GOVERNMENT OF KARNATAKA

KARNATAKA GOVERNMENT INSURANCE DEPARTMENT

(MOTOR BRANCH)

RULES AND RATES

MOTOR INSURANCE

Chapter I : ORIGIN.

Chapter II : PRINCIPLES.

Chapter III : Part I-Rules

Part II-Rates

KARNATAKA GOVERNMENT INSURANCE (MOTOR BRANCH) RULES, 1958, BANGALORE.

No. FD 32 INS 58, dated 12th November, 1958

In pursuance of Article 309 of the Constitution of India, the Governor of Karnataka hereby makes the following rules in supersession of existing rules, in respect of the Scheme of the Motor Insurance Branch of the Karnataka Government Insurance Department.

PART I Titles

1. (i) These rules may be called the Karnataka Government Motor Insurance Rules 1958.

(ii) They shall extend to the whole State of Karnataka.

2. Commencement of Amendments – All Amendments made shall be published in the Official Gazette and shall come into force on the date of such publication.

3. In these rules, unless the context otherwise requires :

(a) ‘Act’ means the Motor Vehicles Act, 1939 (Central Act IV of 1939)

(b) ‘Certificate of Insurance’ means the Certificate issued by the Department as required by the ‘Act’ for production to the authorities Competent to check it as evidence of having insured the vehicle.

(c) ‘Insured’ is the person who has insured his vehicle or the Government which has insured its vehicles in this Department.

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(d) ‘Policy’ is the document issued by the Department detailing the terms of the contract regarding the Indemnity to be granted to the insured in respect of an accident arising for using the vehicle in a public place.

(e) ‘Director’ means the Director, Karnataka Government Insurance Department.

(f) Premium is the amount to be paid for insuring the Motor Vehicle.

(g) Tariff rates are the rates of premium, etc., provided in the Tariff of the south India Motor Tariff Association.

4. Eligibility for Insurance: –

(1) Vehicles owned by the Government of Karnataka. (2) Vehicles of Industrial concerns wholly owned by the Government of

Karnataka. (3) Vehicles in which the Government of Karnataka have a financial

interest.

5. Types of Policies: (1) The following are the two types of Policies issued by the Department.

(a) Comprehensive. (b) Third Party Liability.

(2) Comprehensive Policies are issued ordinarily when the vehicle is not more than ten years old.

6. Premium rates:- Premium rates in respect of the two types of Policies issued under these rules are noted in Part II of these rules. Premium is ordinarily payable annually in advance.

7. Procedure for Insurance:

(i) Every Motor Vehicle owner who has to insure under these rules can obtain the requisite proposal form from the Karnataka Government Insurance Department Head Office or the District Insurance Office of the District.

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(2) The proposer will fill up and sign the proposal form and attach to it the Treasury or Bank Receipt or a crossed Cheque drawn in favour of the Director, Karnataka Government Insurance Department for the payment of the appropriate premia and forward them to the District Insurance Office or the Head Office as the case may be for issuing the Cover Note.

(3) After the Cover Note is issued, the Certificate of insurance and Policy are despatched to the Insured usually before the expiry of the Cover Note.

8. Benefits under the Policies (1) The risks covered by the Comprehensive and Third Party Liability

Policies are noted in Part II.

(2) Additional benefits can be obtained by Vehicle Owners by Payment of an additional premium required under these rules. Where an extra benefit has been added, no return of additional payment will be allowed in the event of the Policy being cancelled before the expiry period.

II. The period of insurance is One year subject to renewal year after Year. The liability of the Department expires on the last day of the Year if not renewed. If it is not renewed within 90 days from the date of expiry, the no claim bonus earned ceases to be operative. (2) Policies for periods, shorter than One year, may be issued at the

rates, terms and conditions set out in Part II of the theses rules.

9. Transfer of Interest:- (1) A policy may be transferred to an approved new Owner or to Cover another Vehicle but adjustment of premium on Pro-rata basis will be made in case alteration of Horse Power or Value.

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-4- (2) Alteration in terms of Policies, transfer, etc., will be effected by means of an endorsement on Policies or on separate slips of Paper typed or printed and signed by the competent Officer and will have the same force as the terms of the Policy.

10. Cancellation of Policies:- In the case of cancellation of Policies, the premium to be paid will be on a short period basis as noted in Part II of these rules, with the exception that in the case of vehicles which are subsequently re-registered outside the Karnataka State, cancellation will be effected with adjustment of Premium on a Pro-rata basis.

