BY:-PUNEET BHATNAGARSHALABH KAPOORPIYUSH KHATTERSHWETA TANWARMISHA BHALLA

AUTO INSURANCE

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

TYPES OF INSURANCE• Auto insurance

• Home insurance• Health insurance• Accident, sickness and unemployment insurance• Casualty• Life

What is it:Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

AUTO INSURANCE

• Property Damage Liability

• Bodily Injury Liability

• Medical Payments or Personal Injury Protection (PIP)

AUTO INSURANCE

Auto Insurance in India deals with the insurance covers for the loss or damage caused to the automobile or its parts due to natural and man-made calamities. It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability. There are certain general insurance companies who also offer online insurance service for the vehicle.Auto Insurance in India is a compulsory requirement for all new vehicles used whether for commercial or personal use. The insurance companies have tie-ups with leading automobile manufacturers. They offer their customers instant auto quotes. Auto premium is determined by a number of factors and the amount of premium increases with the rise in the price of the vehicle. The claims of the Auto Insurance in India can be accidental, theft claims or third party claims. Certain documents are required for claiming Auto Insurance in India, like duly signed claim form, RC copy of the vehicle, Driving license copy, FIR copy, Original estimate and policy copy.

IN INDIA

• Private Car Insurance

• Two Wheeler Insurance • Commercial Vehicle Insurance

TYPES OF AUTO INSURANCE

INTRODUCTION

GLOBALLY MOTOR INSURANCE IS THE BIGGEST AND FASTEST GROWINGGENERAL INSURANCE PORTFOLIO AND INDIA IS NO EXCEPTION TO IT.• IT ACCOUNTS FOR MORE THAN 45% OF THE

TOTAL GENERAL INSURANCE PREMIUM INCOME IN INDIA.

• IN THE YEAR ENDING 2009, TOTAL NONLIFE PREMIUM OF THE INDUSTRY WAS ABOUT 28,000 CRORES OUT OF WHICH MOTOR SHARE WAS ABOUT 13,000 CRORES,

• HOWEVER MOTOR BUSINESS WAS 25 CRORES ONLY AT THE TIME OF NATIONALIZATION

Contd..

SOME OF THE FACTORS RESPONSIBLE FOR THIS GROWTH ARE:• INCREASE IN EARNING CAPACITY OF INDIVIDUAL• CHANGE IN PRIORITIES OF LIFE• EXPLOSIVE GROWTH OF AUTOMOBILE INDUSTRY• NEWER MODELS BEING INTRODUCED IN INDIA

AND IN THE WORLD, THE COSTLIER ONES AND THE CHEAPEST VERSIONS AND

• INTRODUCTION OF CHEAP AUTO LOANS.

Growth • IN 1951, THERE WERE 3,00,000 MOTOR

VEHICLES THROUGHOUT INDIA• THE ROAD NETWORK AT THAT TIME WAS OF

4,00,000 KILOMETERS• BY THE YEAR ENDING 2004, THE NUMBER OF

VEHICLES HAS GONE UP BY 270 TIMES, WHERE AS,

• ROAD NETWORK HAS EXPANDED BY 11 TIMES ONLY.

• IN INDIA THE VEHICLE POPULATION HAS ALREADY CROSSED 8 CRORES COMPRISING OF THE FOLLOWINGS:

TWO WHEELERS: 6 CRORES MOTOR CARS : 2 CRORES COMMERCIAL : 2 CRORES AND• ABOUT 90 LAKH MOTOR VEHICLES (ALL TYPES)

ARE BEING ADDED ON INDIAN ROADS EVERY YEAR.

ACCIDENTS• ABOUT 300 PERSONS ARE BEING KILLED ON ROAD ACCIDENTS

DAILY AND ABOUT 10,00,00 ARE BEING INJURED ANNUALLY AND • THE INCIDENCE OF ROAD ACCIDENTS TO NUMBER OF VEHICLES

IN INDIA IS ALARMINGLY HIGH IN COMPARISON TO DEVELOPED COUNTRIES:

• THE NUMBER OF ROAD ACCIDENTS PER 10,000 VEHICLES IN INDIA IS ABOUT 120 AS AGAINST 10 IN THE DEVELOPED COUNTRIES OF THE WORLD

• THE NUMBER OF DEATHS PER 10,000 VEHICLES IN INDIA IS 55 AS AGAINST 2 IN THE WEST.

• IN 1990, TRAFFIC ACCIDENTS WERE WORLD’S NINTH BIGGEST CAUSE OF DEATH AND IT IS EXPECTED TO BECOME THE THIRD BIGGEST BY 2020.

• STUDY UNDERTAKEN BY THE ‘WORLD HEALTH ORGANIZATION’ REVEALS THAT ROAD ACCIDENTS ARE THE SECOND AND THIRD BIGGEST CAUSE OF DEATH IN THE AGE GROUP OF 5-29 AND 30-44 YRS. RESPECTIVELY.

• THE INDIAN SITUATION IS AMONGST THE WORST IN THE WORLD I.E.

