Motor insurance provides protection against risks associated with motor vehicle accidents, such as injuries to others, damage to other vehicles or property, or damage to the insured vehicle itself. It is mandatory in India under the Motor Vehicles Act to purchase a Liability Only policy that covers bodily injury and property damage to third parties. Insurers also offer optional policies that provide additional coverage like compensation for injuries to the owner-driver or damage to the insured vehicle. India has seen rapid growth in both motor vehicles and road accidents in recent decades, making motor insurance an important product for both individuals and the insurance industry.

1. MOTOR INSURANCE
BY
S. M. GUPTA

2. TOPIC - ACCIDENT AND
MOTOR INSURANCE
ACCIDENT AND MOTOR
INSURANCE.
TERMS AND CONDITIONS OF
MOTOR INSURANCE.
CLAIMS & RECOVERY.
COMPULSORY THIRD PARTY
INSURANCE.
2

3. WHAT IS MOTOR INSURANCE?
WHAT IS MOTOR INSURANCE?
MOTOR INSURANCE IS A COMBINATION
OF TWO WORDS I.E. ‘MOTOR +
INSURANCE’
MOTOR UNDER THE MOTOR VEHICLE
ACT IS A SELF-PROPELLED VEHICLE
INSURANCE WE ALREADY KNOW IS
PROTECTION AGAINST ANY
‘UNFORESEEN RISK’
THE ‘UNFORESEEN RISK’ IS AN INCIDENT,
WHICH CAN’T BE FORESEEN I.E. WHICH
MAY OR MAY NOT HAPPEN I.E.
3

4. WHAT IS MOTOR INSURANCE?
WHAT IS MOTOR INSURANCE?
A) IT MAY RESULT IN TO EITHER CREATION
OF LIABILITIES OR
B) WILL RESULT IN TO FINANCIAL LOSSES:
INJURIES/DEATH TO PERSON/S AND ‘A’
DAMAGE TO PROPERTY.
(LIABILITIES)
DAMAGE TO THE VEHICLE ITSELF AND ‘B’
THEFT OF PARTS OR THE THEFT OF THE
VEHICLE ITSELF.
(FINANCIAL LOSSES)
4

5. WHAT IS MOTOR INSURANCE?
WHAT IS MOTOR INSURANCE?
MOTOR INSURANCE IS THUS PROTECTION
AGAINST THE RISKS EXPLAINED EARLIER,
IN ORDER TO:
OVER COME THE LIABILITIES AND
THE FINANCIAL LOSSES
ASSOCIATED WITH THE ACCIDENTS.
THERE ARE DIFFERENT POLICIES OT MEET
THE ABOVE OR
A SINGLE POLICY CAN ALSO BE TAKEN FOR
THE SAME AS BEING EXPLAINED IN THE
NEXT SLIDE.
5

6. TYPES OF POLICIES
TYPES OF POLICIES
THE POLICY WHICH IS MANDATORY TO
BE TAKEN IN ORDER TO MEET THE
REQUIRED OF THE MOTOR VEHICLE
ACT IS, ‘LIABILITY ONLY POLICY’, AS
EXPLAINED EARLIER AND
THE SECOND POLICY IS THE CHOICE OF
THE OWNER OF THE VEHICLE I.E. HE
MAY OR MAY NOT TAKE THIS POLICY,
KNOWN AS, ‘PACKAGE POLICY’.
6

7. INTRODUCTION
INTRODUCTION
GLOBALLY MOTOR INSURANCE IS THE
BIGGEST AND FASTEST GROWING
GENERAL INSURANCE PORTFOLIO AND
INDIA IS NO EXCEPTION TO IT.
IT ACCOUNTS FOR MORE THAN 45% OF THE
TOTAL GENERAL INSURANCE PREMIUM
INCOME IN INDIA
IN THE YEAR ENDING 2009, TOTAL NON-
LIFE PREMIUM OF THE INDUSTRY WAS
ABOUT 28,000 CRORES OUT OF WHICH
MOTOR SHARE WAS ABOUT 13,000 CRORES
HOWEVER MOTOR BUSINESS WAS 25
CRORES ONLY AT THE TIME OF
NATIONALIZATION.
7

