UNDERSTANDING

MOTOR INSURANCE
LECTURE BY : Mr. Khemchand Khichi
Regional Manager
The New India Assurance Co Ltd
Regional office
surat

VEHICLE INSURANCE :
Definition:
A motor insurance policy is a policy
issued by an insurance company as part
to provide financial protection against
physical damage and/or bodily injury to
riders and general public resulting from
traffic collisions and against liability that
could also arise there from accident

VEHICLE INSURANCE :
Description:

Broadly, there are two types of motor insurance - the 'Act

only' policy and a comprehensive policy
Act only
:The scope of the 'Act only' policy is to pay compensation
for death or any bodily injuries and for damage to
property of third parties. While the insured is treated as
the first party and the insurance company as the second
party, all others would be third parties

VEHICLE INSURANCE :
comprehensive policy :
The scope of policy is comprehensive i.e.In case the vehicle
accident it take care of own damages to the vehicle. The perils
covered under the comprehensive policy are specified perils as
per policy in combination with the minimum requirements of the
act (i.e. third party liability).

Comprehensively, these include damage to the vehicle by

accidental external means: fire, lightning, explosion, selfignition, burglary, house-breaking, riot and strike, malicious acts
and terrorist acts, earthquake, flood, inundation, cyclone,
landslide/rockslide, etc. while in transit by rail, road, air, inland
waterways, lift or elevator.

VEHICLE INSURANCE :
ABOUT THE CONTRACT OF INSURANCE (IN BRIEF)

Now, any policy of motor insurance will not pay but indemnify
against events that may happen & not against events which must
happen or which have been deliberately brought about, The loss
producing event should be identifiable within the meaning of the
term accidental / fortuitous.
A loss producing event is Fortuitous / Accidental in the sense
that it would not have happened but for any act / event again
which was not expected in the normal & ordinary course of things

PERILS

PERIL
THE LOSS PRODUCING EVENT PERIL

Probable cause that exposes a person or property to the risk

of damage, injury, or loss, and against which an insurance
cover (policy) is purchased.

Policy of motor Insurance indemnifies only those losses

that have been specifically
brought about by explicitly specified events --- Peril(s).

hence , the peril itself is not covered, but the loss

occurred due to peril is covered

TYPES OF PERILS :
Fire Group Perils
Fire, Lightening, Explosion & Implosion, Forest Fire, Bush Fire
Act of God Perils
Storm, Tempest, Flood, Inundation, Earthquake, Landslide,
Rockslide
Social Group Perils
Riot, Strike, Malicious Damage and Terrorism
Miscellaneous Perils
Impact Damage, Aircraft Damage, Bursting and/or overflowing of
Water Tanks, Apparatus and Pipes, Missile Testing operations,
Leakage from Automatic Sprinkler Installations

PERIL
i)

by fire, explosion self-ignition or lightning

fire :
a process in which substances combine chemically with oxygen from the
air and typically give out bright light, heat, and smoke; combustion or
burning
explosion :
the sudden, loud, and violent release of energy that happens when
something (such as a bomb) breaks apart in a way that sends parts flying
outward
: a sudden and very fast increase
: a sudden expression of some strong emotion
self-ignition :
Ignition of a substance, such as oily rags or hay, caused by a localized
heat-increasing reaction between the oxidant and the fuel and not
involving addition of heat from an outside source

PERIL
ii) by burglary, housebreaking or theft
burglary :
the act of illegally entering a building in order to steal things
housebreaking :
the act of forcefully entering someone's house in order to
commit a crime (such as robbery)

theft ;
the act or crime of stealing, an unlawful taking (as by
embezzlement or burglary) of property

PERIL
iii) by riot and strike;
riot :
a situation in which a large group of people
behave in a violent and uncontrolled way

strike;(protest)
an event at which people gather together to
show strong disapproval about something

PERIL
iv) by earthquake (Fire and Shock Damage);

a shaking of a part of the Earth's

surface that often causes great
damage : volcanic or tectonic in
origin

PERIL
v) by flood, typhoon, hurricane, storm,
tempest,
flood,: inundation, cyclone, hailstorm, frost;
a rising and overflowing of a body of water especially
onto normally dry land

typhoon :
an extremely large, powerful, and destructive storm
that occurs especially in the some region of the
Philippines or the China Sea

