Motor Vehicle Insrance- Merlyn Coelho

“MOTOR VEHICLE INSURANCE”

Bachelor of Commerce

(Banking & Insurance)

Semester VI

(2012-13)

Submitted by

MERLYN COELHO

SMT.M.M.K. COLLEGE OF COMMERCE AND ECONOMICS

BANDRA (W)

MUMBAI-50

“MOTOR VEHICLE INSURANCE”

Bachelor of Commerce

(Banking & Insurance)

Semester VI

(2012-13)

Submitted

In Partial Fulfillment of the requirements

For the Award of Degree of Bachelor of

Commerce – Banking & Insurance

By

MERLYN COELHO


BANDRA (W)

MUMBAI-50


BANDRA (W)

MUMBAI-50

CERTIFICATE

(2012 – 2013)

This is to certify that MERLYN COELHO of B.com (Banking &

Insurance) Semester VI (2012-13) has successfully completed the project

on “MOTOR VEHICLE INSURANCE” under the guidance of Dr.

Ashok Vanjani.

Date:-

Place:-Mumbai.

(Prof. Mr. Vishal R Tomar) (Dr. Ashok Vanjani)

Course Co-ordinator Principal

(Prof. Dr.A.C Vanjani)

Project Guide External Examiner

DECLARATION

Date:-

I, Miss. MERLYN COELHO the student of B.Com (Banking &

Insurance) Semester VI (2012-13) hereby declare that I have completed

the project on “MOTOR VEHICLE INSURANCE” successfully.

The information submitted is true and original to the best of my

knowledge.

Thank you,

Yours faithfully,

MERLYN COELHO

ACKNOWLEDGEMENT

At the beginning, I would like to thank Almighty God for his shower of

blessing. The desire of completing this dissertation was given a way by

my guide Dr. A.C Vanjani. I am very much thankful to him for the

guidance, support and for sparing his precious time from a busy and

hectic schedule.

I am thankful to Dr. ASHOK VANJANI, Principal of Smt.M.M.K.

College. My sincere thanks to Prof. FARZIN DARUWALLA who

always motivated and provided a helping hand for conceiving higher

education.

I would fail in my duty if I don’t thank my parents who are pillars of my

life. Finally, I would express my gratitude to all those persons who

directly and indirectly helped me in completing dissertation.

MERLYN COELHO

DECLARATION

Date:-

I the undersigned Dr.A.C Vanjani, have guided MERLYN COELHO

for her project, she has completed the project “MOTOR VEHICLE

INSURANCE” successfully.

I hereby, declared that information provided in this project is true as per

the best of my knowledge.

Thank you,

Yours faithfully,

Dr.A.C Vanjani.

INDEX

SR no. TOPIC Page no.

1. Executive Summary 1

2. Introduction 3

3. Meaning of motor vehicle insurance 5

4. History of motor vehicle insurance 6

5. Fundamental principles of insurance 9

6. Categories for the purpose of insurance 13

7. Need for motor vehicle insurance 17

8. Advantages of motor vehicle insurance 20

9. Disadvantages of motor vehicle insurance 21

10. Prenium rating and calculation 23

11. Factors considered for premium rating 24

12. Types of claims of motor vehicle insurance 32

13. Vehicle insurance in India 38

14. Current status of vehicle insurance companies 41

15. Case study 43

16. Bajaj allianz’s motor insurance 46

17. Article on motor vehicle insurance 51

18. Conclusion 54

19. References 55

EXECUTIVE SUMMARY

The Vehicle Act of 1939 introduced compulsory general insurance to

protect those who may get injured in an accident. However, the insurance

of damage to the vehicle is not compulsory. The tariff’s Advisory

Committee regulates motor vehicle insurance business in India. Motor

vehicle Insurance is one of the largest non-life insurance business in the

world. All motor vehicles are required to be registered with the Road

Transport Authorities. They are also insured for third party liability. This

is based on the premise that the motor vehicles could be either cause

injury or be a subject of damage or injury. The Motor Vehicle Act was

modified in 1988 motor vehicles require compulsory insurance because

any motor vehicle can be parked or derived in public places.

Vehicle insurance, in exchange for a premium, will pay valid claims

advising out of tariff/collisions. It is insurance purchased for cars, trucks

and other road vehicle. Its primary use is to provide protection against

physical damage resulting from traffic collision and against liability that

could also arise there from.

Vehicle insurance originated in U.K where the first vehicle policy

insurance policy was introduced into England in 1894 to cover third party

liabilities. And in 1899 the policy was extended to cover the accidental

damage similar to what is known as comprehensive policy . In India the

Vehicle Act was passed in 1939 and in 1946 the third party insurance was

introduced compulsory.

The need for compulsory vehicle insurance is obvious. There has been a

phenomenal rise in the vehicle accidents in the last 4-5 years. Much of

these are attributed to the sudden in the number of vehicles every before

being driven n roads has to be compulsorily insured. The vehicle

Motor vehicle insurance Page 1

insurance policy represents a combined coverage of the vehicles

including accessories, loss (or) damage to his property (or) life and the

third party coverage.

OBJECTIVE OF STUDY

To understand motor vehicle insurance market in India.

To look out for strength and weakness of vehicle insurance

industry.

To know need and importance of motor vehicle insurance.

To understand claim and premium procedure.


INTRODUCTION

MEANING OF INSURANCE

Insurance is a policy from a large financial institution that offers a

person, company, (or) other entity reimbursement (or) financial

protection against possible future loses (or) damages.

It is important to understand for anybody that is considering buying an

insurance policy (or) simply understanding the basics of finance.

Insurance is a hedging instruments used as a precautionary measures

against future contingent loss. The instrument used for managing the

possible risks of the future.

It is bought in order to hedge the possible risks of the future which

may (or) may not take place. This is mode of financially insuring that if

such an incident happens then the loss does not affect the present well-

being of the property insured. Thus though insurance, a person buys

security and protection. A simple example will make the meaning of

insurance easy to understand.

Example

A biker is always subjected to the risk of head injury. But it is not

certain that the accident causing him the head injury would definitely

occur. Still, people riding bikes cover their heads with helmets. This

helmets in such cases acts as insurance by protecting him/her from any

possible danger. The price paid was the possible inconvenience (or) act

of wearing a helmet, i.e. equivalent the insurance premium paid, in return

for relatively small, regular payments to the insuring body (or) insurance

company. Insurance can range from life to medical to generate

[residential, commercial property, natural incidents, burglary, etc.].


DEFINITION OF INSURANCE

A payment of compensation for specific potential future losses in

exchange for a periodic payment

Insurance is designed to protect the financial well-being of an

individual company (or) other entity in the case of unexpected loss.

Some forms of insurance are required by law, while others are optional.

Agreeing to the terms of insurance policy creates a contact between the

insured and the insurer.

In exchange for payments from the insured (called premiums), the

insurer agrees to pay the policy holder a sum money upon the occurrence

of a specific event. In most cases, the policy holder pays the rest.

Example

Insurance is including vehicle insurance, health insurance, disability

insurance of life and business insurance. A contract whereby, for

specified consideration, one party undertakes to compensate the other for

a loss relating to a particular subject as a result of the occurrence of

designated hazards.


