Proposal form Printing
order\1.3.1. MOTOR PROPOSAL FORM BLANCK.pdf
• Pre – Risk Survey Form Printing order\1.4.3.
MOTOR PRE RISK SURVEY FORM-NEW.doc
• Motor Rate Chart Printing order\MOTOR RATE
CHART.doc
• Premium Computation Table Printing
order\MOTOR INURANCE COMPUTATION TABLE.pdf
• Motor Policy Classification of policies
• Endorsements
Purpose or General Conditions
• This product indemnifies the insured
for loss of or damage to the insured
motor vehicle and the
• insured's liability for death/injury or
damage to property towards third
party.
 Types of Motor Insurance

• Third Party Only (TPO) Cover

• Third Party, Fire and Theft (TPF and
T) Cover
• Comprehensive Cover
• Additional Cover/Extension
 Third Party Only
• Third Party Only cover indemnifies
the insured against legal liability for
death of or
• bodily injury to third parties and
damage to third party property
caused by lawful use
• of the insured vehicle
Third Party Risks Proclamation
• Third Party Risks Proclamation - this
type of cover indemnifies the insured
against compulsory legal liability for
death of or bodily injury to third
parties and damage to third party
property caused by lawful use of the
insured vehicle
 Third Party, Fire & Theft cover
• Third Party, Fire & Theft cover provides
indemnity:
• - for loss of or damage to the insured vehicle
by fire, external explosion, self
• ignition, lightning theft or attempted theft;
• - to the insured against legal liability for
death of or bodily injury to third parties and
• damage to third party property caused by
lawful use of the insured vehicle
 Comprehensive cover
• Comprehensive cover provides indemnity:
1) for loss of or damage to the insured vehicle
by:
• accidental collision or overturning
• fire, external explosion, self ignition,
lightening
• theft or attempted theft
• impact damage
-2) to the insured against legal liability for
death of or bodily injury to third parties and
damage to third party property caused by
lawful use of the insured vehicle
 Additional Cover/Extension
Those commonly provided by the Insurance
company are :
• increase in third party liability limit;
• territorial limit extension;
• special cover (B.S.G);
• passengers legal liability (P.L.L)
• The special cover (BSG) shall be provided as
part of the standard cover without additional
charge in respect of private vehicles.
 Classification of policies
• Private Vehicle Insurance Policy ;
Printing order\PRIVATE VEHICLE INSURANCE POLICY.doc
• Commercial Vehicle Insurance Policy
; Printing order\COMMERCIAL VEHICLE INSURANCE
POLICY(F).doc
• Motor Trade Insurance Policy. Internal
and road risk ; Printing order\1.5.6. MOTOR
TRADE ROAD RISKS POLICY GIC.doc
 Insured Objects
• The major types of insured objects are motor
vehicles - mechanically propelled vehicles
intended or adapted for use on roads.
• The insured object also includes accessories
which are necessary for the normal
functioning of the vehicles, and also declared
attachments including for instance Bull Bars,
Roof Racks , CD players etc
 Underwriting information
For underwriting purposes motor vehicles shall
have
• Plate No.
• Engine No.,
• Chassis No.,
• Make & Model,
• Year of Make
• Sum Insured or Value
 PERILS COVERED IN
“OWN DAMAGE”
I. Fire explosion, self ignition or lightning
II. Burglary, housebreaking or theft or attempted
theft
III. Malicious act
IV. Whilst in Transit by: road ,rail, inland
waterway, lift or elevator
V. Impact damage caused by falling objects
provided no convolution of nature such as
Flood, typhoon, hurricane, storm, tempest,
inundation, cyclone, hailstorm, frost etc is
involved
 PERILS COVERED IN
“OWN DAMAGE” by (Contd..)
VI. Accidental external means
– “Accidental”
– “External”
-- “ physical ”
 Meaning
• Accidental:
i An unpleasant event, especially in a
vehicle, that happens unexpectedly
and causes injury or damage.
ii undesirable or unfortunate happening,
unintentionally caused and usually
resulting in harm, injury, damage or loss.