PERIL
v) by flood, typhoon, hurricane, storm,
tempest,
inundation, cyclone, hailstorm, frost;
hurricane:
an extremely large, powerful, and destructive storm
with very strong winds that occurs especially in the
western part of the Atlantic Ocean

storm :
a disturbance of the atmosphere marked by wind and
usually by rain, snow, hail, sleet, or thunder and
lightning

PERIL
v) by flood, typhoon, hurricane, storm,
tempest,
Tempest :inundation, cyclone, hailstorm, frost;
a violent storm a violent windstorm, especially one
with rain, hail, or snow

Inundation:
the rising of a body of water and its overflowing onto
normally dry land Inundation: To cover with water,
especially
floodwaters.
-->
not
necessarily
floodwaters, could be due to local rainfall , could even
be due to a local artesian well

PERIL
v) by flood, typhoon, hurricane, storm,
tempest,
Flooding:inundation, cyclone, hailstorm, frost;
An overflowing of water onto land that is
normally dry. --> the overflow may or may not remain
in place. If it stays it's inundation; if it carries away
top soil or deposits silt, it's purely flooding.

cyclone :
an extremely large, powerful, and destructive storm
with very high winds that turn around an area of low
pressure

PERIL
v) by flood, typhoon, hurricane, storm,
tempest, inundation, cyclone, hailstorm, frost;

hailstorm :
a storm that produces hail,
something that gives the effect of a
shower

PERIL
vi) by accidental external means;
the Peril Accidental External Means is
event. The inclusion of the term

an

Means qualifies it as an event.

motor policies have used the phrase

accidental external means to limit the range
of admissible loss producing events for which
the insurer will be liable.

PERIL

Limit the range of admissible loss producing events

vi)--- byby
accidental
external means;
relying
on the exclusions.
The relevance of the
understood through the

term

external

can

be

best

following exclusions which are as follows (relevant portion

reproduced)
1. Financial loss due to any mechanical breakdown
admissible loss - excluded event / exclusion.

is a non-

2. Financial loss due to any electrical breakdown is a nonadmissible loss excluded event / exclusion

3. Cause of loss is never insured a non-admissible loss again an

exclusion

PERIL
vii) by malicious act;
Involving malice; characterized by wicked or
mischievous motives or intentions. An act done
maliciously is one that is wrongful and
performed willfully or intentionally, and
without legal justification

PERIL
viii) by terrorist activity;
A common definition of terrorism is the
systematic use or threatened use of violence to
intimidate a population or government for
political, religious, or ideological goals

PERIL
ix) whilst in transit by road
rail inland , waterway lift
elevator or air;

PERIL
landslide :

x)a large
by landslide,
rockslide;
mass of rocks
and earth that

suddenly and
quickly moves down the side of a mountain or hill

rockslide :
a usually rapid downward movement of rock fragments
that slide over an inclined surface, a rock mass moved
by a rockslide compare rockfall

EXCLUSION :

EXCLUSION
:
The Company shall not be liable to make
any payment in respect of:

(a)
consequential loss, depreciation,
wear and tear, mechanical or electrical
breakdown, failures or breakages;

EXCLUSION
:
consequential loss :
a loss that arises as an indirect result of an act
or event called also indirect loss
Indirect loss which accompanies an insured
loss, such as loss of earnings resulting from a
burnt down business that was insured against
fire. Consequential losses are not covered by
ordinary insurance policies, unless specifically
included on payment of additional premium.
See also direct loss, and indirect loss.

EXCLUSION
:
depreciation :
a reduction in the value of an asset over time,
due in particular to wear and tear.

wear and tear :

Wear and tear is damage that naturally and
inevitably occurs as a result of normal wear or
aging

mechanical break down::

EXCLUSION
A Mechanical Breakdown is defined as the inability

of
a covered part(s) to perform the function(s) for
which it was designed, due solely to defects in
materials or faulty workmanship.
Note: Mechanical breakdown does not include damage
due to negligence, damage caused by an accident, or
the gradual reduction in operating performance due to
wear and tear. In addition, this plan does not provide
any benefit for any mechanical failure or breakdown
caused by a non-covered part

electrical breakdown,
EXCLUSION
:

Electrical breakdown or dielectric breakdown

is a long reduction in the resistance of an
electrical insulator when the voltage applied
across it exceeds the breakdown voltage. This
results in the insulator becoming electrically
conductive. Electrical breakdown may be a
momentary event (as in an electrostatic
discharge), or may lead to a discontinuous arc
charge if protective devices fail to interrupt
the current in a low power circuit

EXCLUSION :

GENERAL EXCEPTIONS /EXCLUSIONS

1.