MEANING OF MOTOR VEHICLE INSURANCE

The meaning of motor vehicle insurance is very simple as it comprises of

two words i.e. motor + insurance and motor means a vehicle of any sort

which is running on the road and Insurance means to provide cover for

any unforeseen risk which may occur in day to day life. Then another

question arises what is unforeseen risk? You are walking on the road a

car hits you from the back, you get a fracture in your leg and while

coming out you never thought that you will have an accident but it

happened and this is unforeseen risk i.e. a risk of happening of an event

which may happen or may not happen. So Motor Insurance as you all

know is the insurance for motor vehicles, there are various risks which

are related with the loss or damage to motor vehicles like theft fire or any

accidental damage so as to provide coverage for this motor insurance is

taken.

DEFINITION OF MOTOR VEHICLE INSURANCE

“Vehicle Insurance is a contract between the insured and the insurer in

which the insurer promises to indemnify the financial liability in event of

loss to the insured’s vehicle.”


HISTORY OF MOTOR VEHICLE INSURANCE

If we see in real life we can say that Motor Insurance is an important

part of General Insurance; it is the fascinating branch of insurance. This type

of insurance has come into existence from United Kingdom in the early part

of this century. As you must be surprised to know that the first Motorcar was

introduced in England in 1894. The first motor policy to provide coverage

for third party liability was came into existence in 1895. Now you must be

wondering what is a third party liability? Third party liability includes third

party and liability incurred towards third party. Third Party means any party

other then owner /driver or the government, any liability occurring towards

third Party due to use of motor vehicle is third party liability. It can be in the

form of bodily injury to third party or damage to third party property.

So at the beginning, only third party insurance came into existence but

later on, in U.K they realized the importance of insurance in terms of motor

and with this an accidental comprehensive policy also came into existence

and later on the lines of U.K. we started using approx the same policy.

In 1903 the Car and General Insurance Corporation limited was

established mainly to transact motor insurance, after this company a lot

many other companies has come into existence to transact this business. It

has been realized that after World War I, there was a considerable increase

in the number of vehicles on the road and when we have the number of the

vehicles on the road there is an increase in the number of accidents. As the

concept of insurance was not that much in existence so lot of accidental

damages were not at all recovered and the motorists faced a lot of problems


for getting their treatments and damages to their vehicles. After realizing this

the introduction of compulsory third party insurance through the passing of

the Road Traffic Acts 1930 and 1934 was done. Later on these Acts have

been consolidated by the Road Traffic Act 1960.

In 1939, India has also realized the importance of Motor Insurance

and Motor Vehicle Act was passed and came into existence in 1939. Earlier,

only few people knew about motor insurance but later on compulsory third

party insurance was introduce by the Act on 1st July 1946. We in India

follow the same practice as that of U.K. Today we follow a set Tariff

provided by Tariff Advisory Committee where as now in U.K. Tariff

business have been withdrawn. As Motor Vehicles Act laid the provisions in

1939 and it required some amendments that were implemented by the Motor

Vehicles Act 1988 and it became effective from 1st July 1989 and that’s

how the insurance concept has come to India.

As you all know in our country crores of vehicles are plying on the

road and lot of accidents occurred daily, and due to these accidents damages

to material and third party occurs. Third party is any person other then the

owner. But the question arises how the loss is to be compensated? After

realizing all these problems it was made mandatory for all the vehicles

which are plying on the road to have an insurance which can provide

coverage to general public against the risk of loss or damage to motor

vehicles and with this the motor insurance concept has come into existence

and Act made this insurance compulsory for everyone those who are driving

the vehicle on the road so it become quite popular among people and than


motor insurance policies become available to provide a comprehensive cover

and a third party liability cover.

FEATURES OF MOTOR VEHICLE INSURANCE

Assured best deals on your Motor Insurance

Fair and Faster claims settlement

Discounts on back to back accident free years

Instant online renewal and issuance of your Motor Policy

Quick service on breakdown/accident with instant claim status updates

24x7-customer assistance for all product queries and claims information.

OTHER SALIENT FEATURES

For claims free experience, discount available on subsequent

Renewal

Discount available if voluntary excess opted for Discount available

for membership with approved automobile association

Discount available for installing approved anti-theft device

Depreciation, for the parts needing replacement in the accident is defined


FUNDAMENTAL PRINCIPLES OF INSURANCE

1) INDEMNITY :

A contract of insurance contained in a fire, marine, burglary or any

other policy (excepting life assurance and personal accident and sickness

insurance) is a contract of indemnity. This means that the insured, in case of

loss against which the policy has been issued, shall be paid the actual

amount of loss not exceeding the amount of the policy, i.e. he shall be fully

indemnified. The object of every contract of insurance is to place the insured

in the same financial position, as nearly as possible, after the loss, as if he

loss had not taken place at all. It would be against public policy to allow an

insured to make a profit out of his loss or damage.

2) UTMOST GOOD FAITH:

Since insurance shifts risk from one party to another, it is essential

that there must be utmost good faith and mutual confidence between the

insured and the insurer. In a contract of insurance the insured knows more

about the subject matter of the contract than the insurer. Consequently, he is

duty bound to disclose accurately all material facts and nothing should be

withheld or concealed. Any fact is material, which goes to the root of the

contract of insurance and has a bearing on the risk involved. It is only when


the insurer knows the whole truth that he is in a position to judge (a) whether

he should accept the risk and (b) what premium he should charge.

If that were so, the insured might be tempted to bring about the event

insured against in order to get money.

3) INSURABLE INTEREST:

A contract of insurance effected without insurable interest is void. It

means that the insured must have an actual pecuniary interest and not a mere

anxiety or sentimental interest in the subject matter of the insurance. The

insured must be so situated with regard to the thing insured that he would

have benefit by its existence and loss from its destruction. The owner of a

ship run a risk of losing his ship, the charterer of the ship runs a risk of

losing his freight and the owner of the cargo incurs the risk of losing his

goods and profit. So, all these persons have something at stake and all of

them have insurable interest. It is the existence of insurable interest in a

contract of insurance, which distinguishes it from a mere watering

agreement.


4) CAUSA PROXIMA:

The rule of causa proxima means that the cause of the loss must be

proximate or immediate and not remote. If the proximate cause of the loss is

a peril insured against, the insured can recover. When a loss has been

brought about by two or more causes, the question arises as to which is the

causa proxima, although the result could not have happened without the

remote cause. But if the loss is brought about by any cause attributable to the

misconduct of the insured, the insurer is not liable.

5) RISK:

In a contract of insurance the insurer undertakes to protect the insured

from a specified loss and the insurer receive a premium for running the risk

of such loss. Thus, risk must attach to a policy.

6) MITIGATION OF LOSS:

In the event of some mishap to the insured property, the insured must

take all necessary steps to mitigate or minimize the loss, just as any prudent

person would do in those circumstances. If he does not do so, the insurer can

avoid the payment of loss attributable to his negligence. But it must be

remembered that though the insured is bound to do his best for his insurer,

he is, not bound to do so at the risk of his l


7) SUBROGATION:

The doctrine of subrogation is a corollary to the principle of

indemnity and applies only to fire and marine insurance. According to it,

when an insured has received full indemnity in respect of his loss, all rights

and remedies which he has against third person will pass on to the insurer

and will be exercised for his benefit until he (the insurer) recoups the amount

he has paid under the policy. It must be clarified here that the insurer's right

of subrogation arises only when he has paid for the loss for which he is

liable under the policy and this right extend only to the rights and remedies

available to the insured in respect of the thing to which the contract of

insurance relates.