11. Loss of Policies, Certificates:- Where the holder of a Policy of Insurance declares that a Policy or Certificate of insurance issued to him under these rules have been lost or destroyed, defaced or torn, the Director, if he is satisfied with the statements made, shall issue a duplicate subject to the following conditions:-

(i) A declaration by the Insured setting out the full statement of the loss or destruction of Policy or Certificate of Insurance is furnished to the Karnataka Government Insurance Department.

(ii) A fee of Rs.4 (Four) in addition to stamp duty is paid.

12. Claims how made:- In respect of claims arising under a Policy. The Director should be intimated immediately, duly completing a claim form which can be had on application and a copy of the Police report where the accident has been reported to the Police as required under law, if so required by the Department.

13. Vehicles belonging to Government Departments, Government Industrial concerns and Vehicles in which Government have a financial interest should be insured with the Karnataka Government Insurance Department (Motor Insurance Branch) against Third Party Risks.

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14. Head of Account:- The accounts of the scheme shall be separately maintained and all receipts and payments carried to a separate Head of Account, viz., “8011, Insurance and Pension Funds (a) State Insurance Fund (2) Motor Insurance Fund”.

15. Management:- The business of the Motor Insurance Branch shall be managed by the Director, Karnataka Government Insurance Department.

16. The amount payable on the Policies issued under these rules shall be payable by the General Revenues of the State (Public Account of the Karnataka State).

Miscellaneous

(1) The Premium or extra premium to be charged in the case of new type

of vehicles or special risks may be fixed and varied from time to time.

(2) The Director is empowered to offer rebates on the fleet of vehicles

special rates, quoting terms and rates in cases of vehicles which are

not mentioned in these rules.

17. False information furnished by a proposer or an Insured or production of any false evidence in the matter of insurance of his vehicle or other points connected there with shall render the Policy null and void and the premium paid forfeited.

18. The decision of Government shall be final in all matters connected with the scheme.

19. Savings:- Notwithstanding the supersession of the existing rules, anything done or any action taken or any liability incurred there under should be deemed to have been done, taken or incurred under these rules as if, these rules were in force at the appropriate time.

20. No suit or legal proceedings shall lie against any Officer in respect of anything done in good faith or intended to be done in pursuance of these rules.

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8011-00-105-2-00

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Motor Insurance Branch

Origin:- The Motor Insurance Branch of this Department was started on

1st July 1946, on which date Compulsory Insurance of Motor Vehicles against third Party liability became law in our country from the commencement and until General Insurance was nationalised in our Country, all Motor vehicles registered in the State or the vehicles owned by persons residing in the State could be insured in this Branch. But after nationalisation of General Insurance from 1st January 1973, the vehicles which can be insured are the following:-

(1) Vehicles owned by Government Department and Government commercial concerns.

(2) Vehicles in which Government have a financial interest, and the vehicles for the purchase of which Government has advanced money.

The Motor Insurance Branch is a compact unit attending to all items of work

relating to the Branch. The records of the Motor Branch are maintained in the Section itself.

The records of the Motor Branch consist of the following:-

(1) Current Policy Files.

(2) Treasury Accounts and Cash Accounts.

(3) General Files.

The current Policy files are about 30,000. These are arranged in Steel

racks in numerical Order. If a Department owns several vehicles like P.W.D., etc., for each vehicle there is a file. The files of the Motor Branch are arranged either horizontally or vertically, in the numerical order of Policies.

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Distribution of Work:- The following are the items of work done in the Motor Insurance Branch:-

(1) Receipt of proposals along with premium credits and issue of Cover

Notes. (2) Issue of Certificates of Insurance and Policies. (3) Transfer of Ownership when Vehicles are transferred from One

Department to another. (4) Settlement of claims when the vehicle meets with an accident after

inspecting it and authorising its repairs. (5) Closing of Monthly Accounts. (6) Preparation of Final Accounts annually. (7) Audit of Accounts and replies to Audit Points.

The work is distributed by forming Sections, each Section being in charge

of a Superintendent. Administrative Control:- The Staff consists of Class IV, Attenders,

Second Division Assistants, First Division Assistants, Typists and Superintendents. The Officer Cadre consists of an Assistant Director in overall charge and the Director. Each Superintendent is in charge of One Section.

The Director is the final authority on all matters relating to the Branch.

