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  FAQ On Auto Insurance
  What is the significance of a certificate of Insurance?

What is expected of the insured in the event of an accident involving damage to the vehicle and/or injury to third party?

Can Motor Insurance Policies be taken for a shorter term than the normal period of one year?

Can Motor Policies be issued for a longer term than a year?

Can Motor Vehicles be insured against Fire & Theft Risks only?

Are accessories and extra fittings of the vehicle covered under the Comprehensive Motor Insurance Policy?
What is the significance of a certificate of Insurance?
The Certificate of Insurance issued by the insurers in relation to every vehicle is the only evidence acceptable to the police authorities to show that valid insurance exists. This document has to be produced when demanded by an authorised police officer.
The Certificate of Insurance cannot be backdated. Hence, if a Policy is not renewed on or before the expiry date, the Certificate of Insurance in respect of new Insurance will be effective only from the date of New Insurance. For every renewal, a fresh certificate must be obtained. If there is any alternation in the risk during the currency of the insurance, the old certificate should be surrendered and a fresh one to be obtained. Duplicate Certificate in lieu of defaced, mutilated or lost certificates can be obtained on payment of prescribed fee and after production of an affidavit to that effect.
What is expected of the insured in the event of an accident involving damage to the vehicle and/or injury to third party
Damage to the Vehicle:

When an accident takes place, a report should be immediately filed with the insurance company and a set of claim forms submitted to them. An estimate for repairs and/or replacements has also to be prepared and submitted. The insurance company may then appoint an independent Surveyor who will also value the damage and hold discussions with the repairers and arrive at the amount at which the claim will be settled.
On completion of the survey, the repair work can be undertaken. When the relevant bills are produced, settlement will be made under the Policy. The claim amount may be paid either directly to the repairer or to the Insured if the latter has already made payment to the repairer and holds proof of the same.
In case of settlement of claim either for total loss of the vehicle or for replacement of certain items, such damaged vehicle or parts belong to the insurance company. They may arrange for disposal of the same in the best manner possible.

Death or Injury to Third Party:

The moment an accident takes place and a third party is involved, a report should be immediately filed with the police. Simultaneously, notice should be sent to the Insurance Company.
No settlement should be made with the third parties for any compensation to the latter and no commitment should be entered into with regard to the Insured's liability with the third parties.
All dealings with the third parties will be only with the knowledge and approval of the Insurance Company. Any claim from third parties will have to be suitably defended in consultation with the Insurance company and expenses for such defence will be payable by the insurance company if incurred with their consent.
Can Motor Insurance Policies be taken for a shorter term than the normal period of one year?
Motor Insurance Policies are normally taken for a period of one year. However, according to the requirements of the vehicle owner, a policy for a shorter term can be issued.

Situations do arise when a person plans to sell off his vehicle within a couple of months and he does not intend to renew his policy for another year. In such circumstances, he may go for a shorter period of cover. Short period insurance attracts Short Period Scale for calculating premium and obviously comes out costlier than the pro rata for the said period.

Short Period Scale
Period Not Exceeding Rate
 1 week 10 percent of annual rate
1 month  25 percent of annual rate
 2 months  35 percent of annual rate
 3 months  50 percent of annual rate
 4 months  60 percent of annual rate
 6 months  75 percent of annual rate
 8 months  85 percent of annual rate
 Exceeding 8 months  Full Annual Premium
Can Motor Policies be issued for a longer term than a year?

No policy can be issued for a period of more than one year ordinarily. However, for motor cycles and scooters only, the Act Policy in Form A, which is the minimum compulsory insurance required by law, may be issued on a long term basis. Such policies once issued remain valid up to the cancellation of the registration of the vehicle by the Regional Transport Authority (R T A).

This insurance is particularly useful for owners of comparatively older vehicles, for whom the Comprehensive Cover becomes a little too expensive considering the age and market value of the vehicle. The premium for such insurance is charged in accordance with the Long Term Act Policy Premium Schedule.

Long Term Act Policy Premium Schedule For Two-Wheelers Only

Age of Vehicle Below 250 cc Above 250 cc
New up to One Year 1103  1380 
Between 1 to 2 Years 1060  1326 
 Between 2 & 3 Years  1012 1267 
 Between 3 & 4 Years  961 1202 
 Between 4 & 5 Years  908 1134 
 Between 5 & 6 Years  868 1063 
 Between 6 & 7 Years  789  987
Between 7 & 8 Years   724  905
Between 8 & 9 Years 653 817
Between 9 & 10 Years 577 721
Over 10 Years 498 622
Can Motor Vehicles be insured against Fire & Theft Risks only?

Yes

Private Cars, motor cycles, scooters and commercial vehicles can be insured against Fire & Theft Risks only, provided they are laid up in the garage and not in active use. The insurance company under such cover shall only be liable to indemnify the insured against loss or damage by:

Fire Explosion
Self-Ignition or Lightning
Burglary
Housebreaking or Theft and Riot
Strike
Malicious and Terrorism Damage

In case of vehicles that are in use, Fire & Theft Risks only can be covered with the Act Liability Risks. The premium rates for such restricted cover is as follows

Type of Vehicle Fire & Theft Risks only Act Liability plus Fire & Theft Risks
Private Cars 0.5 percent of Insured's estimated value Act Premium + 25 percent of Own Damage Premium
Motor cycles and Scooters Rs.100/- flat Act Premium + 40 percent of Own Damage Premium
 Commercial Vehicles 0.45 percent of Insured's estimated value Act Premium + 40 percent of Own Damage Premium

Does a Third Party Claim affect the Bonus/ Malus rate under the Comprehensive Motor Insurance Policy?

The Bonus/Malus concept is applicable only to the Own Damage Section of the Comprehensive Policy.
The discount or loading is accordingly allowed or charged on the Own Damage portion of the premium. The Act Liability or Third Party premium is absolute. There is no scope for adjustment. As such, an accident giving rise to a Third Party claim, whatever the amount, does not affect the application of Bonus/Malus at the time of renewal of the policy.

Are accessories and extra fittings of the vehicle covered under the Comprehensive Motor Insurance Policy?
Accessories are generally those parts which are directly supplied by the manufacturer along with the vehicle. But they are not essential for the running of the vehicle. The engine of a vehicle is essential for its running and obviously not an accessory. A spare tyre, is however an accessory. Loss or damage to accessories are covered only if they are on the vehicle.
In case the accessories are detached from the vehicle and kept in a garage and are destroyed by fire, they are not covered. Radios, tape recorders, air conditioners and other electrical or electronic items are fitted by vehicle-owners. These cannot be considered as accessories. These items qualify as extra fittings and the owner the owner has to specifically describe and mention separate values towards them at the time of insurance. Only on payment of the requisite additional premium, can they be covered. However, if such items are built-in and supplied by the manufacturer, will be treated as accessories and need not be separately insured.
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