8) CONTRIBUTION:

Where there are two or more insurance on one risk, the principle of

contribution comes into play. The aim of contribution is to distribute the

actual amount of loss among the different insurers who are liable for the

same risk under different policies in respect of the same subject matter. Any

one insurer may pay to the insured the full amount of the loss covered by the

policy and then become entitled to contribution from his co-insurers in

proportion to the amount which each has undertaken to pay in case of loss of

the same subject-matter.


CATEGORIES FOR THE PURPOSE OF INSURANCE

Private Car:

Motor vehicle used for social, domestic and pleasure purposes (excluding

the carriage of goods other than samples) of the insured or anyone else with

the insured’s knowledge and consent excluding use for hire or reward,

racing, pace making, speed testing, and use for any purposes in connection.

Two Wheeler:

Motorized two wheeler (with or without side car) Used for social,

domestic, and pleasure purposes (excluding The carriage of other than

samples) of the insured or anyone else with the insured’s knowledge and

consent but excluding use for hire or reward, racing pace making, reliability

trial, speed testing, and use for any purpose in connection with the motor

trade.

Commercial Vehicle:

Motor vehicles other than as mentioned in the lists ‘1’ and ‘2’ above:

Goods carrying vehicles:

Public carries other than three wheelers.

Private carries.

Goods carrying motorized three wheelers and motor

motorized pedal cycles.(private carriers)

Goods carrying motorized three wheelers and motorized pedal

cycle.(public carriers)


Trailers: Any truck, car, carriage or other vehicle, including

agriculture implements, without means of self population, drawn or

hauled by any self propelled Vehicle is referred to as trailer for the

purpose of these guidelines.

Vehicles used for carrying passengers:

i. Vehicles carrying passengers for hire and reward.

ii. Vehicles carrying passengers other than hire and reward.

Miscellaneous vehicles:

Agriculture and forestry vehicles:

Special purposes vehicles other than Goods and passengers carrying

the own damage cover for any special purpose vehicles, fitted with

specialty equipments whose value is more the value of vehicle itself,

is not to be underwritten in the motor department.

Motor Trade: road transit risks only.

Motor Trade: road risks only.

Motor Trade: internal risks only.

The vehicle insurance generally includes:

Loss (or) damage by accident, fire, lightning, self ignition, external

explosion, burglary, housebreaking (or) theft, malicious act. Liability for

third party injury (or) death, third party property and liability to paid driver

on payment of appropriate additional premium, loss (or) damage to

electrical (or) electronic accessories.


The vehicle insurance does not include:

Consequential loss, depreciation, mechanical electronically

breakdown, failure (or) breakage.

When vehicle is used outside the geographical area.

TYPES OF POLICIES

Third party liability policy:

Legal liability for third party personal injury (including injury to

passengers) and third party property damage, which is unlimited in

amount.

Emergency treatment fees for those injured or requiring hospital

treatments.

Damage to the vehicle itself by fire, theft or attempted theft.

Legal expenses incurred by the insured can also be reimbursed with the

written consent of the insurer.

Comprehensive Policy:

This policy covers the entire range of risks as defined in the tariff.

The risks covered under this policy includes loss due to fire,

explosion, burglary, theft, earthquake, flood, cyclone, terrorist

activities, malicious acts, riots, strikes, landslides, accidental external

means, transit by road, inland, waterways, lift and air.


The losses due to mechanical breakdowns, failure, breakages, wear

&tear, depreciation, consequential losses, overloading, strain of

commercial vehicles are not under this policy.

The policy provides a limited amount of cover if personal items

belongings to the policyholder or to passengers are damaged by theft or

accidental damage. The is a limit to the amount payable for such items,

normally Rs. 1,000 to 2,000. Payments are usually made to the

policyholders even if a lost item belongs to passengers.

If the motor vehicle is disabling, the insurer also bears a reasonable cost

to the vehicle to a place of repairs. This cost is covered up to Rs. 300 in

case of motor cycle and Rs. 2,500 for other vehicles. The repairs can be

carried out without authorization of the insurer to the extent of Rs.150

for motor cycle and Rs.500 for other vehicles.

In case of commercial vehicles the insured has to bear a sum of Rs.1,

500 in respect each accident compulsorily. It is called compulsory

excess.


NEED FOR MOTOR VEHICLE INSURANCE

In Indian conditions, the vehicles are subject to many hazards like

potholes, open manholes, puddles, untarred roads, traffic management

system, poor pedestrian management, and absence of footpaths for

pedestrians, jaywalkers, increasing number of accidents etc. which

accentuate the need for automobile insurance. Some of these hazards are

discussed below:

FOOTPATHS

As footpaths are encroached by hawker, pedestrians have a tough time

dodging vehicles to reach the other end of the road. Large potholes and

manholes are a common sight and during the monsoon the situation can get

only worse causing untold damage to your vehicle.

DRUNKEN DRIVING

Drunken driving is another very common feature. Be it a car, a two-

wheeler, or even a truck, drunken driving is one of the major reasons for

increase in accidents. Through drunken driving is a punishable offence the

penalty has hardly proved to be a deterrent.

RECKLESS DRIVING

Besides, rash driving by youngsters is another of the dangerous

realities that you should consider. Majority of the youngsters drive

recklessly caring little for the law, causing serious accidents resulting in loss

of life or limb.

THEFT


Cases of stolen cars are on the rise. Experts in stealing cars are well

aware of the loopholes that can be exploited and accordingly have also been

successful I manipulating with the chasis number of vehicles in order that

they are not traced.

FIRE

Other than these there is also a danger of fire or theft of vehicle.

Therefore, vehicle insurance under such unsafe conditions is a must not only

to cover the financial liability that may arise from an accident in which the

other party is injured. The cost of repairs that you would have to pay to the

other party in case of an accident may be exorbitant. Besides if the accident

involves hospitalization too, the expenses can go through the roof. It would

be a great burden if all these costs are borne by the individual. The insurance

company can indemnify against such losses and the financial liability arising

thereof.

If the auto insurance is not made compulsory, there is a strong

possibility that some may not buy these voluntarily. This is because most of

them think that the cost of accidents or losses will fall on others or they

underestimate the risk the loss.” Economic arguments for compulsory

insurance laws in these people to consider more of the costs of their actions

when deciding whether to drive, what kind of car to buy, how safely to

drive, and so an.”

The economic rationale for insurance may be that it affects people’s decision

to drive. Some people are likely to forgive driving if the insurance is made

compulsory insurance is made compulsory since it acts as a financial


disincentive. Another could be that it encourages people to drive safely,

which may reduce of risk. Those who criticize compulsory auto insurance

plead that it results in lowering the disposable income or it results in

lowering the disposable income or it results in a shift of income from lower

group to the higher group. for dubious advantages.

ADVANTAGES

Accidents Happen: accidents happen on the road all the time and

whether you are involved in a small bang up or a serious crash, having


auto repair insurance can be one less thing to worry about after the stress

and shock inevitable after an accident. Not only can auto repair

insurance give you peace of mind when you are bout on the road,

depending on the level of cover you choose, you can also be covered for

repairs due to environment accidents such as water damage or tree

branches falling on your car.

Your Vehicle Will Be Longer: if you are someone who seldom buys a

new car, if something happens to your vehicle then you are going to

want it fixed properly. When you have auto repair insurance you can be

sure you will be able to afford the best possible repairs for your vehicle

if the worst were to happen. This means you don’t have to waste time

and money doing DIY repairs to your vehicle, and can instead be sure

the repairs carried out on your car will be of a high quality.

