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MOTOR INSURANCE BY R.R.JOSHI

MOTOR INSURANCE BY R.R.JOSHI. Motor Constitutes 45% of Total Premium. Historical Background. First Motor Car was introduced into England in 1894 and first Motor Policy was introduced in 1895 to cover Third Party Liability. By 1899,accidental damage to the car was added to the policy

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MOTOR INSURANCE BY R.R.JOSHI

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  1. MOTOR INSURANCEBYR.R.JOSHI

  2. Motor Constitutes45% of Total Premium

  3. Historical Background First Motor Car was introduced into England in 1894 and first Motor Policy was introduced in 1895 to cover Third Party Liability. By 1899,accidental damage to the car was added to the policy Road Traffic Act 1930 and 1934 introduced compulsory Third Party In India, the Motor Vehicles Act was passed in 1939.The Act was revised in 1988 The Motor Tariff was withdrawn in 2007.However,the policy formats and relevent General Regulations were allowed to continue

  4. LEGISLATIVE ENVIRONMENT • The Insurance act • The Motor Vehicle Act • The India Motor Tariff

  5. Application of Basic Principles • Utmost Good Faith- Material facts in Motor Insurance are- • Type of Vehicle and IDV • Zone of Use • Past loss experience • Driving History and traffic convictions of Driver • Insurable Interest-Policy will be normally issued in the name of the Registered Owner of the Vehicle. Financial Interest/Hypothecation is recognized by special endorsements

  6. Application of Basic Principles Indemnity—IDV will be the basis of settlement for TL/CTL/Theft claims and repair claims will be settled by applying depreciation as per policy table on the parts replaced Subrogation –modification introduced by Knock-for Knock Agreement Contribution –as per Insurance Law Proximate Cause---as per Insurance Law

  7. Salient provisions of Motor Vehicles Act as applicable to Insurance Sections 140-144– deals with No Fault Liability Sections 145-164— deals with Insurance of Motor Vehicles against T.P.Risks Sections 165-176--- deals with Claims Tribunals Sections of Special Relevance are- Section-140 ---NFL Sections-146 and 147---Compulsory Insurance and Limits of Liability Section—149--- Defences available to Insurers Section-163 A- Structured Compensation Section -166—Fault Liability

  8. DEFINITION OF MOTOR VEHICLE Motor vehicle means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes chassis to which a body has not been attached and a trailer:

  9. SECTION-146—Necessity for Third Party Insurance No person shall use, except as a passenger, or allow any person to use, a motor vehicle in a public place unless there is in force in relation to the use of the vehicle by that person or that other person as the case may be, a policy of insurance complying with the requirements of this chapter Exemptions---Central and State Government Vehicles and Vehicles belonging to Local Authorities/State Transport Undertakings

  10. SECTION-147 LIMIT OF THIRD PARTY LIABILITY Policy of insurance must be a policy which insures the person or classes of persons specified in the policy against- Any liability incurred by the insured in respect of death or bodily injury to ANY person including owner of the goods or his authorized representative carried in the vehicle Liability incurred in respect of damage to any property of a third party Liability incurred in respect of death or bodily injury of any passenger of a public service vehicle.

  11. LIMIT OF THIRD PARTY LIABILITY (contd..) Liability arising under Workmen’s Compensation Act, 1923 in respect of death or bodily injury to:- ( a ) Paid driver of the vehicle ( b ) Conductor, or Ticket Examiner (Public Service Vehicles); ( c ) Coolies carried in goods vehicle. V. Liability in respect of death or bodily injury of passengers who are carried for hire or reward or by reason of or in pursuance of contract of employment

  12. THIRD PARTY LIABILITY (contd..) The policy of insurance should cover the liability incurred in respect of any one accident as follows :- (A) In respect of death or bodily injury to any person: the amount of liability incurred ___________(unlimited) (B) In respect of damage to any property of third party __________a limit of Rs. 6000/-

  13. SECTION 140NO FAULT LIABILITY-CLAIMANT IS NOT REQUIRED TO PROVE NEGLIGENCE OF THE DRIVER The amount of compensation payable (A) Rs. 50,000/- for death (B) Rs. 25,000/- permanent disablement

