Basics of Motor Insurance ppt.
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Transcript of Basics of Motor Insurance ppt.
MOTOR INSURANCE
BYS. M. GUPTA
TOPIC - ACCIDENT AND MOTOR INSURANCE
� ACCIDENT AND MOTOR INSURANCE.
� TERMS AND CONDITIONS OF MOTOR INSURANCE.
� CLAIMS & RECOVERY.
� COMPULSORY THIRD PARTY INSURANCE.
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WHAT IS MOTOR INSURANCE?WHAT IS MOTOR INSURANCE?
� MOTOR INSURANCE IS A COMBINATION OF TWO WORDS I.E. ‘MOTOR + INSURANCE’
� MOTOR UNDER THE MOTOR VEHICLE ACT IS A SELF-PROPELLED VEHICLE
� INSURANCE WE ALREADY KNOW IS PROTECTION AGAINST ANY ‘UNFORESEEN RISK’
� THE ‘UNFORESEEN RISK’ IS AN INCIDENT, WHICH CAN’T BE FORESEEN I.E. WHICH MAY OR MAY NOT HAPPEN I.E.
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WHAT IS MOTOR INSURANCE?WHAT IS MOTOR INSURANCE?
� A) IT MAY RESULT IN TO EITHER CREATIONOF LIABILITIES OR
� B) WILL RESULT IN TO FINANCIAL LOSSES:
� INJURIES/DEATH TO PERSON/S AND ‘A’
� DAMAGE TO PROPERTY.(LIABILITIES)
� DAMAGE TO THE VEHICLE ITSELF AND ‘B’� THEFT OF PARTS OR THE THEFT OF THE
VEHICLE ITSELF.(FINANCIAL LOSSES)
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WHAT IS MOTOR INSURANCE?WHAT IS MOTOR INSURANCE?
� MOTOR INSURANCE IS THUS PROTECTION AGAINST THE RISKS EXPLAINED EARLIER, IN ORDER TO: � OVER COME THE LIABILITIES AND� THE FINANCIAL LOSSES
� ASSOCIATED WITH THE ACCIDENTS.
� THERE ARE DIFFERENT POLICIES OT MEET THE ABOVE OR
� A SINGLE POLICY CAN ALSO BE TAKEN FOR THE SAME AS BEING EXPLAINED IN THE NEXT SLIDE.
TYPES OF POLICIESTYPES OF POLICIES
� THE POLICY WHICH IS MANDATORY TO BE TAKEN IN ORDER TO MEET THE REQUIRED OF THE MOTOR VEHICLE ACT IS, ‘LIABILITY ONLY POLICY’, AS EXPLAINED EARLIER AND
� THE SECOND POLICY IS THE CHOICE OF THE OWNER OF THE VEHICLE I.E. HE MAY OR MAY NOT TAKE THIS POLICY, KNOWN AS, ‘PACKAGE POLICY’.
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INTRODUCTIONINTRODUCTION
� GLOBALLY MOTOR INSURANCE IS THE BIGGEST AND FASTEST GROWING GENERAL 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 NON-LIFE 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.
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INTRODUCTIONINTRODUCTION
� 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.
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GROWTHGROWTH
� 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.
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GROWTHGROWTH
� 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.
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ACCIDENTSACCIDENTS� 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.
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ACCIDENTSACCIDENTS
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� 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.
World’s Costliest Car-Bugatti VeyronBefore and after the accident
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IMPLICATIONSIMPLICATIONS
� 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.
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REMEDIESREMEDIES
� THE MOTOR VEHICLE ACT HAS THEREFORE MADE THE THIRD PARTY INSURANCE COMPULSORY
� IT 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 AN IMPRISONMENT OF THREE MONTHS OR A PENALTY OF RS. 1000 OR BOTH (SEC.196 OF THE MV ACT).
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HISTORYHISTORY
� 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).
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HISTORYHISTORY
� 1894: 1ST MOTORCAR INTRODUCED IN U.K. ENGLAND.
� 1895: 1ST MOTOR POLICY – ONLY THIRD PARTY LIABILITIES – INTRODUCED.
� 1899: ACCIDENTAL DAMAGE TO CAR ADDED – COMPREHENSIVE INSURANCE (PACKAGE).