An Assistant Director is in-charge of the entire Branch. All Papers requiring the Orders of the Director have to pass through him.

Delegation to District Officers

The District Insurance Officers of the Department have been delegated

with the following items of work relating to the Motor Insurance Branch. (1) Issue of Cover Notes on the basis of completed proposal forms and

the payment of full year premium. The Cover Note is prepared in Triplicate, One copy with Proposal and

premium payment receipt being forwarded to the Head Office for the issue of

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Policies. The Second copy (or the Original) is given to the party. The third is the Office Copy. The form of the Cover Note is given in Motor Vehicles Act 1939, Chapter VIII. A copy of the Cover Note is appended. The Cover Note contains the following details:- Name of the Insured and Address, Distinguishing letters and number of the Vehicle, type of Cover granted, period of Insurance. The amount of premium is also very often stated in the Cover note. Spot inspection of Accidents. When report received by the District Insurance Officer about a vehicle insured in this Department having met with an accident he arranges to inspect the Vehicle at the place of accident. A report is sent to the Head Office mentioning the following details:-

(a) Registered letters and number of the vehicle(s) involved and the name of the Owner(s).

(b) Type of Policy covering the other vehicle, Policy number and Name of Insurer.

(c) Probable cause of the accident. (d) Currency of driving licence of the Driver. (e) Details of apparent damages. (f) Probable cost of repairs – this can be assessed on a very rough basis if

possible.

The distribution of work in the Motor Branch is in Four Sections

according to similarity of work. A Superintendent is in-Charge of each Section. (a) Receipt of Proposals, issue of Cover Notes, either by the District

Insurance Officers or in the Head Office, registering Proposal and issue of Policies. These are in respect of individual proposers, who have purchased vehicles out of Government Advance and on renewals of these vehicles.

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(b) Preparation of Renewals and Preparation of Notices to all Government Vehicles and Compilation of accounts.

(c) Claims and Records – Inspection by Surveyors whenever necessary.

(d) Renewals of Government Vehicles. New Business Work After the proposals are received along with the necessary premium, usually with a Cheque, they are registered in the Office. If it is a case of first insurance, proposal completed answering all the questions correctly are required. In case of renewal, no proposal is required. The required premium along with the renewal notice has to be furnished. In the case of renewals, the Policy file has to be put up along with the renewal notice. Cheques received have to be sent to the Cash Section for realisation. In the case of Government Vehicles, the Premium calculation Sheet can be prepared and the file sent to the Typist for typing out the Certificate of Insurance and Policy. Ordinarily in the case of individual Policies, the Policy cannot be issued until the cheque is realised and credited to Motor Branch Account. Policy Work After the premium calculation is put up, the endorsement number in respect of additional risks covered have to be noted clearly on the premium calculation Sheet for typing them. The period of risk, type of Policy, Viz., Comprehensive or Third Party have to be carefully checked along with the endorsements. The file should then be submitted to the Officer for his signature. The issue of the Policy has to be noted in the Policy register for first Insurance and in the renewals register in the case of renewals.

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Compilation of Accounts Compilation of Accounts in respect of Motor Insurance is much simpler though they are more or less similar to the work in the Compulsory Life Branch. The premium payments are made once a year at the time of insurance and the risk is not covered until the credits are traced in the accounts. Immediately the statements relating to Motor Insurance Branch are received from the Accountant General, action has to be taken for agreeing the figures with the Statements got from the Treasuries and Banks. The figures consolidated on the basis of the credits and debits of the Treasuries and Banks have to be reconciled with the Accountant General’s figures, every month. There are likely to be excess or Short recoveries to a limited extent and explanatory memos have to be got for these. Agreed figures have to be posted to the abstracts renewals or fresh according to Policy numbers, figures for which details are wanting, can be transferred to Suspense Account. The Suspense should be cleared as early as possible. The fund balance at the credit of Motor Insurance has to be agreed with Accountant General’s figures at the end of the Year and interest has also to be claimed on the monthly balances as in the case of the Life Branch. Proforma final statements have to be prepare annually and these have to be got audited. Audit points raised have to be noted in register and suitable replies given to them. Settlement of Claims

Settlement of Claims on Motor Insurance Policies are perhaps the most important and equally complicated work in the Motor Insurance Branch as it involves legal and technical knowledge. The scope of risks covered under the two types of Policies issued in Motor Insurance, viz., Comprehensive or Third Party are explained in the Chapter on Principles of Motor Insurance. In the case of Small accidents under own damage, no Police report is required and no inspection by a Surveyor would be required. Spot inspection whenever possible can be done by the District Insurance Officer or Assistant Insurance Officer or any Official authorised, for accidents taking place in the jurisdiction of a District in Karnataka. If the accident is a severe one resulting in heavy loss to the vehicle and/or serious third Party claims, it would be desirable to take assistance of a licensed Surveyor.