• External:
connected with or situated on the
outside of something / somebody.
 “Accidental”
“External”
-- “ physical
This accidental, external and physical
means includes collision, overturning,
malicious acts, and damage/loss during
transit; and of course plus the perils
covered by the Third Party and/or Fire
and/or Theft Policy cover, that is to say
fire, self-ignition, lightning, explosion,
theft, burglary, housebreaking, etc.
 2 Limit of Indemnity

In the event of loss of or damage to any motor vehicle

described in the schedule, the Company
• may at its own option repair or replace such motor
vehicle or part and/or accessories or
• pay in cash the amount of the loss or damage
• and the liability of the company shall not exceed the
actual value of the parts damaged or lost plus the
reasonable cost of fitting and
• in no case shall exceed the insured's estimate of the
value of such motor vehicle (including accessories) as
specified in the schedule or the market value of such
motor vehicle (including accessories) at the time of the
loss or damage, which ever is the less.
 3 Protection and removal after accident

•
• If the insured motor vehicle is disabled by
reason of accidental loss or damage
covered under this policy, the Company will
pay reasonable cost of protection and
removal to the nearest competent repairer,
but in no case shall the amount exceed
20% (twenty percent) of the repair cost.
 4 Hire purchase or mortgage agreement.

• If the insured motor vehicle is subject to a

hire purchase or mortgage agreement, any
payment in cash shall be made to the
owner described in the hire purchase or
mortgage agreement whose receipt shall
be a full and final discharge to the company
in respect of such loss or damage
 5 Authority to repair

•
• The insured may authorize the repair of the
insured motor vehicle necessitated by damage
for which the company is liable under this
policy provided that:
– the estimated cost of such repair does not exceed
the authorized repair limit stated in the schedule;
– a detailed estimate of the cost is forwarded to the
company immediately; and
– The insured shall give the company every assistance
to see that such repair is necessary and the charge is
reasonable.
 6 Unobtainable parts

• If any damaged accessory or part of the

insured motor vehicle is obsolete and can
not be obtained from the dealer, the
company shall pay the value of the
accessory or part at the time of the
damage, not exceeding the manufacture's
last quoted price for the accessory or part
including a reasonable cost of fitting such
accessory or part.
 EXCLUSIONS
(OWN DAMAGE)
The Company shall not be liable to pay for:
• any excess amounts stated in the schedule;
• loss of use consequent upon loss or damage
to the motor vehicle described in the
schedule;
• wear and tear and/or depreciation of any
motor vehicle described in the schedule or
any part of such motor vehicle;
• mechanical or electrical, electronic or
computer break-down or failure of any part
of any motor vehicle described in the
schedule
 EXCLUSIONS (Contd..)

• damage to tyres by braking, punctures, cuts or bursts;