8. INTRODUCTION
INTRODUCTION
SOME OF THE FACTORS RESPONSIBLE
FOR THIS GROWTH ARE:
INCREASE IN EARNING CAPACITY OF
INDIVIDUAL
CHANGE IN PRIORITIES OF LIFE
EXPLOSIVE GROWTH OF AUTOMOBILE
INDUSTRY
NEWER MODELS BEING INTRODUCED IN
INDIA AND IN THE WORLD, THE COSTLIER
ONES AND THE CHEAPEST VERSIONS AND
INTRODUCTION OF CHEAP AUTO LOANS.
8

9. 9

10. 10

11. GROWTH
GROWTH
IN 1951, THERE WERE 3,00,000 MOTOR
VEHICLES THROUGHOUT INDIA
THE ROAD NETWORK AT THAT TIME
WAS OF 4,00,000 KILOMETERS
BY THE YEAR ENDING 2004, THE
NUMBER OF VEHICLES HAS GONE UP
BY 270 TIMES, WHERE AS
ROAD NETWORK HAS EXPANDED BY
11 TIMES ONLY.
11

12. GROWTH
GROWTH
IN INDIA THE VEHICLE POPULATION HAS
ALREADY CROSSED 8 CRORES COMPRISING
OF THE FOLLOWINGS:
TWO WHEELERS: 6 CRORES
MOTOR CARS : 2 CRORES
COMMERCIAL : 2 CRORES AND
ABOUT 90 LAKH MOTOR VEHICLES (ALL
TYPES) ARE BEING ADDED ON INDIAN
ROADS EVERY YEAR.
12

13. ACCIDENTS
ACCIDENTS
ABOUT 300 PERSONS ARE BEING KILLED ON
ROAD ACCIDENTS DAILY AND ABOUT 10,00,00
ARE BEING INJURED ANNUALLY AND
THE INCIDENCE OF ROAD ACCIDENTS TO
NUMBER OF VEHICLES IN INDIA IS
ALARMINGLY HIGH IN COMPARISON TO
DEVELOPED COUNTRIES:
THE NUMBER OF ROAD ACCIDENTS PER
10,000 VEHICLES IN INDIA IS ABOUT 120 AS
AGAINST 10 IN THE DEVELOPED COUNTRIES
OF THE WORLD
THE NUMBER OF DEATHS PER 10,000
VEHICLES IN INDIA IS 55 AS AGAINST 2 IN
THE WEST.
13

14. ACCIDENTS
ACCIDENTS
IN 1990, TRAFFIC ACCIDENTS WERE WORLD’S
NINTH BIGGEST CAUSE OF DEATH AND IT IS
EXPECTED TO BECOME THE THIRD BIGGEST
BY 2020.
STUDY UNDERTAKEN BY THE ‘WORLD
HEALTH ORGANIZATION’ REVEALS THAT
ROAD ACCIDENTS ARE THE SECOND AND
THIRD BIGGEST CAUSE OF DEATH IN THE
AGE GROUP OF 5-29 AND 30-44 YRS.
RESPECTIVELY.
THE INDIAN SITUATION IS AMONGST THE
WORST IN THE WORLD I.E.
SHARE OF ROAD FATALITIES IS AROUND 86%.
AGAINST 40% SHARE OF VEHICLE POPULATION.
14

15. World’s Costliest Car-Bugatti Veyron
Before and after the accident
15

16. IMPLICATIONS
IMPLICATIONS
IT IS THEREFORE NATURAL THAT IN
A SITUATION LIKE THIS I.E. THE
WIDESPREAD USE OF VEHICLE BY THE
COMMON MAN
MANY VEHICLE OWNERS AND USERS
MAY NOT HAVE THE REQUISITE
FINANCIAL CAPABILITIES OF
COMPENSATION TO THE VICTIMS OF
THE ROAD ACCIDENT.
16