Any accidental loss or damage and/or

liability caused sustained or incurred
outside the Geographical Area.

2. Any claim arising out of any contractual

liability;

EXCLUSION
:
3. Any accidental loss or damage and/or liability
GENERAL EXCEPTIONS /EXCLUSIONS

caused sustained or incurred whilst the vehicle

insured herein is
(a) being used otherwise than in accordance with the
Limitations as to Use or
(b) being driven by or is for the purpose of being
driven by him/her in the
charge of any person other than a Driver as stated in
the Drivers Clause.

EXCLUSION
:

GENERAL EXCEPTIONS /EXCLUSIONS

4. (a) any accidental loss or damage to any property

whatsoever or any loss or expense whatsoever resulting or
arising there from or any consequential loss.

(b) any liability of whatsoever nature directly or indirectly

caused by or contributed to by or arising from ionising
radiations or contamination by radioactivity from any nuclear
fuel or from any nuclear waste from the combustion of
nuclear
fuel.
For
the
purpose of
this exception
combustion shall include any self sustaining process of nuclear
fission;

EXCLUSION
:

GENERAL EXCEPTIONS /EXCLUSIONS

5.Any accidental loss or damage or

liability directly or indirectly caused by
or contributed to by or arising from
nuclear weapons material;

EXCLUSION
:

GENERAL EXCEPTIONS /EXCLUSIONS

6. Any accidental loss or damage and/or liability directly or indirectly

or proximately or remotely occasioned by contributed to by or
traceable to or arising out of or in connection with war, invasion, the
act of foreign enemies, hostilities or warlike operations (whether
before or after declaration of war) civil war, mutiny rebellion, military
or usurped power or by any direct or indirect consequence of any of
the said occurrences and in the event of any claim hereunder the
insured shall prove that the accidental loss or damage and/or liability
arose independently of and was in no way connected with or
occasioned by or contributed to by or traceable to any of the said
occurrences or any consequences thereof and in default of such
proof, the Company shall not be liable to make any payment in
respect of such a claim.

EXCLUSION
:

GENERAL EXCEPTIONS /EXCLUSIONS

7. DEDUCTIBLE

DEDUCTIBLE ; allowable as a deduction able

to be subtracted from an amount of money

EXCLUSION
:

GENERAL EXCEPTIONS /EXCLUSIONS

7. DEDUCTIBLE

DEDUCTIBLE ; allowable as a deduction able

to be subtracted from an amount of money

POLICY CONDITION

POLICY CONDITION

1. Notice shall be given in writing to the Company

immediately upon the occurrence of any accidental loss or
damage in the event of any claim and thereafter the Insured shall
give all such information and assistance as the Company shall
require. Every letter claim write summons and/or process or copy
thereof shall be forwarded to the Company immediately on
receipt by the insured. Notice shall also be given in writing to the
Company immediately the Insured shall have knowledge of any
impending Prosecution, Inquest or Fatal Inquiry in respect of any
occurrence which may give rise to a claim under this Policy. In
case of theft or criminal act which may be the subject of a claim
under this policy the Insured shall give immediate notice to the
Police and co- operate with the Company in securing the
conviction of the offender

2. No admissionCONDITION
offer promise payment or indemnity
POLICY
shall be made or given by or on behalf of the insured
without the written consent of the Company which
shall be entitled if it so desires to take over and
conduct in the name of the Insured the defence or
settlement of any claim or to prosecute in the name of
the Insured for its own benefit any claim for indemnity
or otherwise and shall have full discretion in the
conduct of any proceedings or in the settlement of any
claim and the insured shall give all such information
and assistance as the Company may require

POLICY
CONDITION
3. The Company
may at its

own
option repair reinstate or
replace the vehicle or part
thereof and/or its accessories or
may pay in cash the amount of
the loss or damage and the
liability of the Company shall
not exceed:

4. The InsuredCONDITION
shall take all reasonable steps to
POLICY
safeguard the vehicle from loss or damage and to
maintain it in efficient condition and the Company
shall have at all times free and full access to examine
the vehicle or any part thereof or any driver or
employee of the Insured. In the event of any accident
or breakdown, the vehicle shall not be left unattended
without proper precautions being taken to prevent
further damage or loss and if the vehicle be driven
before the necessary repairs are effected any
extension of the damage or any further damage to the
vehicle shall be entirely at the insureds own risk.