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The following are some of the points to be considered in the Settlement of claim on report of an accident.

(1) Examine type of Policy issued and whether the Policy is current on the date of an accident.

(2) Calling for the claim application form from the Insured.

(3) Where a Third Party liability has been incurred, to call for Police Report.

(4) Spot inspection of accident, by the District Insurance Officer, Assistant Insurance Officer or an Official. Where the damage is very heavy, to call for a Surveyor’s report.

(5) Arranging for towing the vehicle if necessary to an approved Garage. After repairs and discharge note is received from the claimant, arranging payment.

(6) If it is a case of third party liability, and the case is taken up in the claims Tribunal, to get ourselves included as a defendant, and arrange for defence thro’ the Government pleader on the advice of Law Department in Government.

(7) Where the compensation awarded is heavy, to go up in appeal provided it is approved by the Law Department in Government.

(8) Compensation awarded by the Court have to be deposited without delay, unless it is decided to prefer an appeal.

(9) Where the accident is on account of the negligence of a third Party, action has to be taken under Sub-rogation rights to recover from the Third Party of his insurer, the compensation paid under the Policy, that is reimbursement of claim amounts paid.

(10) Settlement of claims by mutual negotiations and Compromise is more desirable than allowing the case to go to a court of law or the claims tribunal.

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(11) In respect of claims under own damage, estimates of repair charges received from approved garages have to be scrutinised with reference to damages before authorising repairs. After the repairs are authorised and completed, payments can be made to the garage on getting the bills and Payee’s receipt and the claim discharge forms signed by the insured persons, showing satisfaction of the repairs executed. Damaged parts replaced can be taken over by the Department and these have to be noted in the scrap parts register and auctioned periodically, the accounts realised being credited to the Motor Insurance Fund.

Subrogation of Rights As stated above, Motor Insurance Policies are subject to subrogation rights. If a vehicle insured in this Department is damaged on account of negligence of another vehicle and this is proved either by the Police report or in a Court of Law, the right of the owner of the vehicle against the negligent third Party passes to the Department. Therefore this Department after it pays the damage can claim it from the insurer of the other vehicle and if not paid can institute legal proceedings for recovery of the amount. This can be done only under approval of Government. Renewal of Insurance effected with this Department Motor Insurance Policies are annual contracts, subject to renewal year after year. The Department has to send renewal notice annually to the owner, well before the expiry date. The expiry date of Insurance is available in the Policy and renewal registers. No claim bonus, if any, due has to be taken into account in calling for the renewal premium. Several concessions have to be considered in calculating the renewal premium in addition to no-claim bonus. These are the following:-

(1) 20 percent reduction to vehicles owned by Government and Government Advance cases.

(2) Reduction in premium on account of I.B.P.C., insured bearing a portion of the claim that is for voluntary excess.

(3) Any other concession admissible as per tariff. ...13

-13- Transfer of Ownership If the insured replaces his vehicle by another, the no claim discount earned by the Insured remains valid even in respect of the new vehicle. But if the original insured sells his vehicle, the purchaser is not entitled to the No claim bonus earned by the Original Insured. That is why when the ownership is being transferred to his name, pro-rata, No Claim Bonus has to be recovered from him. Insurance of Vehicles in which Government has a Financial Interest. In the case of Motor Vehicles purchased out of vehicle advance sanctioned by Government to the Government Employee, it is required that the vehicles have to be insured in this Department either for Comprehensive risks if permissible as per rules, or at least for Third Party Liability plus Fire and Theft risks. Procedure for Insurance After a copy of the Government Order sanctioning the advance is received in the Motor Branch, the Government Employee has to be addressed requesting the party to insure the vehicle in this Department. Non-compliance should be intimated to Government. In the case of Gazetted Officers, the Accountant General has also to be intimated. The interest of the Governor of Karnataka has to be noted in the register maintained for this purpose. Principles of Motor Insurance Motor Insurance is of recent origin in our Country. Motor Vehicles Act 1939, and Chapter VIII dealing with compulsory Insurance of Motor Vehicles was brought into force form 1st July 1946. According to this Act, no Motor Vehicle can be used in a Public place unless there is in force in relation to that Vehicle a Policy of insurance issued by an authorised insurer.

