What is Motor Insurance Policy?
Motor insurance (also known vehicle insurance or auto insurance) is a mandatory insurance policy which is taken for motor vehicles like two wheelers (bikes), cars, trucks and etc. As per the regulations prescribed in the Motor Vehicles Act, 1988, every vehicle must have a valid insurance cover in India. Keeping this legal requirement in mind, a motor insurance policy is designed by general insurance companies. Individuals buying a vehicle should also buy a motor insurance policy. The policy compulsorily covers damages and injuries caused to any third party or property by the insured vehicle. .If, however, a comprehensive policy is taken, damages suffered by the vehicle can also be covered.
There are two types of motor insurance policies which are available in the market. They are :
Third party liability only policy
This is the mandatory insurance cover which is required by the Motor Vehicles Act, 1988. Under this policy, two types of coverage are allowed. The first coverage is against bodily injury or death of any third party due to your vehicle. If, when using your vehicle, you injure any individual or cause any individual's death, you would face financial liabilities. You would have to pay for the injury or death caused. The first coverage in a third party liability policy pays for this financial liability. Under the second coverage, damages caused to surrounding third party property are covered. If, your vehicle damages any property belonging to any individual, you might be liable to pay for the damages caused. The third party policy pays for this loss too. Moreover, you might also find a personal accident cover in the third party liability policy. This cover pays an additional benefit in case of accidental death or disablement of the driver or owner of the insured vehicle.
Comprehensive motor insurance policy
This policy is also called a package policy because it combines the coverage for third party liability and own damage in one package. While the damages caused to any third party or property is covered under the plan, damages suffered by the insured vehicle are also covered. The policy pays for the repair costs which incur when the vehicle is damaged. Besides these coverage features, a comprehensive policy also has the option of add-on covers which enhance the scope of coverage.
Under this type of motor insurance policy, coverage is given for privately owned cars. car insurance plans can be bought as comprehensive policies or liability only policies.
Two wheeler insurance
Under two wheeler insurance plans, privately owned two-wheelers are covered. These policies might have a coverage duration of 1 year to 3 years.
Commercial vehicle insurance
Commercial motor insurance policies cover all types of vehicles used for commercial purposes. Thus, commercially used cars, bikes, trucks, lorries, scooters, minivans, etc. can be covered by this plan.
A motor insurance policy has the following benefits :
It fulfils the legal requirements
Since the Motor Vehicles Act, 1988 mandates a validthird party insurance cover., the motor insurance policy takes care of this legal requirement.
It pays for your financial liability
If you injure any individual due to your vehicle or damage someone else's property, you face a legal liability. You are bound to compensate the aggrieved party for the financial loss you have caused. This compensation might be a financial burden on you. A motor insurance policy removes this burden as it pays your financial liability.
You can cover your own damages too
If you buy a comprehensive insurance policy, damages suffered by your vehicle are also covered. The repair costs incurred in restoring your damaged vehicle is paid by the policy and you don't feel the pocket pinch.