SHARE OF ROAD FATALITIES IS AROUND 86%. AGAINST 40% SHARE OF VEHICLE POPULATION.

IMPLICATIONS

• IT IS THEREFORE NATURAL THAT IN A SITUATION LIKE THIS I.E. THE WIDESPREAD USE OF VEHICLE BY THE COMMON MAN

• MANY VEHICLE OWNERS AND USERS MAY NOT HAVE THE REQUISITE FINANCIAL CAPABILITIES OF

• COMPENSATION TO THE VICTIMS OF THE ROAD ACCIDENT.

REMEDIES

• THE MOTOR VEHICLE ACT HAS THEREFORE MADE THE THIRD PARTY INSURANCE COMPULSORY

• IT IS A PUNISHABLE OFFENCE TO USE THE VEHICLE WITHOUT INSURANCE

• NECESSARY PROVISIONS FOR ITS ENFORCEMENT ARE THEREFORE ARE AVAILABLE WITH THE AUTHORITIES:

FAILURE TO COMPLY THE PROVISIONS OF SEC.146 OF THE MV ACT IS PUNISHABLE BY ANIMPRISONMENT OF THREE MONTHS OR A PENALTY OF RS. 1000 OR BOTH (SEC.196 OF THE MV ACT).

HISTORY• MOTOR INSURANCE IS ONE OF THE MOST

IMPORTANT PORTFOLIOS OF INSURANCE INDUSTRY AND

• IT IS MANDATORY/COMPULSORY INSURANCE FOR THE VEHICLES PLYING ON THE ROADS

• IT IS WORTHWHILE TO KNOW THAT • THE TOLL TAKEN BY ROAD ACCIDENTS IS NO LESS

THAN THE TOLL OF A MAJOR NATURAL OR A MAN-MADE CATASTROPHE (LIKE 9/11).

• POST WORLD WAR- I: INCREASE IN NUMBER OF VEHICLES AND ROAD ACCIDENTS.

• ROAD TRAFFIC ACTS: 1930 & 1934- COMPULSORY THIRD PARTY LIABILITY INSURANCE.

• ROAD TRAFFIC ACT 1960: COMPULSORY INSURANCE PROVISIONS OF ABOVE ACTS WAS CONSOLIDATED.

HISTORY IN INDIA• 1939: MOTOR VEHICLES ACT (MVA) PASSED.• COMPULSORY 3RD PARTY INSURANCE INTRODUCED

ON 1ST JULY, 1946.• PRACTICE IN INDIA FOLLOWS THAT OF U.K. MARKET.• MVA 1988, REPLACED THE MVA OF 1939.

EFFECTIVE FROM JULY 1ST 1989.• THE MANDATORY PART OF THE MOTOR INSURANCE

IS KNOWN AS ‘THIRD PARTY INSURANCE’• THIS INSURANCE WAS FORMED ON THE BASIS OF

MOTOR VEHICLE ACT• THE POLICY IS BEING ISSUED IN ACCORDANCE

WITH THE PROVISIONS OF THE M. V. ACT, IS NOW CALLED AS THE ‘LIABILITY ONLY POLICY’ & THE COVERAGE’S PROVIDED ARE:….

LIABILITY TO THIRD PARTIES• DEATH OF OR BODILY INJURY TO ANY PERSON INCLUDING

OCCUPANTS (PROVIDED SUCH OCCUPANTS ARE NOT CARRIED FOR HIRE OR REWARD) AS PER MOTOR VEHICLES ACT, 1988.

• THE COMPANY SHALL NOT BE LIABLE FOR DEATH OR INJURY ARISES OUT OF AND IN THE COURSE OF THE EMPLOYMENT

• DAMAGE TO PROPERTY OTHER THAN PROPERTY BELONGING TO THE INSURED OR HELD IN TRUST/ CUSTODY OR CONTROL OF THE INSURED

• ALL COSTS AND EXPENSES INCURRED WITH ITS WRITTEN CONSENT.

• ANY DRIVER WHO IS DRIVING THE VEHICLE ON THE INSURED’S ORDER OR WITH INSURED’S PERMISSION

• PROVIDED THAT SUCH DRIVER SHALL AS THOUGH HE/ SHE WAS THE INSURED

• OBSERVES & FULFILL THE TERMS EXCEPTIONS AND CONDITIONS OF THIS POLICY

• ANY PERSON ENTITLED TO INDEMNITY, THE COMPANY WILL INDEMNIFY SUCH PERSON OR HIS/ HER PERSONAL REPRESENTATIVE PROVIDED

• THAT SUCH PERSONAL REPRESENTATIVE SHALL AS THOUGH WAS THE INSURED, OBSERVE FULFILL

• THE TERMS EXCEPTIONS AND CONDITIONS OF THIS POLICY.

Contd.