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For the purpose of Insurance and for charging the premium all Motor Vehicles are classified as follows:-

(1) Private and Professional Cars. (2) Two Wheelers like Scooters, Motor Cycles, Mopeds, etc. (3) Commercial vehicles.

The classification is according to the purpose for which the vehicle is used.

Private and Professional cars as the name signifies is used for the benefit of

the Owner, either for Private work or for going to the Place where he works. The main condition to be satisfied is that it should not be used for hire or reward.

Two wheelers like Motor Cycles, Scooters, and other Power driven vehicles

of various varieties manufactured in our country form a separate class. They have to be insured for payment of Third Party liability. These two Wheelers are also responsible for a large number of accidents.

Commercial vehicles are those used for Commercial purposes. These

include the following:- (1) Vehicles used as taxi. (2) Auto rickshaws used for hire. (3) Public Conveyance Buses carrying persons as fare paying Passengers. (4) Factory Buses carrying their employees to and from the factory

premises. (5) School and Regimental Omni Buses. (6) Lorries. (7) Fire Brigade Vehicles. (8) Municipal Lorries used for carrying rubbish. (9) Water Carriers, Milk Vans, Trailers etc. (10) Various other miscellaneous vehicles run by Petrol, Diesel and

even Steam.

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Motor Insurance Contracts are annual contracts subject to renewal Year after year. The General Principles applicable to all General Insurance Policies also apply to Motor Insurance Contracts. These principles are indemnity, subrogation, Contribution and Proximate cause. The doctrine of Uberima fides or Utmost Degree of good faith has to be satisfied in Motor Insurance Contracts.

Indemnity is the payment of compensation for actual loss suffered.

A contract of Insurance is designed to protect the financial interest of the insured in the subject matter of Insurance. It follows therefore that an insured can recover a loss under a Policy if he has insurable interest. Every person who owns a Motor Vehicle has insurable interest to the extent of the value paid by him. Law requires that an insured can recover a loss only to the extent of his insurable interests. This is principle of Indemnity. Indemnity literally means security or protection against loss or damage. Insurance contracts promise “to make good the loss or damage”. The object of this principle is to place the insured after a loss in the same pecuniary position as far as possible as he occupied immediately before the loss. The effect of this principle is to prevent the insured from making a profit out of a damage.

Motor Insurance contracts as already stated are contracts of indemnity.

Methods of Indemnification

There are four methods of providing indemnity to the Insured:

(a) Cash Payment:- The most common method of indemnification is by means of cash payment to the insured. When the insurers are satisfied in regard to the cause and extent of loss, as ascertained from the claim form and other enquires and also in large losses, report from independent Surveyors, the loss is settled by cash payment.

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-16- Repair:- Instead of making a cash payment, the settlement of claims for loss or damage may be effected by repair. This is the practice followed for motor damage claims. The procedure is for the insured to submit a detailed estimate of the cost of repairs to the insurer who will arrange an inspection of the damaged vehicle to see that the repairs are necessary and the cost reasonable. Thereafter the insurer will authorise the repair of the vehicle. On receipt of the final bill of repairs, and a satisfaction note from the insured, the repairer is paid. Replacement:- The Insurer may directly arrange with a dealer to replace the property. Reinstatement:- This method would apply in respect of buildings or other property destroyed or damaged by Fire.

The right to select the method of indemnification is reserved to

the insurers. Subrogation:- Subrogation may be defined as the transfer of rights and

remedies of the insured to the insurer who has indemnified the Insured in respect of the loss. If the Insured has any right of action to recover the loss from any third party, who is primarily responsible for the loss, the insurer having paid the loss is entitled to avail himself of these rights to recover the loss from the third party. The effect is that the Insured does not receive more than the actual amount of his loss and any recovery effected from the third party goes to the benefit of the insurer to reduce the amount of the loss. If the Insured himself recovers the loss, from the third Party after having received the claim from the insurer, he holds that recovery as trustee for the benefit of the insurer to the extent that the latter is entitled to. As this is according to the principle of indemnity, Subrogation is a corollary of indemnity.

If a private car is damaged by the rash and negligent driving of a lorry,

the Car Owner’s right of recovery against the lorry owner is transferred to the Insurer who has indemnified the loss. The right of recovery arises only after payment of loss. Subrogation arises through (1) Torts-wrongful acts of third party (ii) Contracts.