  14. Section 161--HIT AND RUN HIT AND RUN ACCIDENT– is defined as an accident arising out of the use of a Motor Vehicle ,the Identity of which cannot be ascertained in spite of reasonable efforts for the purpose Compensation is paid through the Solatium Fund – Death ---Rs.50000/- Grievous Hurt---Rs.25000/-

  15. INDIA MOTOR TARIFFGENERAL REGULATIONS • NO INSURANCE OUT OF PURVIEW OF TARIFF • TWO TYPES OF POLICIES • LIABILITY ONLY • PACKAGE • EXTENSION OF GEOG AREA AT ADDITIONAL PREM.(Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka, Maldives) • RATING OF LIABILITY COVER AS PER IRDA CIRCULAR • PREMIUM WILL GO TO THIRD PARTY POOL • OWN DAMAGE RATING DETARIFFED WEF 1/1/2007

  16. GENERAL REGULATIONS CONTD. • VINTAGE CARS (<31.12.1940) • NO AGREED VALUE POLICY • SUM INSURED-IDV • SEPARATE BUT UNIFORM DEP. FOR PARTIAL LOSSES • GEOGRAPHICAL ZONES: • Private Cars/Two Wheelers/Taxis and 3 whlr PSVs upto 6 pass./ 2 whlr taxis • Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad , Kolkata, Mumbai, New Delhi and Pune. • Zone B:Rest of India

  17. GENERAL REGULATIONS CONTD. • No Mid term inclusion/cancellation of extra benefit • Concession for vehicles specially designed for physically/mentally challenged • Compulsory PA cover for owner driver • Optional PA cover for other persons • Loading for vehicles imported without duty • Maximum cap on TPPD cover • Compulsory deductible for all classes of vehicles • Cover for electronic/electrical fittings not included in manufacturer’s selling price

  18. GENERAL REGULATIONS CONTD. • Additional premium for bi-fuel system • Additional premium for fibre glass fuel tanks • Additional premium for vehicles used for Driving tuitions • Cover for garaged vehicle • Restricted cover for Fire &/or theft and Liability • Rules for rating of vehicles driven by non conventional source of power • Option to select higher towing charges than provided in the policy

  19. GENERAL REGULATIONS CONTD. • Other Commercial Vehicles: • Zone A : Chennai, Delhi / New Delhi, Kolkata, Mumbai • Zone B : All other State Capitals • Zone C : Rest of India • 12 months policies • Short period rates • Display of premium • Full premium payable in advance • Min premium =Rs.100 (except for vehicles spl designed for physically/mentally challenged)

  20. Transfers • No claim Bonus • On OD only • NCB follows fortunes of original insured • NCB of institution on vehicle transfer • Change of Insurer • Vehicle sold And not replaced immediately • Validity of NCB after policy expiry • Sunset Clause

  21. G.R. 3 (A) • For all classes of vehicles, there are 2 types of policies. • 1. Liability only Policy • Covering Act Liability plus enhanced third party • property damage-Rs. 7.5 Lakhs • P.A. to Owner / Driver • 2. Package Policy • -Section I covers own damage • - Section II covers liability as 1 above POLICY FORMS

  22. MOTOR PACKAGE POLICY-PERILS COVERED UNDER SECTION -I “OWN DAMAGE” • Fire explosion, self ignition, lightning • Burglary, housebreaking , theft • Riot and strike • Earthquake (fire and shock damage) • Flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost

  23. PERILS COVERED IN “OWN DAMAGE” (Contd..) VI. Accidental external means • Malicious Act /Terrorism • Whilst in transit by road, rail, inland waterway, lift, elevator or air • Rockslide / Landslide

  24. EXCLUSIONS(OWN DAMAGE) • Consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures or breakages: • Damage to tyres and tubes unless the motor car is damaged at the same time when the liability of the insurer is limited to 50% of the cost of replacement:

  25. EXCLUSIONS(OWN DAMAGE) (Contd..) • Any accidental loss or damage whilst the insured or any person driving with the knowledge and consent of the insured is under the influence of intoxicating liquor & drugs