17. REMEDIES
REMEDIES
THE MOTOR VEHICLE ACT HAS
THEREFORE MADE THE THIRD PARTY
INSURANCE COMPULSORY
IT A PUNISHABLE OFFENCE TO USE THE
VEHICLE WITHOUT INSURANCE
NECESSARY PROVISIONS FOR ITS
ENFORCEMENT ARE THEREFORE ARE
AVAILABLE WITH THE AUTHORITIES:
FAILURE TO COMPLY THE PROVISIONS OF SEC.146
OF THE MV ACT IS PUNISHABLE BY AN
IMPRISONMENT OF THREE MONTHS OR A PENALTY
OF RS. 1000 OR BOTH (SEC.196 OF THE MV ACT).
17

18. HISTORY
HISTORY
MOTOR INSURANCE IS ONE OF THE
MOST IMPORTANT PORTFOLIOS OF
INSURANCE INDUSTRY AND
IT IS MANDATORY/ COMPULSORY
INSURANCE FOR THE VEHICLES PLYING
ON THE ROADS
IT IS WORTHWHILE TO KNOW THAT
THE TOLL TAKEN BY ROAD ACCIDENTS
IS NO LESS THAN THE TOLL OF A MAJOR
NATURAL OR A MAN-MADE
CATASTROPHE (LIKE 9/11).
18

19. HISTORY
HISTORY
1894: 1ST MOTORCAR INTRODUCED IN
U.K. ENGLAND.
1895: 1ST MOTOR POLICY – ONLY THIRD
PARTY LIABILITIES – INTRODUCED.
1899: ACCIDENTAL DAMAGE TO CAR
ADDED – COMPREHENSIVE INSURANCE
(PACKAGE).
1903: CAR & GENERAL INSURANCE
CORPORATION LTD. – ESTABLISHED
MAINLY TO TRANSACT MOTOR
INSURANCE, FOLLOWED BY OTHER
COMPANIES.
19

20. HISTORY
HISTORY
POST WORLD WAR- I: INCREASE IN
NUMBER OF VEHICLES AND ROAD
ACCIDENTS.
ROAD TRAFFIC ACTS: 1930 & 1934 -
COMPULSORY THIRD PARTY LIABILITY
INSURANCE.
ROAD TRAFFIC ACT 1960: COMPULSORY
INSURANCE PROVISIONS OF ABOVE
ACTS WAS CONSOLIDATED.
20

21. HISTORY ––INDIA
HISTORY INDIA
1939: MOTOR VEHICLES ACT (MVA) PASSED.
COMPULSORY 3RD PARTY INSURANCE
INTRODUCED ON 1ST JULY, 1946.
PRACTICE IN INDIA FOLLOWS THAT OF
U.K. MARKET.
GOVERNED BY A TARIFF: WITHDRAWN IN
UK.
MVA 1988, REPLACED THE MVA OF 1939.
EFFECTIVE FROM JULY 1ST 1989.
21

22. MANDATORY INSURANCE
MANDATORY INSURANCE
THE MANDATORY PART OF THE MOTOR
INSURANCE IS KNOWN AS
‘THIRD PARTY INSURANCE’
THIS INSURANCE WAS FORMED ON THE
BASIS OF MOTOR VEHICLE ACT
THE POLICY IS BEING ISSUED IN
ACCORDANCE WITH THE PROVISIONS
OF THE M. V. ACT, IS NOW CALLED AS
THE ‘LIABILITY ONLY POLICY’ & THE
COVERAGE’S PROVIDED ARE:….
22

23. LIABILITY TO THIRD PARTIES
LIABILITY TO THIRD PARTIES
DEATH OF OR BODILY INJURY TO ANY
PERSON INCLUDING OCCUPANTS
(PROVIDED SUCH OCCUPANTS ARE NOT
CARRIED FOR HIRE OR REWARD) AS PER
MOTOR VEHICLES ACT, 1988.
THE COMPANY SHALL NOT BE LIABLE FOR
DEATH OR INJURY ARISES OUT OF AND IN
THE COURSE OF THE EMPLOYMENT
DAMAGE TO PROPERTY OTHER THAN
PROPERTY BELONGING TO THE INSURED OR
HELD IN TRUST/ CUSTODY OR CONTROL OF
THE INSURED
ALL COSTS AND EXPENSES INCURRED WITH
ITS WRITTEN CONSENT.
23