� 1903: CAR & GENERAL INSURANCE CORPORATION LTD. – ESTABLISHED MAINLY TO TRANSACT MOTOR INSURANCE, FOLLOWED BY OTHER COMPANIES.
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HISTORYHISTORY
� 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.
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HISTORY – INDIAHISTORY – 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.
� GOVERNED BY A TARIFF: WITHDRAWN IN UK.
� MVA 1988, REPLACED THE MVA OF 1939. EFFECTIVE FROM JULY 1ST 1989.
MANDATORY INSURANCEMANDATORY INSURANCE
� 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:….
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LIABILITY TO THIRD PARTIESLIABILITY 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.
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LIABILITY TO THIRD PARTIESLIABILITY TO THIRD PARTIES
� 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.
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LIABILITY TO THIRD PARTIESLIABILITY TO THIRD PARTIES
� 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.
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PERSONAL ACCIDENT COVER FOR OWNER-DRIVER
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 OR WHILST:
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PERSONAL ACCIDENT COVER FOR OWNER-DRIVER
PERSONAL ACCIDENT COVER FOR OWNER-DRIVER
� 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:
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SCALE OF COMPENSATIONSCALE 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%
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LIMITATIONSLIMITATIONS
� 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 SHALL NOT IN THE AGGREGATE EXCEED THE SUM OF RS. 2 LACK DURING: � ANY ONE PERIOD OF INSURANCE.
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EXCLUSIONSEXCLUSIONS
� 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.
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LIMITATIONSLIMITATIONS
� 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.
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LIMITS OF LIABILITYLIMITS OF LIABILITY
� UNDER SECTION - II OF THE POLICY: � DEATH OF OR BODILY INJURY - SUCH
AMOUNT AS IS NECESSARY TO MEET THE REQUIREMENTS OF THE MOTOR VEHICLES ACT, 1988.� UNLIMITED.
� UNDER SECTION - II OF THE POLICY: � DAMAGE TO ‘THIRD PARTY PROPERTY’:
� RS.6,000 / RS.7, 50,000 AS THE CASE MAY BE.
� P.A. COVER UNDER SECTION – III: � FOR ‘OWNER-DRIVER’ (CSI):
� RS.2,00,000.
TYPES OF VEHICLESTYPES OF VEHICLES
� THE INDIAN MOTOR TARIFF REVISED W.E.F. 1ST JULY 2002, FOR THE PURPOSES OF INSURANCE
� HAS CLASSIFIED THE MOTOR VEHICLES BROADLY INTO THREE CATEGORIES WITH FURTHER SUB CLASSIFICATION VIZ.
� PRIVATE CARS� MOTORIZED TWO WHEELERS AND � COMMERCIAL VEHICLES.
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PRIVATE CARSPRIVATE CARS
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MOTORIZED TWO WHEELERS
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The most expensive motorcycle $250,000, Dodge Tomahawk, V10 engine 505 c.c., 10 cylinders, max. speed of almost 400 mph.
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COMMERCIAL VEHICLES
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Neoplan Jumbo cruiser 2 in 1 bus double deck bus 170 passenger capacity
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WORLD’S LONGEST TRUCK ‘MIDNIGHT RIDER TRACTOR TRAILER LIMOUSINE’
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CONDITIONSCONDITIONS
� NOTICE SHALL BE GIVEN IN WRITING IMMEDIATELY FOR ANY ACCIDENTAL LOSS OR DAMAGE TO THE VEHICLE
� NOTICE SHALL BE GIVEN IN WRITING IMMEDIATELY OF ANY WRIT/ SUMMONS ALONG WITH COPY OF ANY ‘PROSECUTION INQUEST’ OR ‘FATAL INQUIRY’
� NO ADMISSION, OFFER, PROMISE, PAYMENT WITHOUT THE WRITTEN CONSENT
� IN CASE OF THEFT, IMMEDIATELY INFORM THE POLICE
� NO ADMISSION, OFFER, PROMISE, PAYMENT, SHALL BE MADE WITHOUT THE WRITTEN CONSENT OF THE COMPANY.….
CONDITIONSCONDITIONS
� THE INSURED SHALL TAKE ALL
REASONABLE STEPS TO SAFEGUARD
THE VEHICLE FROM LOSS OR DAMAGE
AND TO MAINTAIN IT IN EFFICIENT
CONDITION:� COMPANY SHALL HAVE FREE AND FULL
ACCESS TO EXAMINE THE VEHICLE OR ANY PART THEREOF OR
� ANY DRIVER OR EMPLOYEE OF THE INSURED.