POLICY CONDITION

5. The Company may cancel the policy by sending fifteen days notice by
recorded delivery to the insured at insured's last known address on
the grounds of misrepresentation, fraud, non- disclosure of material
facts or non- cooperation and in such event will return to the insured the
premium paid less the pro rata portion thereof for the period the policy
has been in force or the policy may be cancelled at any time by the
insured on seven days notice by recorded delivery and provided no claim
has arisen during the currency of the policy, the insured shall be entitled
to a return of premium less premium at the companys short period rates
for the period the policy has been in force. Return of the premium by the
Company will be subject to retention of the minimum premium of Rs.
100/- (or Rs. 25/- in respect of vehicles specifically designed/modified
for use by blind/handicapped/ mentally challenged persons). Where the
ownership of the vehicle is transferred, the Policy cannot be cancelled
unless evidence that the vehicle is insured elsewhere is
produced

6. If at the time of occurrence

of an event that
EXCLUSION
:
gives rise to any claim under this Policy there
is in existence any other insurance covering
the same liability, the Company shall not be
liable to pay or contribute more than its
rateable proportion

POLICY
6. If at theCONDITION
time of occurrence of an

event that gives rise to any claim

under this Policy there is in
existence any other insurance
covering the same liability, the
Company shall not be liable to
pay or contribute more than its
rateable proportion

POLICY CONDITION

7. If any dispute or difference shall arise as to the quantum to be

paid under this Policy (liability being otherwise admitted),
such difference shall independent of all other questions be
referred to the decision of a sole arbitrator to be appointed
in writing by the parties to the dispute or if they cannot agree
upon a single arbitrator within 30 days of any party invoking
Arbitration, the same shall be referred to a panel of three
arbitrators comprising two arbitrators one to be appointed by
each of the parties to the dispute/difference and a third
arbitrator to be appointed by such two arbitrators who shall act
as the presiding arbitrator and Arbitration shall be conducted
under and in accordance with the provisions of the Arbitration
and Conciliation Act, 1996

8. The due observance

and fulfillment of
POLICY
CONDITION

the Terms, Conditions and Endorsements

of this Policy in so far as they relate to
anything to be done or complied with by
the insured and the truth of the
statements and answers in the said
proposal shall be conditions precedent to
any liability of the Company to make any
payment under this Policy

9. In the event
of the death of sole insured,
POLICY
CONDITION
this Policy will not immediately lapse but will
remain valid for a period of three months from
the date of death of insured or until the expiry
of this Policy (whichever is earlier). During the
said period, legal heir(s) of the insured to
whom the custody and use of the Motor Vehicle
passes may apply to have this Policy
transferred to the name(s) of the heir(s) or
obtain a new insurance policy for the Motor
Vehicle.

ADD ON COVERS

01-Depreciation
Re-imbursement
What is Covered:

We will pay you the amount of depreciation deducted on the value of

parts replaced under own damage claim, lodged under section 1 (own
damage) of the policy. We will pay for the first 2 claims reported to Us
during the Period of insurance.
Special Conditions applicable to this cover in addition to the
General
Conditions:
A claim where replacement of any part is not involved and no
depreciation is deducted under owndamage claim, will not be considered
as claim under this cover.
Vehicle is repaired at any of our Authorised Garage/Authorised
workshop/Authorised service station.

2. Daily Allowance
What is Covered:

We will pay You Daily Allowance as mentioned in the schedule to enable You to
meet the cost of hired transport to reduce Your inconvenience, if Your Vehicle
is damaged by a covered peril mentioned in section 1 of the policy.