24. LIABILITY TO THIRD PARTIES
LIABILITY TO THIRD PARTIES
ANY DRIVER WHO IS DRIVING THE
VEHICLE ON THE INSURED’S ORDER
OR WITH INSURED’S PERMISSION
PROVIDED THAT SUCH DRIVER
SHALL AS THOUGH HE/ SHE WAS
THE INSURED
OBSERVES & FULFILL THE TERMS
EXCEPTIONS AND CONDITIONS OF
THIS POLICY.
24

25. LIABILITYTO THIRD PARTIES
LIABILITY TO THIRD PARTIES
ANY PERSON ENTITLED TO
INDEMNITY, THE COMPANY WILL
INDEMNIFY SUCH PERSON OR HIS/
HER PERSONAL REPRESENTATIVE
PROVIDED
THAT SUCH PERSONAL
REPRESENTATIVE SHALL AS THOUGH
WAS THE INSURED, OBSERVE FULFILL
THE TERMS EXCEPTIONS AND
CONDITIONS OF THIS POLICY.
25

26. PERSONALACCIDENT COVER
PERSONAL ACCIDENT COVER
FOROWNER-DRIVER
FOR OWNER-DRIVER
THE COMPANY UNDERTAKES TO PAY
COMPENSATION AS PER THE
FOLLOWING SCALE FOR BODILY
INJURY/ DEATH SUSTAINED BY THE
OWNER-DRIVER OF THE VEHICLE
IN DIRECT CONNECTION WITH THE
VEHICLE INSURED OR WHILST:
26

27. PERSONALACCIDENT COVER
PERSONAL ACCIDENT COVER
FOROWNER-DRIVER
FOR OWNER-DRIVER
DRIVING
MOUNTING INTO/ DISMOUNTING FROM
THE VEHICLE INSURED
WHILST TRAVELING IN IT AS A CO-DRIVER
CAUSED BY VIOLENT, ACCIDENTAL,
EXTERNAL AND VISIBLE MEANS
WHICH IS INDEPENDENT OF ANY OTHER
CAUSE
SHALL WITHIN SIX CALENDAR MONTHS OF
SUCH INJURY RESULT IN:
27

28. SCALE OF COMPENSATION
SCALE OF COMPENSATION
Nature Of Injury Compensation
1 Death 100%
Loss of two limbs or sight of both eyes or one limb & 100%
2
sight of one eye
3 Loss of one limb or sight of one eye 50%
4 Permanent total disablement 100%
28

29. LIMITATIONS
LIMITATIONS
PROVIDED ALWAYS THAT
COMPENSATION SHALL BE PAYABLE UNDER
ONLY ONE OF THE ITEMS (1) TO (4) ABOVE IN
RESPECT OF THE:
OWNER-DRIVER ARISING OUT OF ANY ONE
OCCURRENCE AND
THE TOTAL LIABILITY OF THE INSURER SHALL
NOT IN THE AGGREGATE EXCEED THE SUM OF
RS. 2 LACK DURING:
ANY ONE PERIOD OF INSURANCE.
29

30. EXCLUSIONS
EXCLUSIONS
NO COMPENSATION SHALL BE PAYABLE IN
RESPECT OF DEATH OR BODILY INJURY DIRECTLY
OR INDIRECTLY WHOLLY OR IN PART ARISING OR
RESULTING FROM OR TRACEABLE TO:
INTENTIONAL SELF INJURY SUICIDE OR ATTEMPTED
SUICIDE PHYSICAL DEFECT OR INFIRMITY OR
AN ACCIDENT HAPPENING WHILST SUCH PERSON
IS UNDER THE INFLUENCE OF INTOXICATING
LIQUOR OR DRUGS.
SUCH COMPENSATION SHALL BE PAYABLE
DIRECTLY TO THE INSURED OR TO THEIR LEGAL
REPRESENTATIVES.
30

