basics of motor insurance ppt

MOTOR INSURANCE

BYS. M. GUPTA

TOPIC - ACCIDENT AND MOTOR INSURANCE

� ACCIDENT AND MOTOR INSURANCE.

� TERMS AND CONDITIONS OF MOTOR INSURANCE.

� CLAIMS & RECOVERY.

� COMPULSORY THIRD PARTY INSURANCE.

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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.

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� A) IT MAY RESULT IN TO EITHER CREATIONOF 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)

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� 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.

TYPES OF POLICIESTYPES 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’.

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INTRODUCTIONINTRODUCTION

� 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.

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INTRODUCTIONINTRODUCTION

� 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.

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GROWTHGROWTH

� 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.

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GROWTHGROWTH

� 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.

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ACCIDENTSACCIDENTS� 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.

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ACCIDENTSACCIDENTS

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� 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.

World’s Costliest Car-Bugatti VeyronBefore and after the accident

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IMPLICATIONSIMPLICATIONS

� 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.

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REMEDIESREMEDIES

� 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).

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HISTORYHISTORY

� 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).

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HISTORYHISTORY

� 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.

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HISTORYHISTORY

� 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.

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HISTORY – INDIAHISTORY – 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.

MANDATORY INSURANCEMANDATORY 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:….

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LIABILITY TO THIRD PARTIESLIABILITY 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.

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� 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.

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� 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.

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PERSONAL ACCIDENT COVER 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:

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� 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:

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SCALE OF COMPENSATIONSCALE OF COMPENSATION

Nature Of Injury Compensation

1 Death 100%

2 Loss of two limbs or sight of both eyes or one limb & sight of one eye

100%

3 Loss of one limb or sight of one eye 50%

4 Permanent total disablement 100%

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LIMITATIONSLIMITATIONS

� 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.

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EXCLUSIONSEXCLUSIONS

� 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.

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LIMITATIONSLIMITATIONS

� 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.

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LIMITS OF LIABILITYLIMITS 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.

TYPES OF VEHICLESTYPES 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.

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PRIVATE CARSPRIVATE CARS

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MOTORIZED TWO WHEELERS

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

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COMMERCIAL VEHICLES

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

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

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CONDITIONSCONDITIONS

� 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.….


� 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.

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� 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.

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� 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…..

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� 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.

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CLAIMSCLAIMS

� 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.

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CLAIMS PROCEDURECLAIMS PROCEDURE

� IMMEDIATE NOTICE OF LOSS INWRITING TO BE GIVEN

� FOR ACCIDENTAL LOSSES, ESTIMATEOF REPAIRS AND CLAIM FORM TO BESUBMITTED

� FOR LOSS DUE TO THEFT OF VEHICLE, A COPY OF F.I.R. ALONG WITH A CLAIMFORM TO BE GIVEN

� TO APPOINT A SURVEYOR FOR ASSESSMENT OF LOSS/ ANINVESTIGATOR TO INVESTIGATE THETHEFT…..

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CLAIMS PROCEDURECLAIMS PROCEDURE

� ORIGINAL R/C, D/L TO BE PRODUCED � REPAIRS CAN BE STARTED IN CASE OF

PARTIAL LOSS, AFTER INITIAL VERIFICATIONBY SURVEYOR’S

� CLAIMS ARE SUBJECT TO COMPULSORYEXCESSES

� IN CASE OF TOTAL LOSS, LIMIT OFLIABILITY WILL BE IDV

� ANY DISPUTE REGARDING ‘QUANTUM’ OFCLAIM AMOUNT HAS TO BE REFERRED TO AN ARBITRATOR

� TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER IS 12 MONTHS FROM DATE OFSUCH DISCLAIMER.

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THANKS

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basics of motor insurance ppt

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