Page 202 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 11: Motor Insurance

Conditions Notes

Apart from the usual conditions such as notice of loss, cancellation of policy, arbitration, etc.
there are two conditions which are specific to motor policies.

The insured is required to safeguard the vehicle from loss or damage and maintain it in
efficient condition. In the event of an accident, the insured shall take precautions to prevent
further damage. If the vehicle is driven before repairs any further damage is at insured’s
risk.
The insurer has the option to repair or replace the vehicle or parts or pay in cash the
amount of damage or loss. The insurer’s liability cannot exceed the insured’s estimated
value of the vehicle (specified in the policy) or the value of the vehicle at the time of loss
whichever is less.

Rating/Proposal Form

The proposal form elicits all information necessary for rating and underwriting. Some examples
of rating are given:

Private Cars/ Scooters/ Motorcycles

Rates are based upon the cubic capacity as given by manufacturers, Insured’s Declared Value
(IDV), the Zone of operation and age of the vehicle.
The cubic capacity of the vehicle indicates the power of the engine. Separate rates apply for cars
up to 1000 cc, from 1000 cc – 1500 cc and above 1500 cc and scooters/motorcycles up to 150cc,150-
350cc and above 350cc.
Similarly there are different rates for vehicles in the age groups up to 5 yrs.; 5 yrs. to 10 yrs. and
above 10 yrs. There are two Zones of operation, Zone A and Zone B, as follows:
Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi & Pune
Zone B: Rest of India.
Note: The rates for Zone A are higher than those for Zone B.

Commercial Vehicles

The rating depends upon the Zone of operation, passenger carrying capacity/ gross vehicle
weight, Insured’s Declared Value (IDV) and age of the vehicle.
There are three Zones for commercial vehicles:

1. Zone A Chennai, New Delhi, Kolkata and Mumbai
2. Zone B All other state capital
3. Zone C Rest of India

Personal Accident Cover

There is provision for compulsory personal accident cover for owner-driver of cars and
commercial vehicles of ` 2 lakh and ` 1 lakh for owner driver of scooters/motorcycles. It covers
death, PTD and PPD only.

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