31. LIMITATIONS
LIMITATIONS
THIS COVER IS SUBJECT TO:
THE OWNER-DRIVER IS THE REGISTERED
OWNER OF THE VEHICLE INSURED
THE OWNER-DRIVER IS THE INSURED
NAMED IN THIS POLICY
THE OWNER-DRIVER HOLDS AN
EFFECTIVE DRIVING LICENSE
IN ACCORDANCE WITH THE PROVISIONS OF
RULE 3 OF THE CENTRAL MOTOR VEHICLES
RULES 1989, AT THE TIME OF THE ACCIDENT.
31

32. LIMITS OF LIABILITY
LIMITS OF LIABILITY
UNDER SECTION - II OF THE POLICY:
DEATH OF OR BODILY INJURY - SUCH
AMOUNT AS IS NECESSARY TO MEET
THE REQUIREMENTS OF THE MOTOR
VEHICLES ACT, 1988.
UNLIMITED.
UNDER SECTION - II OF THE POLICY:
DAMAGE TO ‘THIRD PARTY PROPERTY’:
RS.6,000 / RS.7, 50,000 AS THE CASE MAY BE.
P.A. COVER UNDER SECTION – III:
FOR ‘OWNER-DRIVER’ (CSI):
RS.2,00,000.
32

33. TYPES OF VEHICLES
TYPES OF VEHICLES
THE INDIAN MOTOR TARIFF REVISED W.E.F.
1ST JULY 2002, FOR THE PURPOSES OF
INSURANCE
HAS CLASSIFIED THE MOTOR VEHICLES
BROADLY INTO THREE CATEGORIES WITH
FURTHER SUB CLASSIFICATION VIZ.
PRIVATE CARS
MOTORIZED TWO WHEELERS AND
COMMERCIAL VEHICLES.
33

34. PRIVATE CARS
PRIVATE CARS
34

35. 35

36. MOTORIZED TWO
WHEELERS
36

37. The most expensive motorcycle $250,000, Dodge
Tomahawk, V10 engine 505 c.c., 10 cylinders,
max. speed of almost 400 mph.
37

38. 38

39. COMMERCIAL
VEHICLES
39

40. Neoplan Jumbo cruiser 2 in 1 bus double
deck bus 170 passenger capacity
40

41. WORLD’S LONGEST TRUCK ‘MIDNIGHT
RIDER TRACTOR TRAILER LIMOUSINE’
41

42. 42

43. 43

44. CONDITIONS
CONDITIONS
NOTICE SHALL BE GIVEN IN WRITING
IMMEDIATELY FOR ANY ACCIDENTAL LOSS OR
DAMAGE TO THE VEHICLE
NOTICE SHALL BE GIVEN IN WRITING
IMMEDIATELY OF ANY WRIT/ SUMMONS ALONG
WITH COPY OF ANY ‘PROSECUTION INQUEST’ OR
‘FATAL INQUIRY’
NO ADMISSION, OFFER, PROMISE, PAYMENT
WITHOUT THE WRITTEN CONSENT
IN CASE OF THEFT, IMMEDIATELY INFORM THE
POLICE
NO ADMISSION, OFFER, PROMISE, PAYMENT,
SHALL BE MADE WITHOUT THE WRITTEN
CONSENT OF THE COMPANY.….
44

45. CONDITIONS
CONDITIONS
THE INSURED SHALL TAKE ALL
REASONABLE STEPS TO SAFEGUARD
THE VEHICLE FROM LOSS OR DAMAGE
AND TO MAINTAIN IT IN EFFICIENT
CONDITION:
COMPANY SHALL HAVE FREE AND FULL
ACCESS TO EXAMINE THE VEHICLE OR
ANY PART THEREOF OR
ANY DRIVER OR EMPLOYEE OF THE
INSURED.
45