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Contribution:- Contribution may be defined as the right of an insurer who has paid the loss under a Policy to recover a proportionate amount from other insurers who are liable for loss. The Insured may affect two or more insurances on the same subject matter. If in the event of a loss, he recovers under each of these Policies, the total amount recovered would be more than his actual loss and it would be against the principle of Indemnity and therefore he can recover proportionately. The Insurer who has paid the loss however has a right to a proportionate contribution from the other insurers. The application of the Principle of Contribution is subject to the following pre-requisites.

(a) The subject matter must be common to all the Policies. (b) The peril which causes the loss must be common to all the Policies. (c) The Interest covered under all the Policies must be the same. (d) The Policies must be in force at the time of loss. (e) The policies must be legally enforceable.

In Motor Policies, the condition provides for pro-rata contribution. As it

is related Indemnity, it is a corollary to indemnity.

Some Technical Terms

Cover Note:- A Cover Note is an unstamped document issued in advance

of the Policy and as a rule, granting the same insurance as that provided for by the Policy. A cover Note is ordinarily valid for a period of 30 days. If, however, the Policy cannot be issued within the period, it can be extended by another 30 days. The maximum period for which a Cover Note can be issued is two months.

Certificate of Insurance:- For purposes of Motor Vehicles Act, in addition

to Policy, a Certificate of insurance has also to be issued. The Police authorities do not accept a Policy of insurance as evidence of insurance. They can insist on a certificate of insurance.

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No Claim Discount:- A discount as a percentage of the net premium payable is allowed, if the Policy is being renewed continuously for a specified number of years without any claims having been reported to the insurers there under. The discount is calculated on the net renewal premium for such part of the insurance as is renewed in respect of each vehicle which has been insured for a period specified and in respect of which no claim has been made during such period. If the Policy is renewed after 90 days the no claim rebate becomes inoperative.

The discount follows the fortunes of the insured and not the Policy or the Vehicle. Details of the certificate of insurance As stated above, the only evidence acceptable to the Police authorities for the existence of a valid insurance as required by the Motor Vehicles Act is a Certificate of Insurance issued by the insurers, since these certificates are merely evidence of the existence of a Policy of insurance they are not required to be stamped. Any person driving Motor Vehicles in a public place has to produce the Certificate relating to the Vehicle he is driving, on being required by Police Officer in uniform authorised in this behalf by the State Government. The certificate of Insurance provides a standard form of document which sets out clearly the essential particulars of insurance and thus facilitates the work of the Police authorities in effectively enforcing the Compulsory insurance provisions of the Motor Vehicles Act. Discounts or Reductions in Premium

The tariff provides for the grant of various discounts. Apart from the No Claim discount already discussed, the following are a few of the other important discounts commonly allowed. Rebate for Voluntary Excess

A rebate is allowed, depending on the amount of the excess that the insured is agreeable to bear in respect of each and every claim for the loss of or damage to the Vehicle. This is also known as Insured’s bearing portion of claims (I.B.P.C.) The percentage of rebate allowed depends on the type of vehicles, viz. Private Cars, Commercial Vehicles or Motor Cycles.

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Concession for Vehicles laid up When a Vehicle is laid up for a sustained period, the Vehicle is susceptible to restricted risks only and hence only a restricted Cover is required during this period. A pro-rata refund for the period for which the Vehicle is laid-up may be made by the insurers. Discount for more than one vehicle insured. The property of One Owner are Joint owners and insured with One Company. This rebate is granted at the option of the Department. Discount for Membership of Automobile Association This discount as per rates provided in the tariff is allowed only for Private Cars and Motor Cycles. Short Period Rates The rates of Premium quoted in Tariff are for annual Policies. But there are cases wherein Policies may have to be issued or renewals effected for periods shorter than 12 months. In cases of this type the premium has to be charged at short period rates indicated in the tariff. When Policies have to be cancelled, the premium to be retained is at Short period rates and the balance to be refunded. The short period rates are obviously higher than the Pro-rata Premium.

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-20- Limit of Indemnity under the Motor Vehicles Act Section 95, Sub-section (2) provides that the insurance should cover the liability incurred in respect of any one accident up to the following limits:-

(I) For goods carrying vehicles – Rs.50,000/- including the liabilities if any, arising under the Workmen’s Compensation Act 1923, in respect of the death of, or bodily injury to employees, not exceeding Six in number, being carried in the Vehicle. The Liability if any, under Workmen’s Compensation Act 1923, in respect of the death of, or bodily injury to the Driver of the Vehicle is in addition to the above amount.