Cover is Inclusive: if you shop around for auto repair insurance you

will be able to find very inclusive cover. Affordable auto insurance

doesn’t mean you have to miss out on any extras, and your policy can

easily include a loan vehicle, and gap insurance to cover the additional

costs of replacing a new vehicle such as dealer delivery or registration

you may also be able to negotiate insurance discounts on your auto

repair policy if you are a safe driver, have a good driving record and are

not in a high risk category, i.e. not under 25 years old.

DISADVANTAGES

High cost: the plain and simple fact is that comprehensive auto

insurance is expensive. The insurer wants to hedge their liability against


the entire above situation, and if a customer is in a high-risk, the

premium costs for the policy can go even higher. Buyers need to keep a

close eye on their premiums when buying comprehensive auto insurance

to make sure they are not over-investing in keeping a vehicle street-

worthy.

A lot of extras: another feature of comprehensive auto insurance is that it

tends to include a lot of features that buyers will end up paying for. Take

a look at the attached “insurance riders” on a policy, such as provisions

for emergency roadside service or rental car options, and cancel these as

necessary to avoid being overcharged, unless you think that you will need

these services every time your vehicle breaks down.

Over-hyped policies: there’s nothing worse than paying a lot of money

for car insurance and then finding out that it doesn’t cover the specific

events that you are submitting a claim for policy. That can be the case

with policy. That can be the case with policies that bill themselves as

“comprehensive” without truly covering the common situations a driver

may face on or off the road. Read the fine print in comprehensive car

insurance agreements to make sure that your claims will be covered when

they occur.

Other alternatives: some drivers may not know that you don’t need

comprehensive auto insurance to cover basic damages to your vehicle. In

some cases, insurance types billed as “basic collision” can take care of

road costs without all of the other extras. Collision coverage options are


good for cars that are garaged and less vulnerable to vandalism or other

events.

LIABILITIES

Any liability arising in respect of death or bodily injury to any person

including owner of the vehicle or his authorized person in the carriage.

Any liability incurred in respect of damage to any person or property of a

third party.

Any liability incurred in respect of the death or bodily injury of any

passenger of a public service vehicle.

Liability for bodily injury or death of passengers who are carried for hire

by reason of a contract of employment.

The policy should carry a ‘no faults’ liability limited to a sum of

Rs.50,000 in case of death, Rs.25,000 in case of permanent disability and

Rs.6,000 in case of damage to the property. No fault liability is based on

the premise that the injured party does not have to prove any fault in

order to claim this amount under the policy.

War (or) nuclear perils and drunkard driving.

PREMIUM RATING AND CALCULATION

CALCULATION OF PREMIUMS


In case of Comprehensive Insurance Cover, for the purpose of premium,

vehicles are categorized as follows:

a) PRIVATE CAR

This is used for personal purpose. The premium is computed on the

following basis:

Geographically area of use and cubic capacity

Value of the vehicle.

Accessories are to be specified separately under electrical and non-

electrical items.

b) TWO-WHEELER

It is used for personal only. Premium is calculated on cubic capacity

and value of vehicle. Accessories are to be specified. Theft of

accessories is not covered, unless the vehicle is stolen at the same time.

c) COMMERCIAL VEHICLE

This is a vehicle used for hire and is classified as follows:

Goods-carrying commercial vehicle: In this case premium is calculated

on carrying capacity-gross vehicle weight and value of the vehicle.

Accessories extra, as specified.

Passenger-carrying commercial vehicle: In this case premium is

calculated on carrying capacity of the vehicle-number of passengers and

value of the vehicle. Accessories extra, as specified.

FACTORS CONSIDERED FOR PREMIUM RATING


Vehicle insurance pricing has always been a matter of controversies to

the consumers, service providers and regulators. Vehicle claims have

increased significantly in India since last 10 years. Vehicle insurance rates

charged to different customers reflect differences in the discounted in the

expected costs of providing coverage’s. In order to classify different

persons into homogeneous group with respect to expected claim costs,

insurers generally use rate classification system that includes:

Drivers classes that reflect the characteristics of individual insured,

and

Territorial rating to reflect expected differences in claims costs for

people that live in different geographical areas (holding individual

characteristics constant).

Of course, physical damages rates also depend upon the value and type of

vehicle. Liability insurance rates sometimes also depend on the type of

vehicles, given evidence that certain vehicles are more likely to be involved

in at-fault accidents.

The major factors considered in establishing driver classes and the use

of territorial rating factors are:


Drivers Classes: The parameters are Age, Gender and Martial status,

Use of vehicle, driving education and driving record. The insured in

younger age group, the males, the married ones and new and

inexperienced drivers have on averages high accidental claims. The

loading on the premium increases by the numbers and amount of

accident claims.

Territorial Rating: Large cities have higher average claims costs

followed by suburban areas, smaller cities and smaller towns or rural

areas. In India, the geographical areas have been classified into Group

A and Group B.

Vehicle Classification: Vehicles are generally classified on the basis of

its technical specification, its value or use.

Technical Specification: the typology of a vehicle is more or less based

on its cubic capacity or gross vehicle weight and its carrying capacity.

Heavier vehicles are more exposed to accidents since the restaurant

damages they incur are more. Similarly, vehicles with higher carrying

capacity expose more passengers to risk. Therefore, heavier vehicles

attract higher premium rate. In private cars, taxis and motorcycles, the

factor is the cubic capacity. The more the cubic capacity, the higher

premium rate. Whereas in goods-carrying commercial vehicles and

passengers-carrying commercial vehicles, the criteria are gross vehicle

weight and passenger carrying capacity respectively.


The Value of the Vehicle: The premium rate is applied on the value of

the vehicle to arrive at the premium payable. It is the owner/ insured

who has to select a value of the vehicle and declare the same for

insurance. This value is known as the insured’s estimated value (IEV) in

motor insurance and represents the sum insured.

Normally, this value is arrived at by considered the age of the

vehicle and its present purchase price. A Maruti 800 was purchased in

1998 for Rs. 1, 80,000/- Considered the conventional 10% depreciation

each year and the present purchase price of a similar vehicle at Rs. 2,

00,000/- the IEV for year 2000 is Rs. 1, 80,000/- less 20% for Rs, 2,

00,000= Rs. 40, 000

IEV= Rs. 1, 40,000

However, this is not sufficient for deriving the correct IEV of the

vehicle in terms of vehicle insurance. In vehicle insurance, the basis for

payment of claims is the market value of the vehicle at the place and

time of loss. This market value may be understood as, the price that the

vehicle would fetch in the second-hand market. The 1998 model

mentioned above may fetch a price of say, Rs. 1, 50,000. In situations,

the correct IEV for the Maruti of 1998 model should be Rs. 1, 50,000.

The Use of the Vehicle: risk exposure varies in relation to the use the

vehicle is put to. Private car are lesser exposed than taxis, as the latter is

used extensively for maximum revenue. Taxis therefore attract a higher

premium rate. Similarly, goods carrying vehicles, which are used as


carries and transport, only their owner’s goods attract a lower premium,

than those used as carriers for transporting goods for hire.

The Geographical Area of Operation: The area of operations of a

vehicle has a direct bearing on the premium rate, this is so because,

certain areas of operation are more congested with high densities of

population and road traffic than others and poses higher exposure to

accidents. For this purposes, the traffic differentiates two zones in India,

i.e., Zone A and Zone B, for private cars and taxis. Zone A represents

the Chennai region and Mumbai city. In Zone B, the densities of

population and road traffic are more and more hence attract a higher

premium rate.

