Motor insurance for dummies

A vehicle is a valuable possession for its owner. Motor insurance is mandatory by law so every car or bike owner must have a motor insurance. But not all are aware about its features, what is actually covered and what is not.

 A vehicle is a valuable possession for its owner. Motor insurance is mandatory by law so every car or bike owner must have a motor insurance. But not all are aware about its features, what is actually covered and what is not.

Your vehicle can be covered under either Third Party Insurance or Comprehensive Car Insurance.

Third Party Insurance only covers your liability towards a third party in case of death, injury or property damage caused to them by your vehicle. It doesnt do any good to your vehicle. If you love your car or bike you must have a Comprehensive Insurance policy which covers both third party liability and damage to your vehicle. But this is not much of a worry since most private players offer only Comprehensive Insurance policy. The insurance policy is valid for one year. It becomes effective from the moment the payment of premium is received by the insurance company and ends at midnight exactly a year later.

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Third party motor insurance premium may rise further

Mumbai: Lakhs of vehicle owners across the country may have to pay more for buying the mandatory insurance cover — third party motor cover — for their vehicles.

The third party motor insurance premium is likely to go up within the range of 15-50 per cent in 2013, the second hike in the last one year.

“The hike may come within a fortnight . The premium may increase between 15-50 per cent in various vehicle categories,” said the chairman of a public sector insurance company.

As the third party motor insurance is still regulated by IRDA, it has already decided to hike the rates to make up the huge losses in this portfolio — a lion’s share of total losses of over Rs 10,000 crore suffered by the insurance sector is accounted by third party motor cover.

“Our claim ratio is 175 per cent in the third party motor segment,” said G Srinivasan, CMD, New India Assurance.

In fact, the earlier hike which was done in March 2012 was disputed by the transporters’ association which had fought a legal battle with IRDA and general insurers in Calcutta High Court. However after eight months of litigation, the court had passed verdict in favour of the hike.

Earlier in 2012, while asking the domestic general insurers to hike the provisioning — capital to be set aside to pay the future claims as it takes years settle claims under this category — against the third party motor portfolio, the IRDA had assured