(II) For Vehicles in which Passengers are carried for Hire or reward, or by reason of or in pursuance of a Contract of employment.

(a) In respect of persons other than Passengers carried for hire or reward, Rs.50,000/- in all. (b) In respect of Passengers-

(i) Where the Vehicle is registered to carry not more than 30 Passengers.

(ii) Where the Vehicle is registered to carry more than 30 but not more than 60 Passengers, Rs.75,000/- in all.

(iii) Where the Vehicle is registered to carry more than 60 Passengers, Rs.1,00,000/- in all.

(iv) Subject to the Overall limits specified above, the per Passenger limits are Rs.10,000 and Rs.5,000 for Passengers in Motor Taxi and in a public service vehicle respectively.

(III) For any other class of vehicle the limit of Cover prescribed is the actual liability incurred.

(IV) In respect of damage to property of a third Party, the limit prescribed is Rs.2,000 in all, irrespective of the class of vehicle.

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Policies Issued under Motor Insurance In respect of Private Cars, Motor Cycles, other two Wheeler and Commercial Vehicles, there are three types of Policies which are issued. These are:-

(a) Comprehensive Policies. (b) Third Party Liability Policies and (c) Act only Liability Policies.

Comprehensive Policy – Private Cars

Section I- Risks covered: Loss or damage to the Motor care and /or its accessories whilst thereon, anywhere in India, caused by the following perils:

(i) Accidental external means. (ii) Fire. (iii) External explosion. (iv) Self ignition. (v) Lightning. (vi) Frost. (vii) Burglary, housebreaking or theft. (viii) Malicious Act. The Cover is also operative whilst the Car is in

transit by road, rail, inland Water way lift or elevator. The following are excluded

(1) Consequential Loss. (2) Depreciation. (3) Wear and Tear. (4) Mechanical or Electrical Break down or failures and breakages.

Damage to tyres:

Damage to tyres is ordinarily not payable. If however insured Car is also damaged at the same time, the damage to tyres is payable but the amount is limited to 50 percent of the Cash of replacement.

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-22- Protection of Damaged Vehicle. If the Motor Car is disabled as a result of damage covered by the Policy, insurer bear a reasonable cost of protecting the Car and removing it to the nearest repairers and cost of redelivery to the Insured subject to a limit of Rs.150 in respect of any one accident. Authorising Repairs. In respect of this section under Comprehensive Policy, the Insured may authorise repairs to the Car provided that (a) estimated cost does not exceed Rs.300 and (b) an estimate of such cost is furnished to insurers.

(a) Third Party Liability

Section II- The insurers indemnify the insured against all sums which may become legally liable to pay to third parties by reason of death or bodily injuries caused to third parties, caused by or arising out of the use of the Motor Car. The legal costs and expenses incurred by such third parties are reimbursed in addition, provided that, they were incurred with the insurers written consent. The insurers are not liable to pay for the death or bodily injury arising out of and in the course of employment of the deceased or the injured person by the insured. In spite of this the insurers are liable for such deaths or injuries to the extent necessary to meet the requirements of Section 95 of the Motor Vehicles Act. The damage to the property is not paid if it belonged to the insured or was held in trust by him.

(b) Driver’s liability

Any Driver who is driving the Motor Car on the insured’s order with his permission is indemnified provided that such Driver –

(i) is not indemnified under any other Policy. (ii) Shall, as though he were the insured, observe, fulfil and be subject to the terms, exceptions and conditions of the Policy in so far as they can apply.

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-23- Indemnity to insured while driving any other vehicle The Insured is indemnified for liabilities incurred by him while driving any other Motor Car not belonging to him and not hired to him, provided there is no insurance Policy covering the risk. The liabilities arising while the Motor Car is being used even in Private places in also covered. Section III- Medical Expenses:- If any bodily injury is caused to the insured or to any occupant of the Car by violent accidental external and visible means, as the direct result of an accident to the Car, and if the insured incurs medical expenses, for the treatment of such injury, the medical expenses reasonably incurred are reimbursed to him subject to a limit of Rs.350 in respect of any one accident. General exceptions applicable to all the three sections

(1) Claim arising outside the geographical area specified in the schedule of the Policy.