Such differential rating does not apply to commercial vehicles such

as trucks and buses, as these vehicles normally travel throughout India

for their operation. However, a discount is allowed on the premium for

commercial vehicle used as contract carriage, school buses, public and

private buses used for carrying passengers/workers and operate within a

radius of 501 kilometers from the city limits.

Details of states under Zone A and Zone B


Zone A Zone B

Andhra Pradesh Andaman & Nicobar Mumbai city

Goa, Daman,Diu Arunachal Pradesh Nagaland

Gujarat Assam Orrisa

Karnataka Bihar Punjab

Kerala Delhi Rajasthan

Madhya Pradesh Haryana Sikkim

Maharashtra Himachal Pradesh Tripura

(excluding Mumbai

city)

Lakshadweep Island Uttar Pradesh

Pondicherry Manipur West Bengal

Tamil Nadu Mizoram

The claims experience: Unfavorable claims experience is obviously a

bad risk, the tariff has adopted a system called the “ No claim discount”,

to give discount for good claim experience and a loading for bad

experience. The claim experience of expiring year’s policy is the basis

for allowing discount or charging a loading.

MOTOR VEHICLE INSURANCE CLAIMS

DOCUMENTENTATION:


Following Documents generally required for settlement of motor claims.

However depending on the merits of the case, a particular document may not

be an alternate document could be used to serve the purpose of the insurer.

1. Claim form required to be completed.

2. Registration Certificate: the details usually verified from the RC can

instead be obtained from purchase details of the vehicle if the

circumstances so warrant.

3. Driving License: as per policy condition the driver is required to hold an

effective driving license both in terms of the period validity and the class

of vehicle that is being driven at the time of the accident. The MV Act

provides for a grace period of 30 days after expiry of a license during

which period the license may be accepted as effective, provided the

holder has not been qualified from holding a license. For loss sustained

by parked vehicles, driving license may be relevant.

4. Load Challan/Trip Sheet: to verify that the load carried was within the

permissible limits and trip sheet giving details of number of passengers

carried in the vehicle.

5. Fitness Certificate: the fitness certificate indicates the roadworthiness of

a commercial vehicle.

6. Report to police: a copy of the FIR and Panchanama is required

wherever third parties are involved in an accident.

7. Survey Report: surveyor ascertains the damage, assess the quantum of

payable claim, verify vehicular documents and confirm that the

loss/damage being claimed for is in conformity with the narration of the

accident. Wherever replacement of p [arts is allowed surveyors with the

narration of the accident. Wherever replacement of parts is allowed


surveyors physically verify serial numbers as appearing on major parts,

which carry such numbers.

PROCEDURE:

In order to proceed for claim, the insured immediately informs the

insurer.

The policy documents are verified to ensure that the policy is force and

the loss is entered in the claims register and the claim form is issue to the

insured to be completed and returned.

The insurer, immediately on receipt of intimation of loss, either in

writing or over telephone, a surveyor is appointed based on the estimate.

In case of major accidents, the insured would be asked to arrange for

photographs of the vehicle at the spot of the accident, showing all the

external damages and the number. Plate of the vehicle. The photo

expenses are to be reimbursed upto Rs. 500. Alternatively, the insured

may inform the nearest office of the insurer to arrange for such

photographs.

The survey report is examined and settlement is done based on

surveyor’s recommendations.

If reinspection after repair is considered necessary it may be conducted

by the same surveyor who has assessed the loss.

Conventionally, the payment is made to the repairer directly.

If for any reason, to be specified, the driving license cannot be produced,

the claim may be considered only on the basis on non-standard basis.

SALVAGE DISPOSAL :


Damages automobile parts replaced as part of a motor insurance claim

shall be kept in safe custody by the garage or company. Company shall

arrange disposal as per prescribed norms set out herein.

A salvage committee shall be constituted to handle salvage issues and

the same usually comprise of:

o A designated senior manager

o Designated claims manager

o Finance/accounts manager

Damaged items lying with the garage shall be collected by the company

on the regular basis and kept at a designated yard produced by the

company.

Salvage items shall be available for sale to third parties on ‘as is where

is’ basis.

The shall be kept on display for inspection by prospective buyers, who

will be asked to submit their offers iv sealed envelopes together with a

tender deposits to be decided by the claims committee based on the

latter’s assessment of the expected salvage valve.

The salvage buyer’s submissions shall be opened in the presence of the

salvage committee. The salvage committee shall exercise their

discretion in the sale of the salvage.

The approved bidder shall be advised to make payments against cash

receipt in cash or, by demand draft, or, banker’s cheque favoring the

company within a stipulated period failing which the bidder for the

salvages together with his tender deposit.


TYPES OF CLAIMS OF MOTOR VEHICLE

INSURANCE

PARTIAL LOSS CLAIMS FOR MOTOR INSURANCE.

1. Submission of bills/cash can be dispensed with for claims upto

Rs. 50,000 in respect of private cars and two wheelers only, subject

to.

The survey report correctly indicating the cost of parts allowed for

replacement

Claims being settled on the basis of a report of reinspection after repairs

by the surveyors certifying that the repairs and replacements have to be

obtained and verified.

2. If surveyor confirm replacement of the engine and chassis if

allowed for replacement and indicates the new numbers,

claims may be settled whilst simultaneously advising the insured

that.

As per the provision of the Motor Vehicles Act, the new numbers have to

be incorporated in the RC book.

Insurance company be informed about the incorporation of the new

numbers in the RC book for endorsing on the policy document to

facilitate settlement of future claims.

Where the vehicle is totally damaged or when the net cost of repairs is

almost close to the market value of the IEV the claim could be


considered to be a total loss. Such total loss claims should be encouraged

on net of salvage basis i.e., salvage being retained by the insured and an

appropriate amount towards salvage value as determined by the surveyor

in consultation with the company be deducted from the total loss amount.

However, if the insured to retain the salvage, arrangements should be

made for the safe custody is informed vehicle to prevent further loss or

damage. The RTO should be informed by Registered AD post. An

inventory on the major parts should also be taken for its disposal as per

company’s guidelines for disposal of salvage.

THEFT CLAIMS FOR MOTOR INSURANCE.

1. Partial Loss due to Theft: Theft of parts/ accessories from a vehicle

should be reported to the police immediately by the insured. If parts are

found missing or changed after recovery of stolen vehicle this be

recorded in Panchanama / recovery memo. Final police investigation

report will also be required. However, if the competent authority is

satisfied about the genuineness of the loss, final investigation report may

be waived provided the insured sends a registered AD letter to the

SP/ACP requesting that the insurer should be informed of any recovery.

2. Total Loss due to Theft: Unless claims setting authority is fully

satisfied, investigation of the theft to be arranged by an investigator who

may be appointed with specific terms of reference.

3. The following documents should be collected from the insured in

addition to a certified copy of the FIR, for considering “on account”

payment of the admissible claim after expiry of 90 days from the date of

loss.


Surrender of the Registration Book and the Tax Book to the insurer duly

transferred in the name of the insurers. The RTO is to be informed about

the theft of the vehicle and this should be entered in Tax Book so that

further tax will not accrue.

Letter of indemnity and subrogation.

Ignition keys of the vehicle.

Certificate of insurance and the original insurance policy, if not stolen

with the vehicle.

Specially worded discharge voucher.

