All of us are aware that motor insurance policies are mandatory in India.No car can be driven without insurance.
Motor insurance means insuring the financial risk involved while operating the car. The car might meet with any damages, accident or may be lost or stolen. In such a situation the losses borne by the owner may be compensated by the insurance company if the same is covered under motor insurance policy.
Under the provisions of Motor Vehicles Act, all the vehicles operating in public places should have car insurance policy at least to cover ‘third party liability’. It means that a Motor insurance policy must cover third party in case of any accident. It may or may not cover the damages of the owner of the car!
Now, there are two basic types of motor insurance policies:
- Third party liability coverage.
- Comprehensive plan.
Third party liability:
Under ‘third party liability coverage’, only damages of third party are covered in an accident in a public place for which the owner is liable and not the owner’s damage.
Under ‘comprehensive plan’, owner’s damages are also covered along with ‘third party liability coverage’.
Important Point to Remember:
A policy is valid from the moment a premium is required – from midnight till exactly a year later.
It is advisable to get a policy renewed well in advance, as there is no grace period whatsoever and the fine for driving without an insurance is severe.
The policy is deemed to be renewed from the day that the cheque for the premium is posted by the bank. It is therefore advisable to get a receipt for the same from the bank.
A person purchasing a new vehicle should inform the insurance company within 14 days to have papers transferred to his name. When a vehicle is sold, the previous owner should inform the insurance company of its sale too.
A vehicle owner is eligible for no-claim bonus if adjusted against the premium of his new vehicle, even if the past vehicle is sold, the new vehicle is assumed to be purchased within a period of three years.