(2) Any Claim arising out of contractual liability. (3) Any claim arising whilst the vehicle is being used otherwise than in

accordance with the “Limitations to use” mentioned in the Policy. (4) Driven by any person other than a “Driver” having a valid license – it is

enough if he held and is not disqualified for holding or obtaining such a license.

(5) Any claim arising after any variation in or termination of the Insured’s interest, in the vehicle.

(6) Any claim from or attributed to ionising radiation. (7) Any claim arising from or attributed to nuclear weapons material. (8) Any claim arising from flood, Typhoon, Hurricane, violence cruption,

earthquake or other conversions of nature. (9) Claims arising from War and similar risks. (10) Claim arising from riot, strikes and allied risks. (11) Any claim arising while the insured or any other person driving with the

knowledge and consent of the insured is under the influence of intoxicating liquor or drugs. This is not operative in respect of claims of death for bodily injury to third parties under Section II of Policy.

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(II) The Policy does not cover use for hire or reward or for racing, pace making, reliability trail, speed testing, Carriage of goods (other than samples) in connection with any trade or business for any purpose in connection with Motor trade.

Third Party Cover:- If it is desired to grant only Third Party Cover, the

insurers delete Sections I and III of the Policy by an endorsement.

Commercial Vehicles Comprehensive Policy

Section I- (1) Loss of or damage to the vehicle and/ or its accessories whilst thereon is not covered against the risk of frost.

(2) Loss of or damage to accessories whilst on the Vehicle is covered against the risks of burglary house-breaking or theft only if the vehicle is stolen at the same time.

(3) Loss of or damage to the Vehicle and-or its accessories whilst thereon is not covered if the loss or damage is due to overloading or strain or by explosion of the boiler of the Motor vehicle.

(4) The Insured can authorise repairs without getting the confirmation from the insurers provided the estimated cost of repair does not exceed Rs.150; and

(5) There is compulsory Insured’s bearing portion of claims (I.B.P.C.) of Rs.500 for each and every claim in the case of taxis, Goods carrying vehicles used for general cartage, and public passenger service vehicles.

Section II- (1) The indemnity is available not only while the vehicle is being used but also during the loading and/ or unloading operations.

(2) There is no liability in respect of the death of or bodily injury to any person being carried in the vehicle. However insurers are liable to the extent necessary to meet the requirements of Section 95 of the Motor Vehicles Act in relation to liability under Workmen’s Compensation Act. Therefore the exclusion does not apply to the following an Employee of the Insured who is working within the meaning of Workmen’s Compensation Act 1923 amended to-date.

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(3) There is no Cover in respect of Third Party property damage if the property is belonging to or is held in trust by or is in the custody or control of the Insured or of any member of the Insured’s household or is being conveyed by the Insured Vehicle.

(4) The “driving other vehicles extension” is not available.

Section III - There is no Cover for medical expenses, but instead this

Section provides cover while the Insured Vehicle is towing one disabled mechanically propelled vehicle. Motor Cycles Comprehensive Policy

The following are the points of difference between this Policy and Private Car comprehensive Policy.

Section I – (i) These are the same as the differences. (i) and (ii) above under Section I of the Commercial vehicles Comprehensive Policy. (ii) The cost of removal etc., in the event of an accident is limited to Rs.50. (iii) The amount up to which the insured may authorise repairs at Rs.50 and (iv) The Policies covering Motor Scooters are made subject to an excess of Rs.50 for each and every claim.

Section II – (i) The liability in respect of death of or bodily injury to any

person being conveyed in or on the Motor Cycle is excluded. Such liability is however, covered if the said person is being conveyed by reason of or in pursuance of a contract of employment.

(ii) “Driving other Cycles” extension is not available for Policies issued in respect of Auto Cycles or mechanically assisted pedal Cycles.

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-26- Section III – (i) The Section relating to the Indemnity in respect of

medical expenses is absent.

(ii) It has to be noted that a Side-Car attached to the insured Motor Cycle is covered as if it was also the Motor Cycle. As s matter of fact, a reduction in premium is given if the insured Motor Cycle is never driven without a side Car attached. Extra Benefits:-- The tariff form of the Policy can be extended to Cover various extra benefits, by recovering prescribed extra premium and issuing the relevant endorsement, vide Part II Premium Benefits in the booklet, Karnataka Government Insurance (Motor Branch) Rules, 1958 amended to-date.

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