PERSONAL ACCIDENT COVER FOR OWNER-

DRIVER• THE COMPANY UNDERTAKES TO PAY COMPENSATION AS PER THE FOLLOWING SCALE FOR BODILY INJURY/ DEATH SUSTAINED BY THE OWNER-DRIVER OF THE VEHICLE

• IN DIRECT CONNECTION WITH THE VEHICLE INSURED:

DRIVING MOUNTING INTO/ DISMOUNTING FROM THE

VEHICLE INSURED WHILST TRAVELING IN IT AS A CO-DRIVER CAUSED BY VIOLENT, ACCIDENTAL, EXTERNAL

AND VISIBLE MEANS WHICH IS INDEPENDENT OF ANY OTHER CAUSE SHALL WITHIN SIX CALENDAR MONTHS OF SUCH

INJURY RESULT IN:

SCALE OF COMPENSATION

Nature Of Injury Compensation

1 Death 100%

2 Loss of two limbs or sight of both eyes or one limb & sight of one eye

100%

3 Loss of one limb or sight of one eye

50%

4 Permanent total disablement 100%

LIMITATIONS• PROVIDED ALWAYS THAT

• COMPENSATION SHALL BE PAYABLE UNDER ONLY ONE OF THE ITEMS (1) TO (4) ABOVE IN RESPECT OF THE:

• OWNER-DRIVER ARISING OUT OF ANY ONE OCCURRENCE AND

• THE TOTAL LIABILITY OF THE INSURER SHAL NOT IN THE AGGREGATE EXCEED THE SUM OF RS. 2 LACK DURING:

• ANY ONE PERIOD OF INSURANCE.• THIS COVER IS SUBJECT TO:

• THE OWNER-DRIVER IS THE REGISTERED OWNER OF THE VEHICLE INSURED

• THE OWNER-DRIVER IS THE INSURED NAMED IN THIS POLICY

• THE OWNER-DRIVER HOLDS AN EFFECTIVE DRIVING LICENSE• IN ACCORDANCE WITH THE PROVISIONS OF RULE

3 OF THE CENTRAL MOTOR VEHICLES RULES 1989, AT THE TIME OF THE ACCIDENT.

EXCLUSIONS• NO COMPENSATION SHALL BE PAYABLE IN

RESPECT OF DEATH OR BODILY INJURY DIRECTLY OR INDIRECTLY WHOLLY OR IN PART ARISING OR RESULTING FROM OR TRACEABLE TO:

• INTENTIONAL SELF INJURY SUICIDE OR ATTEMPTED SUICIDE PHYSICAL DEFECT OR INFIRMITY OR

• AN ACCIDENT HAPPENING WHILST SUCH PERSON IS UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS.

• SUCH COMPENSATION SHALL BE PAYABLE DIRECTLY TO THE INSURED OR TO THEIR LEGAL REPRESENTATIVES

A no claim bonus is given to the policy holder if no claims are made; this bonus can go up to 50% in some cases provided the policy is renewed within 90 days of expiry of the previous policy. This no claim bonus is transferable as it can be used even if one is changing the auto insurance company. In addition to the premium which one pays to get the vehicle insured an extra charge might be levied on a four wheeler owner underspecial circumstances. These are as follows :-•Extra premium is paid on electrical and electronic equipments which don't come as part of the factory fitting but are bought separately or imported from abroad.•Vehicles fitted with LPG or CNG kit have to be insured by payment of extra premium•If the geographical area needs to be extended to other South East Asian countries like Bangladesh, Nepal, Bhutan, Pakistan, Sri Lanka and Maldives.•Vehicles fitted with a fiber glass fuel tank

BONUS AND DISCOUNTS

Discounts are also available on premium payments under special circumstances

• When the car is a Vintage one•When No claim bonus has not been utilized•If the owner is a member of a recognized automobile Association•If the vehicle is fitted with ant-theft devices•If the vehicle which is specially modified for the usage of physically challenged people•If the vehicle is used with in insurer's premises and sites

CLAIM PROCEDURE

• IMMEDIATE NOTICE OF LOSS IN WRITING TO BE GIVEN• FOR ACCIDENTAL LOSSES, ESTIMATE OF REPAIRS AND CLAIM FORM TO BE SUBMITTED• FOR LOSS DUE TO THEFT OF VEHICLE, A COPY OF F.I.R. ALONG WITH A CLAIM FORM TO BE GIVEN• TO APPOINT A SURVEYOR FOR ASSESSMENT OF LOSS/ AN INVESTIGATOR TO INVESTIGATE THE THEFT…..

• ORIGINAL R/C, D/L TO BE PRODUCED• REPAIRS CAN BE STARTED IN CASE OF PARTIAL LOSS, AFTER INITIAL VERIFICATION BY SURVEYOR’S• CLAIMS ARE SUBJECT TO COMPULSORY EXCESSES• IN CASE OF TOTAL LOSS, LIMIT OF LIABILITY WILL BE IDV• ANY DISPUTE REGARDING ‘QUANTUM’ OF CLAIM AMOUNT HAS TO BE REFERRED TO AN ARBITRATOR• TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER IS 12 MONTHS FROM DATE OF SUCH DISCLAIMER.