You save for years to buy the car you have always dreamt of. Then, when you finally purchase it, you do everything you can to keep the car in good condition. You pay attention to the way you drive because aggressive driving, urgent braking, etc. can make your car wear out early. You park it in the shade whenever possible to protect its paint and interior from the damaging effects of the sun. You wash it regularly to keep it clean.
Don’t you think you should put the same amount of effort into selecting an insurance plan to protect your car? A sudden accident, breakdown, natural calamity, man-made disaster, and other unexpected contingencies could damage your vehicle within minutes. And a motor insurance policy is a small price to pay for immeasurable peace of mind. Not to mention that it is mandatory to purchase an insurance plan for your vehicle. Driving without an active insurance plan can lead to legal repercussions, and financial ones too - if your vehicle happens to face any damage.
What you should know, though, is not all types of risks are covered under a motor insurance policy. The policy will provide insurance coverage against specific hazards subject to certain terms and conditions.
In this article, let’s learn about all the risks that are covered under a motor insurance policy.
Loss or Damage to the vehicle
Natural calamities like earthquakes, floods, storms, cyclones, hurricanes, tempests, inundation, hailstorms, frost, landslides,lightning, etc.
Theft, burglary, riots, strikes, etc. resulting from human intervention.
Malicious acts like hostilities, an explosion of war weapons, terrorism, etc.
Damage while in transit by rail, road, inland waterways, lift, elevator or air.
Fire, explosion, self-ignition.
Please note: This is just an indicative list. The types of risks covered under motor insurance may vary across insurance companies. Ensure you read all the relevant policy documents so you’re well-informed before making the purchase.
Coverage for accidental disability and death
Insurance companies have to compulsorily offer personal accident cover in motor insurance policies. This cover offers protection to the owner of the vehicle in case they get injured in an accident.
For instance, Aman’s friend Jay recently visited him. Aman is driving Jay around and suddenly his car meets with an accident and the both of them get severely injured and succumb to their injuries. Here the insurance company will provide compensation to Aman’s family but not Jay’s.
Insurance companies also allow you to opt for a personal accident cover for the passengers as well.
So, in the above example, if Aman had opted for a personal accident cover for passengers at the time of buying the motor insurance plan, the insurance company would have provided the compensation to Jay’s family as well.
Third-party legal liability
A motor insurance policy also provides a third-party liability cover. It offers protection to the insured against legal liabilities that may occur due to the loss/damage caused by them to a third party.
Basically, it covers the vehicle owner’s legal liability to pay compensation for -
Death or bodily injury to a third-party individual.
Damage to the third-party property.
For instance, say Sachit buys a motor insurance policy that also offers coverage for third-party legal liability. A few days after taking the policy, Sachit while driving his vehicle, meets with an accident that damages Mr. Rai’s scooter. The motor insurance cover purchased by Sachit will cover the repair costs for the damage caused to Mr. Rai’s scooter.
In case of injury or death of a third party, the amount that will have to be paid to the third party or their family will be decided by the court. There is no compensation limit.
In case of damage to third-party property, the amount that will be compensated cannot exceed the limit of Rs. 7.5 lakhs.
Let’s take Sachit’s example again. Say Sachit had caused damage worth Rs. 10 lakhs to Mr. Rai’s shop. In this case, Mr. Rai will only be compensated for Rs. 7.5 lakhs.
So, these are some of the things covered under a motor insurance policy. A motor insurance plan offers protection against the financial expenses of the damages caused to the insured vehicle, the policyholder, or to a third party.
While it is important to understand what a motor insurance policy will cover, it is also important to educate yourself about the situations it won’t cover. Generally, mechanical or electrical breakdowns of the vehicle, wear and tear of the vehicle’s tyres or tubes, damage to the engine due to oil leakage are some of the situations not covered under a motor insurance policy. We have written a detailed article on this. You can check it out here.
Apart from these core coverages, a Motor Insurance policy will also offer multiple customizations in the form of customizations, add-ons, or riders. These are covered here.