46. CONDITIONS
CONDITIONS
IN THE EVENT OF ANY ACCIDENT OR
BREAKDOWN, THE VEHICLE SHALL
NOT BE LEFT UNATTENDED WITHOUT
PROPER PRECAUTIONS:
TO PREVENT FURTHER DAMAGE OR LOSS
IF THE VEHICLE BE DRIVEN BEFORE THE
NECESSARY REPAIRS
ANY EXTENSION OF THE DAMAGE OR
FURTHER DAMAGE SHALL BE ENTIRELY
AT THE INSURED’S OWN RISK.
46

47. CONDITIONS
CONDITIONS
THE COMPANY MAY CANCEL THE POLICY
BY SENDING SEVEN DAYS NOTICE & WILL
RETURN THE PREMIUM PAID LESS THE PRO
RATA PORTION THEREOF
THE POLICY MAY BE CANCELLED BY THE
INSURED ON SEVEN DAYS’ NOTICE:
PROVIDED NO CLAIM HAS ARISEN DURING
THE CURRENCY OF THE POLICY
INSURED SHALL BE ENTITLED TO A RETURN
OF PREMIUM LESS PREMIUM AT THE
COMPANY’S SHORT PERIOD RATES…..
47

48. CONDITIONS
CONDITIONS
SUBJECT TO RETENTION OF THE MINIMUM
PREMIUM OF RS. 100
RS. 25 FOR VEHICLES SPECIFICALLY
DESIGNED/ MODIFIED FOR USE BY BLIND/
HANDICAPPED/ MENTALLY CHALLENGED
WHERE THE OWNERSHIP OF THE VEHICLE
IS TRANSFERRED, THE POLICY CANNOT BE
CANCELLED UNLESS:
EVIDENCE THAT THE VEHICLE IS INSURED
ELSEWHERE IS PRODUCED.
48

49. CLAIMS
CLAIMS
TYPE OF LOSSES:
TOTAL LOSS (ACCIDENTAL)
WHEN INSURED VEHICLE IS DAMAGED TO THE
EXTEND THAT REPAIRS IS UNECONOMICAL TO THE
COMPANY OR COST OF RETRIEVAL EXCEEDS THE IDV.
IF ASSESSED VALUE OF THE LOSS EXCEEDS 75% OF IDV
(CTL).
TOTAL LOSS (THEFT)
WHEN PHYSICAL PRESENCE OF VEHICLE IS NOT
THERE I.E. VEHICLE IS STOLEN.
PARTIAL LOSS (ACCIDENTAL)
REPAIRABLE LOSS OCCURRING DUE TO AN INSURED
PERIL.
PARTIAL LOSS (THEFT)
THEFT OF PARTS/ ACCESSORIES.
ACCESSORIES COVERED ONLY IN PRIVATE CARS.
49

50. CLAIMS PROCEDURE
CLAIMS PROCEDURE
IMMEDIATE NOTICE OF LOSS IN
WRITING TO BE GIVEN
FOR ACCIDENTAL LOSSES, ESTIMATE
OF REPAIRS AND CLAIM FORM TO BE
SUBMITTED
FOR LOSS DUE TO THEFT OF VEHICLE,
A COPY OF F.I.R. ALONG WITH A CLAIM
FORM TO BE GIVEN
TO APPOINT A SURVEYOR FOR
ASSESSMENT OF LOSS/ AN
INVESTIGATOR TO INVESTIGATE THE
THEFT…..
50

51. CLAIMS PROCEDURE
CLAIMS PROCEDURE
ORIGINAL R/C, D/L TO BE PRODUCED
REPAIRS CAN BE STARTED IN CASE OF
PARTIAL LOSS, AFTER INITIAL VERIFICATION
BY SURVEYOR’S
CLAIMS ARE SUBJECT TO COMPULSORY
EXCESSES
IN CASE OF TOTAL LOSS, LIMIT OF
LIABILITY WILL BE IDV
ANY DISPUTE REGARDING ‘QUANTUM’ OF
CLAIM AMOUNT HAS TO BE REFERRED TO AN
ARBITRATOR
TIME LIMIT FOR FILING A SUIT AFTER
DISCLAIMER IS 12 MONTHS FROM DATE OF
SUCH DISCLAIMER.
51

52. THANKS
52