The allowance would be payable for a maximum period of 10 days during the
period of insurance. In case of theft/total loss claim, We will pay for maximum
15 days during the period of insurance.
Reasonable time taken for repair in respect of damages not admissible under
section 1 of the policy (as agreed between You, surveyor & garage/workshop
manager) would be excluded for the purpose of computation of Daily
Allowance.
Your entitlement of Daily Allowance will start from the following calendar day of
Your Vehicle reaching the garage for repair shall end on the day garage
intimates
You
to
take
delivery
of
the
Vehicle.

03- Courtesy/hire car

What is Covered:

We will arrange for the Courtesy/Hire car to

reduce Your inconvenience if insured Vehicle is
damaged by a covered peril mentioned in
section 1 (Own damage) of the policy.
A Courtesy/Hire car is not intended to be an
exact replacement of vehicle in terms of its
size, segment, type, value or status.

4. Return to Invoice
What is Covered:

We will pay the financial shortfall between the

amount You receive under section 1 of the policy and
the purchase price of the Vehicle as confirmed in the
invoice of sale OR current replacement price of new
vehicle in case exactly same make/model is available,
whichever is less, in the event of Your Vehicle being a
Total Loss/CTL following an accident or stolen during
the period of insurance and not recovered. We will
also reimburse the first time registration charges and
road tax which You had incurred on the insured
Vehicle.

05No
Claim Bonus Protection Cover
What
is Covered:

We will allow you the same No claim bonus, as shown on Your

schedule at the time of renewal providedThe rate of No claim bonus as shown in the schedule is an
accumulation of 2 or more claim free years and their being no
own damage claim in preceding 2 years
Not more than 1 own damage claim is registered in the current
period of insurance.

The renewal of policy is done with Us within 90 days of expiry of

the policy

06 Repair of Glass, Fiber, Plastic & Rubber Parts

What is Covered:

A claim for only Glass/plastic/rubber/fiber part where

You opt for repairs rather than replacement, at our
authorised workshops/authorised dealers/authorised
service stations will not affect Your No Claim
Bonus eligibility at the time renewal with Us provided
number of such claim does not exceed one and there is
no other claim for damage to the vehicle during the
period of insurance

07
- Loss
of Personal belongings
What
is Covered:

We will pay for the loss or damage to

Your and Your Family members personal
belongings caused by perils mentioned
under section 1 of the policy while they
are in the vehicle at the time of loss or
damage to the vehicle.

08Emergency Transport & hotel expenses.

What is Covered:

We will pay towards the cost of overnight stay and taxi

charges for returning back to Your place of residence
or the nearest city You are traveling to if Your motor
vehicle has met with an accident by any of the peril
mentioned under section 1 of the policy and cannot be
driven. We will pay maximum Rs (refer schedule) for
any one accident and Rs (Refer Schedule) during the
period of insurance. Documentary proof of expenditure
must be submitted by any claim under this section.

is Covered:
9-What
Key
Replacement
This cover is applicable if it shown on Your schedule.
What is Covered
Key Replacement We will reimburse You for the
cost of replacing your vehicle keys which are lost or
stolen.
Break-in Protection We will reimburse you for the
cost of replacing your locks and keys if Your vehicle is
broken into. The covered costs include the labor cost
for replacing the lock

What isEngine
Covered:
10Secure
1.

Internal parts of the engine

2.

Gear Box, Transmission or Differential Assembly

Provided loss or damage is due to ingress of water in the engine

or leakage of lubricating oil from engine/respective assembly.

We will also pay for the lubricating oils/consumables used in the

respective assembly i.e. material, which is used up and needs
continuous replenishment such as engine oil, gear box oil etc. but
excluding fuel.

What-is Covered:
11
Tyre Secure

We will cover expenses for repair

and/or replacement, as may be
necessitated
arising
out
of
accidental loss or damage to tyres
and tubes

WhatConsumable
is Covered:
12Expenses:

We will cover cost of consumables required to

be replaced/replenished arising from an
accident to the insured vehicle. Consumable
for the purpose of this cover shall include
engine oil, gear box oil, lubricants, nut &
bolt, screw, distilled water, grease, oil filter,
bearing, washers, clip, break oil, air
conditioner gas and items of similar nature
excluding fuel

ANY QUESTIONS

THANK YOU