Page 199 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes Section 140 of the Motor Vehicles Act 1988, provides for liability of the owner of the Motor
Vehicle to pay compensation in certain cases, on the principle of “no fault”. The amount of
compensation, so payable, is, ` 50,000/- for death, and ` 25,000/- for permanent disability of any
person resulting from an accident occurring from the use of any kind of motor vehicle.

Notes The principle of “no fault” means the claimant need not prove negligence on the
part of the motorist. Liability is automatic.

Certificate of Insurance

The Motor Vehicles Act provides that the policy of insurance shall be of no effect unless and until
a certificate of insurance in the form prescribed under the Rules of the Act is issued.

The only evidence of the existence of a valid insurance as required by the Motor Vehicles Act
acceptable to the police authorities and R.T.O. is a certificate of insurance issued by the insurers.
The points covered under a certificate of insurance differ according to the type of vehicle insured.

Self Assessment

Fill in the blanks:
1. The insurance of third party liability taking place from the use of motor vehicles in public
areas is made ………………………………….

2. The Motor Vehicles Act provides that the policy of insurance shall be of no effect unless
and until a ………………………………………. in the form prescribed under the Rules of
the Act is issued.
11.2 Types of Motor Insurance Policy

Let’s discuss about the types of Motor Insurance Policy. For all classes of vehicles, there are two
types of Policy Forms:

Form “A”: It is used to cover Act Liability. Form “A” is called “Standard Form for “A” Policy for
Act Liability”. This form applies uniformly to all classes of vehicles, whether Private Cars,
Commercial Vehicles, Motor Cycles or Motor Scooters, with suitable amendments in “Limitations
as to Use”.
Form “B”: It is used to cover Own Damage Losses and Act Liability. The policy can also be
extended to cover additional liabilities as provided in the Tariff. Form “B”, which provides
wider cover as indicated above, varies with the class of vehicle covered. There are therefore
Form “B” Policies for Private Cars, Commercial Vehicles, Motor Cycles/Scooters, etc.

Policy Form B

This policy provides the so-called ‘comprehensive’ cover and the structure of the policy form is
the same for all vehicles, (with some differences which are pointed out, wherever applicable).

Section I: Loss or Damage (or “Own Damage”). The risks covered are:
(a) Fire, explosion, self-ignition or lightning
(b) Burglary, house breaking or theft

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