  26. GENERAL EXCEPTIONS(APPLICABLE TO ALL SECTIONS OF THE POLICY) • Geographical area • Contractual liability • Limitations as to use • Driver’s clause • Consequential loss 6) Nuclear Perils 7) War Perils

  27. CLASSIFICATION OF VEHICLES • Private Cars • Motor Cycles / Scooters • Commercial Vehicles

  28. COMMERCIAL VEHICLES Commercial Vehicles are further sub-divided into groups. Goods carrying Vehicles A.1 Public Carriers A.2 Private Carriers A.3 Goods carrying motorized 3 wheelers and Motorized Pedal Cycles (Public Carriers) A.4 Goods carrying motorized 3 wheelers and Motorized Pedal Cycles (Private carriers) Other than 3 wheelers

  29. B. Trailers • Passenger Carrying vehicles C.14 wheeled & 3 wheeled vehicles not exceeding 6 passengers capacity- Taxies, Autos C.24 or more wheelers with passengers exceeding 6 and 3 wheelers exceeding 17 passengers-Buses, Tempos C.3Motorized 3 wheelers carrying between 6 and 17 passengers C.4Motorized 2 wheelers for carrying passengers

  30. Miscellaneous vehicle & special type of vehicles- Ambulances, Bulldozers etc. • Motor Trade Road Transit Risks only • Motor Trade Road Risks only • Motor Trade Internal Risks only Mostly, MFGs & DEALERS

  31. G.R. 4 • The geographical Area of Motor Policies extended to include • Bangladesh • Bhutan • Nepal • Pakistan • Sri Lanka • Maldives EXTENSION OF GEOGRAPHICAL AREA

  32. G.R. 5 VINTAGE CARS AND CLASSIC CARS Any car manufactured prior to 31.12.1940 is considered as Vintage car by the Vintage and Classic Car Club of India. Any car manufactured after 31.12.1940 but before 31.12.1970 is considered as a Classic car by the Vintage and Classic Car Club of India.

  33. Schedule of Depreciation for arriving at IDV

  34. G.R. 9DEPRECIATION ON PARTS

  35. All others

  36. G.R. 10GEOGRAPHICAL ZONES Private Cars / Motorized two Wheelers / Commercial Vehicles under Sec. 4 C.1 & C.4 Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune Zone B: rest of India

  37. G.R. 12 SHORT PERIOD SCALE

  38. Schedule of No Claim Discount • Ist Yr. 20% • IInd Yr. 25% • IIIrd Yr. 35% • IVth Yr. 45% • Vth Yr. 50%

  39. G.R. 28, 29, 30DISCOUNTS • Membership of Automobile Association End. No. 8 • Vintage Car Discounts End. No. 9 • Anti-theft Devices Discounts End. No. 10 • Voluntary Deductibles. End No: 22A

  40. G.R. 36PERSONAL ACCIDENT COVER • Compulsory PA cover • To owner driver • Optional PA cover End No. 15,16,17,18

  41. G.R. 39 (A)TPPD COVER

  42. G.R. 39(B)Premium Reduction for TPPD Cover restricted as per M.V.Act • No. 1 Rs.100/= • No. 2 Rs.50/= • No. 3 Rs.150/= • No. 4 Rs.200/= Reduction End. No.20

  43. RATING CONSIDERATIONS • Insured’s Declared Value

  44. RATING CONSIDERATIONS CUBIC CAPACITY -Upto 1000cc -1000cc to 1500cc -Above 1500cc

  45. ZONES • Zones A & B For the purpose of rating under this tariff, the whole of Indian has been divided into the following zones depending upon the location of the office of registration of the vehicle concerned: Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune Zone B: Rest of India

  46. AGE OF THE VEHICLE • Upto 5 yrs. • Between 5yrs and 10yrs • Above 10yrs

  47. PREMIUM RATING

  48. Compulsory Deductibles • Upto 1500cc – Rs. 500 • Over 1500cc – Rs. 1000

  49. DISCOUNTS ON PRIVATE CARS • Membership of Automobile Association • No claim bonus • Vintage Car • Anti-theft devices • Voluntary deductibles

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