4. The balance payment may be released on receipt of the Final Police

Investigation Report or on expiry of a suitable waiting period from the

date of the “on account” payment, after obtaining the discharge voucher

in full and final settlement of the claim.

5. the police and the registration authorities and the NCRB should be

notified in writing about disposal of the claim on “total loss” basis

following theft of the vehicle. They should be requested to advise from

the police regarding recovery of the vehicle, necessary steps for taking

possession of the vehicle from the police custody should be taken and, if

necessary, an advocate should be appointed for filing recovery

application in the court.

6. Municipal Authorities, where applicable and the RTO should be advised

by registered letter with Acknowledgement. Due to record ‘non use’ of

the vehicle on account of theft and about the cancellation of the Insurance

Certificate.

7. If the vehicle is recovered subsequently, the insured will have the option

to repay the claim amount already paid and retain the recovered vehicle.

If the vehicle is found damaged, the insured will be indemnified against


loss of damage. The insured should be advised to obtain recovery memo

from the police and to get the vehicle surveyed at the police station

before taking delivery, as mentioned under loss theft claims.

8. In cases of criminal breach of trust each case should be dealt with an

individual basis depending upon facts of each case and subject to legal

opinion.

THIRD PARTY BODILY INJURY CLAIMS: FATAL AND NON

FATAL FOR MOTOR INSURANCE.

1. Intimation of Claim: Intimation about an accident resulting into third

party claim is received through various sources:

Insured directly or by mention in passing whilst lodging own damage

claim.

Claimant

MACT/Courts by notice

Through accident report from police in Form 54 prescribed under Central

Motor Vehicles Rules, 1389.

2. Investigation: Investigation about the accident to collect the relevant

data to quantify reasonable and just compensation as per the specified

formats in respect of all third party claims is mandatory. The companies

should ensure that this investigation helps the insurance company in

finalizing out of court settlement at the earliest.

3. Appointment of Advocate: On receipt of notice from the MACT a

competent advocate from the panel may be appointed if necessary. The

following relevant documents and information should be given to


him/her immediately to enable him /her to draft written statement (w/s)on

behalf of the company and ensure that the proper defense is taken where

necessary and no frivolous statements are made.

4. Policy Copy: Duly certified true copy of the complete policy with the

relevant clauses and endorsements as actually attached with the original

issued covering the vehicle at the material time of accident.

5. Driving license: In case it has been observed that driver was not duly

licensed the necessary information should be given to the advocate.

Through under Section 149(2) of the MV Act, 1988, Insurance Company

has no liability if the driver is not duly license rests on insurance

company and this obligation is required to be discharged fully to the

satisfaction of the court.

6. Compliance Policy Conditions: If a breach of a specific condition has

been observed it should be brought to a notice of the Advocate to enable

proper defense if possible.

7. a) Written statement on behalf of the insurance company incorporating

all defenses available as enumerated under Section 149 of MV Act

should be promptly filed.

b) Wherever necessary when there is collusion between the insured and

the claimants or when the insured fails to defend claim, the company’s


advocate must be instructed to obtain the MACT’s permission under Section

170 of the MV Act to defend the claim on merits.

8. Payment of No Fault Liability Claims: If Liability under affected

policy is established after taking into consideration the foregoing

defenses, company should take immediate steps to deposit No Faulty

Liability amount as per Section 140 of the MV Act, 1988.

9. payment of Fault Liability Claims: Companies may initiate action to

settle such claims either through

Jald Rahat Yojna

Lok Adalats

Direct negotiation with the claimant through DICC & RICC.

10.Jald Rahat Yojna: Section 152 of MV Act, 1988 authorizes insurance

company to settle motor third party non-fatal bodily injury claims where

claimant is an adult without claimants taking recourse to MACTs.

Industry has already Launched the Scheme since 1991.

VEHICLE INSURANCE IN INDIA


Vehicle insurance in India is a compulsory requirement for all new

vehicles used whether for commercial (or) personal use. The insurance

company has tie-ups with leading automobile manufactures. They offer their

customers instant vehicle quotes. Vehicle premium increases with the rise in

the price of the vehicle. The claim of the vehicle insurance in India can be

accidental, theft claims (or) third party claims. Documets required would

include duly signed claim form, FIR copy, driving license copy, original

estimate and policy copy.

India is witnessing a boom in car and bike sales and it could not have

come at a better time. The burgeoning middle class and the improvement in

roads and highways have only accentuated the vehicle sales. The spill over

effect of this boom has let the motor insurance portfolio of insurance

companies also on the growth highway.

SCENARIO PRE-2001 ERA - DEALER'S AND INSURER'S

PERSPECTIVE

In fact, it will be interesting to know what happened prior to 2001 and I

would like to highlight some of the issues prevalent at that time. Let's first

look at it from the dealers' perspective. The concerns were –

They used to get commission as little as 5% and that too in non-financed

cars.

Only 18% of the car policyholders used to make claims.

There was no system to chase renewals and the only interaction point

with the insurance company was the development officer.


In short, insurance was a low priority for the dealer as well as the

manufacturer.

On the other hand from the insurer's perspective, motor insurance was a

loss-making portfolio and at best a nuisance. There was no real strategy to

control claims and the poor customer interface was accentuated with

excessive dependence on independent surveyors. There was no data

capturing or analysis for customer segmentation.

PARADIGM SHIFT IN 2001

The liberalisation in 2001 lead to a paradigm shift and changed the

perspective of how dealers, motor manufacturers viewed motor insurance.

We at Bajaj Allianz adopted a dealer centric business model, where

commission income was increased, and introduced better customer

convenience by enabling policy issuance at dealership location. As a result,

body shop income increased by 100%. We also had strategic partnership

with auto manufacturers like Maruti Udyog Limited and Ford Motors. We

are looking at this portfolio with a strong commitment and our focus would

be on data capturing/ analysis besides our core competence in claims

management and service.

CURRENT SCENARIO


The scenario is much different today and motor insurance gets its due

importance. Motor insurance today constitutes 60% of the portfolio for most

of the general insurance companies in the world. The trend would be the

same in India also. In 5 years, the motor insurance is slated to increase from

Rs. 8,000 crores to Rs. 20,000 crores. Currently, it is 41 % of the total

general insurance business up from 36% five years back. The current state of

motor insurance as prevailing today can at best be summarised as below -

Insurance has become the important driver for dealer profitability and

customer satisfaction;

Motor insurance especially private cars, is an area which all insurers want

to develop;

Continuous increase in cost and charges for labour & parts and higher

awards for third party claims are pushing the claims ratio up.

The next paradigm shift could happen when de-tariffing happens. The

fastest growing regions are Deihi, Andhra Pradesh, Karnataka,

Maharashtra and Gujarat.

CURRENT STATUS OF VEHICLE INSURANCE COMPANIES IN

INDIA


Whether one uses his company vehicle or is a proud vehicle owner,

vehicle insurance is an essential requirement for all new vehicles. This

applies for both commercial and personal use. Vehicle insurance includes

loss or damage of the vehicle by any kind of accident, fire, lightning, self

ignition, external explosion, burglary or theft, or by any malicious act.

Vehicle insurance company also pays for grounds like riots, strikes, terrorist

act, and natural calamities like earthquake, cyclone, and flood.

Automobileindia.com furnishes you information on the policies of different

vehicle insurance company.

Most vehicle insurance company in India has comprehensive policies

to help their customers. Some of them have also tied up with top automobile

manufacturer for a fast insurance process. Vehicle insurance companies have

separate plans for two wheelers, four wheelers and commercial vehicles.