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CONDITIONSCONDITIONS
� IN THE EVENT OF ANY ACCIDENT OR
BREAKDOWN, THE VEHICLE SHALL
NOT BE LEFT UNATTENDED WITHOUT
PROPER PRECAUTIONS:� TO PREVENT FURTHER DAMAGE OR LOSS
� IF THE VEHICLE BE DRIVEN BEFORE THE NECESSARY REPAIRS
� ANY EXTENSION OF THE DAMAGE OR
� FURTHER DAMAGE SHALL BE ENTIRELY AT THE INSURED’S OWN RISK.
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CONDITIONSCONDITIONS
� THE COMPANY MAY CANCEL THE POLICY BY SENDING SEVEN DAYS NOTICE & WILL RETURN THE PREMIUM PAID LESS THE PRO RATA PORTION THEREOF
� THE POLICY MAY BE CANCELLED BY THE INSURED ON SEVEN DAYS’ NOTICE: � PROVIDED NO CLAIM HAS ARISEN DURING
THE CURRENCY OF THE POLICY� INSURED SHALL BE ENTITLED TO A RETURN
OF PREMIUM LESS PREMIUM AT THE COMPANY’S SHORT PERIOD RATES…..
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CONDITIONSCONDITIONS
� SUBJECT TO RETENTION OF THE MINIMUM PREMIUM OF RS. 100
� RS. 25 FOR VEHICLES SPECIFICALLY DESIGNED/ MODIFIED FOR USE BY BLIND/ HANDICAPPED/ MENTALLY CHALLENGED
� WHERE THE OWNERSHIP OF THE VEHICLE IS TRANSFERRED, THE POLICY CANNOT BE CANCELLED UNLESS:� EVIDENCE THAT THE VEHICLE IS INSURED
ELSEWHERE IS PRODUCED.
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CLAIMSCLAIMS
� TYPE OF LOSSES:� TOTAL LOSS (ACCIDENTAL)
� WHEN INSURED VEHICLE IS DAMAGED TO THE EXTEND THAT REPAIRS IS UNECONOMICAL TO THE COMPANY OR COST OF RETRIEVAL EXCEEDS THE IDV.
� IF ASSESSED VALUE OF THE LOSS EXCEEDS 75% OF IDV (CTL).
� TOTAL LOSS (THEFT)� WHEN PHYSICAL PRESENCE OF VEHICLE IS NOT
THERE I.E. VEHICLE IS STOLEN.
� PARTIAL LOSS (ACCIDENTAL)� REPAIRABLE LOSS OCCURRING DUE TO AN INSURED
PERIL.
� PARTIAL LOSS (THEFT)� THEFT OF PARTS/ ACCESSORIES.� ACCESSORIES COVERED ONLY IN PRIVATE CARS.
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CLAIMS PROCEDURECLAIMS PROCEDURE
� IMMEDIATE NOTICE OF LOSS INWRITING TO BE GIVEN
� FOR ACCIDENTAL LOSSES, ESTIMATEOF REPAIRS AND CLAIM FORM TO BESUBMITTED
� FOR LOSS DUE TO THEFT OF VEHICLE, A COPY OF F.I.R. ALONG WITH A CLAIMFORM TO BE GIVEN
� TO APPOINT A SURVEYOR FOR ASSESSMENT OF LOSS/ ANINVESTIGATOR TO INVESTIGATE THETHEFT…..
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CLAIMS PROCEDURECLAIMS PROCEDURE
� ORIGINAL R/C, D/L TO BE PRODUCED � REPAIRS CAN BE STARTED IN CASE OF
PARTIAL LOSS, AFTER INITIAL VERIFICATIONBY SURVEYOR’S
� CLAIMS ARE SUBJECT TO COMPULSORYEXCESSES
� IN CASE OF TOTAL LOSS, LIMIT OFLIABILITY WILL BE IDV
� ANY DISPUTE REGARDING ‘QUANTUM’ OFCLAIM AMOUNT HAS TO BE REFERRED TO AN ARBITRATOR
� TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER IS 12 MONTHS FROM DATE OFSUCH DISCLAIMER.
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THANKS
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