• loss of or damage to any communication equipment of
any kind;
• any reduction in the market value of the insured motor
vehicle following any repair whether or not as a result of
any claim under the policy; and
• loss of or damage in respect of any radio, record player,
or tape recorder other than those fitted by the
manufacturer unless specifically declared and insured.
Damage due to overloading & strain
•
Liability to third parties
• death of or bodily injury to any person;
and
• damage to property
Condition 1: Notice shall be given in
writing to the company
immediately upon the
occurrence of any accident and in
the event of any claim.
 General Provisions
No Claim discounts (NCD )
• NCD is a discount given to an insured in
consideration of his satisfactory claim experience
in the preceding year (s) of insurance.
• No claim discount shall be calculated on the
renewal premium in respect of each vehicle:
- which has been insured for a period of one
year and over; and
- where no claim has been made or pending
during the period of insurance or consecutive
periods of insurance
 Procedures for NCD
- When more than one vehicle has been covered
under one policy, NCD applies separately toeach
vehicle i.e., each vehicle earns NCD according to
its claims history.
- NCD can be transferred from one insurer to
another. Hence when the proposer produces
certificate from his previous insurer stating the
period of insurance and confirming that no claim
was lodged, then NCD according to the rate chart
is to be allowed.
- When a vehicle with the same insured substitutes
the existing vehicle which had a NCD, the NCD is
applicable to the new vehicle
 Procedures for NCD
• - If more than one claim is made during the
period of insurance, any NCD earned shall
bereduced to nil.
• - NCD benefit expires one year from the
expiry date of the policy.
• - NCD shall follow the fortune of the insured
(original) person and not the policy or the
vehicle
• and in the event of the transfer of the vehicle
to another person, the NCD not to be
transferred to the new owner.
 Procedures for NCD
-NCD shall be allowed where the insured is not to
be blamed of an accident by the police report or
court decision.
- When an insured with NCD changes his policy
cover from comprehensive to a third party fire
and theft or third party only cover not vice versa,
the NCD shall be adjusted according to the new
cover to the rate of discount for the preceding
accident free period.
- NCD Certificate shall only be issued on clearance
of any outstanding debts due.
- NCD is not applicable for flat rated policies
 General Provisions Continued
• 2 Suspension of Cover for lay-up
• Upon notice being given in writing to the
company that the insured motor vehicle is to
be laid-up and out of use otherwise than as a
result of damage or loss covered by this
policy, the policy will be suspended as from
the date of receipt of the notice and
provided that the cover is suspended for at
least twelve consecutive weeks, the
company will extend the policy for the same
number of weeks
• 3 Change of ownership
• In the event of change of ownership of the
insured motor vehicle to another person,
the cover granted to that other person will
be as follows:
– not-withstanding any provision to the
contrary, the policy shall continue with the
assignee where the insured motor vehicle is
assigned; and
•
– the assignee and the company may terminate
the policy within three months from the date
of assignment.
 General Provisions Continued
• 4 Change of risk
• The insured shall give notice to the
company of any change in the risk
covered by the policy. Unless such
notice is given and subsequently
endorsed on this policy by the
company any indemnity for loss or
damage or liability caused by the
change of the risk shall be forfiled
 General Provisions Continued
• 5 Service and repair clause
• This policy, excluding indemnity to
third party liability, shall operate
whilst the insured motor vehicle is
in the custody of a member of the
motor trade for service or repair.
 General Exceptions
(applicable to all section)
• The company will not be liable to make
any payment in respect of:-
• any accident, loss, damage or liability
caused, sustained or incurred;
– outside the territorial limit of Ethiopia;
– whilst the driver of the insured motor
vehicle is under the influence of
intoxicating liquor or drug.
• any contractual liability;
• loss of or damage to the insured motor vehicle
or any form of liability attached whilst the
motor vehicle insured under this policy is being
driven by any person who has no driving licence
permitting him to drive the insured motor
vehicle or is dis-qualified from holding or
obtaining such licence.
• any damage or liability directly or indirectly
proximately or remotely occasioned by or
contributed by or traceable to or arising out of
or in connection with flood, typhoon hurricane
• windstorm volcanic eruption earthquake or
other convulsion of nature.
• war, invasion, act of foreign enemy, hostilities or
war-like operations (whether war be declared
or not ) civil war, mutiny, riot, strikes, civil
commotion, military or popular rising,
insurrection, rebellion revolution, military or
usurped power, martial law or state of siege
armed or unarmed robbery shifta action, hold-
up or any act of banditry or any of the events or
causes which determine the proclamation or
maintenance of material law or state of siege.
• loss of or damage to the insured
motor vehicle or any form of
liability whilst the insured motor
vehicle is towing any trailer not
specifically insured under this policy
or any disabled mechanically
propelled motor vehicle.
• any loss, damage or liability caused
by overloading or strain or if the
number of persons exceed the
seating capacity of the motor
vehicle described in the schedule of
the policy as specified in the
ownership booklet issued by the
licensing Authority.
 General Conditions
• Insured's Duty
• The due observance and fulfillment of the
terms and conditions of this policy in so far as
they relate to anything to be done or not to be
done by the insured or any person claiming to
be indemnified and the truth of the statements
and answers in the proposal or accident report
shall be conditions precedent to any liability of
the company to make any payment under this
policy.
• Care of Motor vehicle
 General Conditions (Contd..)
• Fraud
• If a claim is in any way fraudulent including
over valuation of the insured motor vehicle
with intent to defraud or if fraudulent means
is used by the insured or by any one acting
on his behalf to obtain any benefit under this
policy or if any loss or damage to the insured
motor vehicle is caused by the willful act or
with the connivance of the insured, all
benefits under this policy shall be forfeited
•
 General Conditions (Contd..)
• Notification of accident
• Notice shall be given in writing to the company
immediately upon the occurrence of any accident or loss
or damage in the event of any claim, every letter, claim,
writ, summons and/or process shall be forwarded to the
company immediately on receipt by the insured, Notice
shall also be given in writing to the company
immediately the insured shall have knowledge of any
impending prosecution in respect of any occurrence
which may give rise to a claim under this policy. In case
of theft or other criminal act which may be the subject
of a claim under this policy the insured shall give
immediate notice to the Police and co-operate with the
company in securing the conviction of the offender.
 General Conditions (Contd..)
• Conduct of Claim/subrogation
• No admission, offer, promise or payment shall be made
by or on behalf of the insured or any person claiming to
be indemnified without the written consent of the
company which shall be entitled if it so desires to take-
over and conduct in his name the defence or settlement
of any claim or to prosecute in his name for its own
benefit any claim for indemnity or
• Contribution
• In the event of loss of or damage of any part of the
insured motor vehicle described under the schedule of
this policy, the insured shall be liable to pay reasonable
contribution on the replacement cost of new accessories
or spare parts on account of wear and tear or
depreciation
 General Conditions (Contd..)
• damages or otherwise against any third party and
shall have full discretion in the conduct of any
proceedings and in the settlement of any claim
and the insured shall give all such information
and assistance as the company may require.
• Other insurance
• If at the time any claim arises under this policy
there is any other insurance covering the same
loss damage or liability, the company shall not be
liable to pay or contribute more than its rate able
proportion of any loss damage compensation
costs or expenses.
 General Conditions (Contd..)
• Cancellation
•
• by giving to the insured fifteen days
notice by registered letter to the
insured at his last known address and in
such event will return to the insured the
premium paid less the pro-rata portion
for the period the policy has been in
force.
 General Conditions (Contd..)
• any time by the insured on written
notice and provided no claim has
arisen during the current period of
insurance the insured shall be
entitled to a return of premium less
the premium at the company's short
period rates for the period the policy
has been in force.
Motor Claims
Rules for NCD
- When more than one vehicle has been covered under one policy, NCD applies
separately to
each vehicle i.e., each vehicle earns NCD according to its claims history.
- NCD can be transferred from one insurer to another. Hence when the proposer
produces
certificate from his previous insurer stating the period of insurance and confirming
that no
claim was lodged, then NCD according to the rate chart is to be allowed.
- When a vehicle with the same insured substitutes the existing vehicle which had a
NCD, the
NCD is applicable to the new vehicle.
- If only one claim is made during the period of insurance, any NCD shall be
reduced by two
years for every claim made.
- If more than one claim is made during the period of insurance, any NCD earned
shall be
• reduced to nil.
• - NCD benefit expires one year from the expiry
date of the policy.
• - NCD shall follow the fortune of the insured
(original) person and not the policy or the vehicle
• and in the event of the transfer of the vehicle to
another person, the NCD not to be transferred
• to the new owner.
• - NCD shall be allowed where the insured is not to
be blamed of an accident by the police
• report or court decision.
• - When an insured with NCD changes his policy
cover from comprehensive to a third party fire
• and theft or third party only cover not vice versa,
the NCD shall be adjusted according to the
• new cover to the rate of discount for the
preceding accident free period.
• - NCD Certificate shall only be issued on clearance
of any outstanding debts due.
• - NCD is not applicable for flat rated policies
 Spot Survey