Some of the top vehicle insurance companies in India are United India

Insurance Company, HSBC India, Bajaj Allianz, ICICI Lombard, and the

new India insurance company. Automobileindia.com contains information

on the renowned vehicle insurance company in India.

Popular Vehicle Insurance Company in India

1) Bajaj Allianz

Bajaj Allianz is one of the top rated vehicle insurance companies in

India. It offers a number of attractive features in its vehicle insurance

policies such as

One of the main features of Bajaj Allianz vehicle insurance is that it

offers 24/7 service by phone and provides online assistance on all days

including national holidays.


Through Bajaj Allianz, customer can go instant claims assistance and

check instant updates of their claims status through mobile messaging

or through 24/7 call centers across the nation. Bajaj Allianz offers

towing facility in case of a break down or accident.

The users can also transfers their existing ‘No Claims Bonus’ from any

vehicle insurance provider and the bonus may range from 20%- 50%.

2) ICICI Lombard

ICICI Lombard on other hand has separated policies vehicle insurance

and two-wheeler. Vehicle insurance policy of ICICI Lombard

includes

Personal accident cover of up to Rs. 2 lakhs for owner driver of the

vehicle.

While travelling in mounting or dismounting from the car and also a

personal accident cover for the passengers in the car, in addition to

loss or damage of car and third party liability.

For two-wheelers, ICICI Lombard offers a compulsory personal accident

cover of Rs. 1 lakh for individual owner and driver of the vehicle, while

travelling, in addition to, insurance for loss, accident, and third party

liability.

CASE STUDY

Claims settlements


CLIENT

REWA Tollway Private Limited belongs to the well known IJM Group of

companies. IJM have their Head Office in Malaysia. IJM is engaged in

construction activities in India and are located in Hyderabad.IJM

Corporation Berhad has formed its subsidiary known as REWA Tollway Pvt

Ltd. exclusively for development, construction, strengthening and widening

of roads between Rewa - Jaisingnagar - Shahdol – Amarkantak Road (246

KM) and Satna - Maihar - Umaria Road (141KM) in Madhya Pradesh. The

project period is 18 Months.

INSURANCE

The above two Road projects were covered by BAJAJ ALLIANZ

GENERAL INSURANCE CO. LTD. under two different CAR Policies

alongwith ALOP insurance.

WHAT HAPPENED?

In the month of September 2003, Satna in Madhya Pradesh experienced

unprecedented rains. During these unprecedented rains heavy losses were

reported in Satna .This act of god had caused the wide spread

flood/inundation at various places including insured's construction site. The

rain carried over the silt and mud, contaminated the material

mainly Granular Sub-base (GSB), Wet Mixed

Macadam (WMM), Dense Bituminuous (DBM) and SDBC laid on road

where work was in progress along with entire stretch. As a result sections of

the road were severely damaged.


ROLE OF BAJAJ ALLIANCE

Immediately on receipt of claim intimation from brokers, a preliminary

surveyor was appointed through our Bhopal Office. Based on the

preliminary survey findings and the estimates, surveyors M/s Cunningham

& Lindsey, Bombay were deputed by our Head Office for final survey on

21/10/2003. In consultation with the insured at Hyderabad, the final

surveyor visited the site from27/10/2003 to 3/11/2003. After the first visit,

series of joint meetings were held with the Insured at Mumbai and

Hyderabad. Again one more visit was made to the site by the final surveyors

for detailed inspection, along with the insured's representatives and our

officials. An initial On A/c payment for Rs. 50 lakhs was on 17/2/04to

enable the insured to mobilize resources to restart operations. In the last

week of February the client finalized their estimate of claim and on

10/03/04evaluated the repair works progress. The actual loss was assessed &

arrived at for the two projects and the claims was assessed and finalized for

Rs. 6.4 crores on 10/3/04 itself. On 12/3/04

Rs. 3 crores was released based on the verbal agreement arrived on 10/03/04

and without waiting for the final survey report. The balance amount is being

paid in the following week upon submission of the certified bills and survey

reports.

LESSONS LEARNT

Be alive to the clients' aspirations and empathize with them. A disaster has

occurred in an area where the clients on-going project was located. Any

delay in remobilizing resources could have led to penalties being levied on


the insured for delay in project completion arising out of their contractual

agreements. Immediate action on our part has ensured that the project gets

completed within the time frame.

Concocted Evidence of Death

Application for deceased person of 34 years, an executive in a firm and

Income Tax payee, by a widow, 3 minor children, unmarried sister and

dependent parents for Rs. 2,60,00,000. The award was made for Rs. 1,

62, 00,000.

The Post Mortem (PM)Report said, ”Cardiac Arrest Probably due to

excessive bleeding”

The company suspected unusual hurry in delivering award.

The applicant brought an execution order immediately after the passing

of dead line for payment of Motor Accidents Claims Tribunal (MACT)

award.

Investigation

The deceased person has fallen from terrace of his bung low, was

having high blood Pressure (BP) and was admitted to a private nursing

home, before he was brought for admission to the government hospital.

The deceased person has heavy debts, was in the habit of lavish living

and had a brother-in-law who was a lawyer.

On appeal, the case was dismissed for concocted evidence of death.

BAJAJ ALLIANZ'S MOTOR INSURANCE

Bajaj Allianz is a joint venture between Allianz AG one of the world's

largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3


wheeler manufacturers in the world. Bajaj Allianz is into both life insurance

and general insurance.

Allianz Group is one of the world's leading insurers and financial services

providers. Founded in 1890 in Berlin, Allianz is now present in over 70

countries with almost 174,000 employees. Bajaj group is the largest

manufacturer of two-wheelers and three-wheelers in India and one of the

largest in the world.

Today, Bajaj Allianz is one of India's leading and fastest growing insurance

companies. Currently, it has presence in more than 550 locations with over

60,000 Insurance Consultants.

MOTOR VEHICLE INSURANCE

Technology has made our daily life simpler in various ways.Motor vehicle is

an invention which has made daily commuting easy. It is convenient and fast

and saves our time. Though it is easy to own vehicle it is expensive

maintaining a motor vehicle especially in case of damage caused to your

vehicle due to some unavoidable circumstances or accidents. Bajaj Allianz's

Motor Vehicle policy helps you in maintaining your vehicle in such

situations.

UNIQUE FEATURE

For claim free experience, discount available on subsequent renewal.

Discount available if voluntary excess opted for


Discount available for membership with approved automobile

association

Discount available for installing approved anti-theft device

Depreciation, for the parts needing replacement in the accident is

defined

ADVANTAGES

Standardized labour costs

Highest standards of service

Hassle-free inspection procedures

BENEFITS

Cashless settlement of repair claims at preferred garages.

Immediate receipt of policies

Speedy claim settlement

Highest standard of services at the preferred garages

Hassle-free documentation and inspection procedures

Quick settlement of major losses such as theft/total loss


A NEW ERA IN MOTOR INSURANCE OF BAJAJ

ALLIANZ

More and more motor insurance customers understand that favorable

premiums are not enough. Bajaj Allianz offers the most comprehensive

benefits system and the most valuable services in the market.

Customers holding more than one policy with Bajaj Allianz are entitled to a

free credit card

Bajaj Allianz is now offering a set of new benefits to both its existing and

potential motor insurance customers. Hungary's market-leading insurance

company has a 50 percent share of motor third party liability policies,

according to the most recent half-year figures.

Bajaj Allianz offers eight new different partner benefits, plus premium

discounts connected to the method and frequency of payment. Loyalty and

other benefits make the new services even more attractive to every customer.

Through the benefits, it is possible to get a premium discount of up to 33

percent.

EASY ACCESS

The company's national network makes personal contact easy through more

than 100 company-owned service units and over 900 contracted body repair

shops. The company's call center and Internet customer care facility offer a


wide range of services: giving information, concluding transactions, starting

claims settlement or registering data changes.

Since Bajaj Allianz introduced its new premium system on October 30, most

telephone calls and clicks have been about premium calculations for third

party insurance. Within the first three days, 130,000 customers received their

individual quotes.

HELP AND CREDIT CARDS

Customers have also been informed about the company's brand new

services: policy holders are entitled to free assistance, a right that is not

restricted to accidents. If the policy holder's vehicle breaks down, the call

center will also take his call and send assistance.

It is also a significant novelty that customers holding more than one policy

are entitled to a free credit card with the Allianz Foreign Trade Bank MKB –

without a separate credit rating. The deal includes a special insurance for the

goods purchased with the card. Additionally, there is a discount of three to

eight percent off the liability insurance premium.

ACTIVE CLAIMS SETTLEMENT

Active claims settlement is probably Bajaj Allianz most significant product

development. While even these days several market players only compete by


offering "service-free" premiums, it is perhaps the most important factor in

the change of eras that Bajaj Allianz does not abandon its customers and

provides extras much beyond the obligatory.

The improvement benefits not only the car owner who is highly dependent

on his car: 70 percent of vehicle owners use their cars on a daily basis, as a

survey conducted by Bajaj Allianz this year shows. Furthermore, according

to the same survey, on average two more people depend on the same car.

In the case of an accident caused by somebody else, every Bajaj Allianz

customer holding both third-party and fully-comprehensive insurance with

Allianz Hungária can file the accident claim directly with Bajaj Allianz.This

means it's not necessary to approach the insurance company of the other

party to get his car repaired. Furthermore, his damage-free status remains

unchanged.

EUROPEAN MOBILITY PROGRAM

Active claims settlement is an integral element of the European mobility

program, which Bajaj Allianz introduced in May 2004 to enhance the

service quality in the Bajaj motor insurance market. Significant discounts

introduced at that time are now coupled with additional discounts in third

party insurance and active claims settlement.

This might give a real boost to the Bajaj vehicle insurance market and could

support the Bajaj convergence with Europe.


AN ARTICLE ON MOTOR VEHICLE INSURANCE

WHY CAR INSURANCE IS A MUST

Kairav Shah in Mumbai

May 07, 2007

Insurance, suddenly, has taken centre-stage because of the increasing

penchant of individuals towards all kinds of loans. With the consumer

becoming more loan-friendly, the obvious fallout has been the requirement

to stack up on insurance as well.

However, taking insurance has not been made mandatory by most banks. Of

course, there is an occasional bank that might insist (read request) you to

take an insurance policy, if you are taking a home loan. But legally, they

cannot force you to take one.

But the only purchase where it is mandatory to have an insurance is in case

of purchasing automobiles. That is, it is imperative that you have car

insurance as soon as you purchase your car.

In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every

owner of a vehicle plying on public roads to take an insurance policy to

cover the amount, which the owner becomes legally liable to pay as damages

to third parties as a result of accidental death, bodily injury or damage to

property. Also, it is necessary for you to always carry the certificate of

insurance in the vehicle as proof.

There are basically two types of motor insurance policies. Type I, which is

better known as Third Party Insurance (Form A), is the one which is


compulsory. This covers the policyholder against damage to a third-party's

property or the third parties themselves.

In simple words, if you were to run into another car and cause damage to

that car and injure the occupant(s) of that car, a third party only policy will

pay for the repair of the other vehicle, and will pay for any medical claims or

injuries suffered by the occupant(s) of the other car and any passengers in

your car other than you.

But this policy does not cover the costs of repairing your own vehicle.

However, you could add some riders to this policy that would cover for your

legal liability to pay compensation for:

Death or bodily injury to a third-party person

Damage to third-party property

Liability is covered for an unlimited amount in respect of death or injury and

damage to third-party property for Rs 7.5 lakhs under commercial vehicle

and cars and Rs 1 lakh for scooters and motor cycles

Moreover, there are additional riders for third-party fire and theft as well.

That is, if your vehicle is stolen or is set on fire, these riders cover them as

well.

Type-II policy, better known as the comprehensive car insurance cover

(Form B) covers payout for third-party damages and injuries, will pay out in

the event of your vehicle being stolen or set on fire, and will also pay for any

damage to your own vehicle (regardless of whose fault the accident was).

In addition to the coverage under liability only, this policy covers loss or

damage to the insured vehicle and its accessories due to fire, explosion, self-


ignition or lightning, burglary, riot and strike, malicious act, terrorist act,

earthquake, (fire and shock) damage, flood, typhoon, hurricane, storm,

tempest, inundation, cyclone and hailstorm, transit by road, inland

waterway, lift, elevator or air. So, this brings us to what type of car

insurance cover is best for you? As a general rule of thumb, the following

points are worth noting:

If you are young and driving an inexpensive first car then you will probably

find the cost of comprehensive motor insurance very high. For instance, a 20

year-old buys a second-hand car for Rs 1.5 lakhs. In this case, the cost of a

comprehensive policy would be higher as compared to the cost for a third-

party fire and theft policy.

Of course, if there is an accident and you are at fault and your car is badly

damaged, then it you will have to pay for the repair or replacement of the

car. But if you are young and driving a more expensive car, then it will

make sense for you to have comprehensive insurance.

Remember that the no-claim bonus follows the individual and not the

vehicle. So you will be able to garner good discounts on renewal of the

policy. The bonus ranges from 20 per cent to 50 per cent, depending on the

number of years for which no claim has been made. Some important

exclusions under this policy include wear and tear, breakdowns,

consequential loss, loss when driving with invalid driving licence or under

the influence of alcohol, use of vehicle otherwise than in accordance with

limitations as to use, etc.

Now, you can do online processing of claims and premium payments. This

implies that life is going to become much easier for the end user.


CONCLUSION

India is witnessing a boom in car and bike sales and it could not have

come at a better time. The burgeoning middle class and the improvement in

roads and highways have only accentuated the vehicle sales. The spill over

effect of this boom has let the motor insurance portfolio of insurance

companies also on the growth highway.

Today’s consumer has became more conscious about his health and

wealth also they are becoming more demanding due to awareness of

insurance therefore, Motor insurance companies are facing challenges of

Best service level at the lowest price. This creates competitions between

insurance companies. However, Insurance Companies are trying

to overcome the challenges by providing 24/7 assistance to customers for all

product queries and claims information.

As compared to Insurance abroad, motor insurance companies in India

still have a long way to go. Since, India is booming in car and bike sales and

even with the awareness of motor insurance in people motor insurance

company is going to have a better time in future.


REFERENCES

BOOKS:

1. Elements of Banking and Insurance- Sethi & Bhatia

2. Automobile insurance- Georges Dionne

WEBSITES:

1. www.bajajallianz.com

2. www.policybazaar.com

3. www.google.com

NEWSPAPER :

Article from Business standard- Kairav Shah in Mumbai


Motor Vehicle Insrance- Merlyn Coelho

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Transcript of Motor Vehicle Insrance- Merlyn Coelho