Police REPORT

INSPECTOR
RECOVERY INSPECTION
Final Survey
REINSPECTION
SURVEY
AT THE TIME OF PROCESSING / SANCTIONING
OF OWN DAMAGE CLAIM

Special attention to be given to the following

parts

1. Radiator
2. Water Pump / Water Pump kit
3. Battery
4. Thermostat
5. Engine Mountings
Special attention to be given to the following parts

6. Wheel Rims
7. Chassis Frame
8. Front Axle I Beam
9. Stub Axle, King Pin
10.Shock Absorbers / Struts in cars
 SPECIAL ATTENTION TO BE GIVEN TO THE
FOLLOWING PARTS
AT THE TIME OF PROCESSING/SANCTIONING OF
OD CLAIM
11. Spring Leaves / Suspension Parts in Cars
12. Wind shield Glass and its Rubber beading
13. Instrument panel and Meters
14. A/C Condenser
15. Rear Axle Tube
16. Internal parts viz., Engine Crankshaft, Engine
block, Pistons, Connecting Rods, Gear Box, Internal
Parts viz. Main Shaft, Counter Shaft, Gear Wheels
etc. Crown Wheel etc.
17. Steering Worm
18. Clutch Plate
19. Body Shell Parts/Door Shell etc./Body & Cabin
 Body & Cabin
• Wooden Material
• Sheet Metal
• Hardware viz., AngleIrons, Nut-
bolts,Rivets etc.
• SunMica / Plywood
• Beading
• Upholstery
• Painting
• Labour
Professional Estimators
Modes of Settlements
• Repair cost to the garage
• Total loss
-Power of attorney
-Title book
-debt free certificate from Tax & Transport
authorities
• Joint insured and joint name payments .
E N D………………END……………..END