Insurance policy is essential for all
motor vehicle owners since it protects them from legal liabilities that might
arise during their vehicle operation. This insurance policy also known as the
Act Only policy covers the act liability of the insured vehicle that forms a compulsory
requirement of the Motor Insurance Act. No vehicle can be used without this insurance
cover and use of the vehicle without this insurance cover is a penal offence.
Risk Covered
- This insurance
policy is must as it protects the motor vehicle owners from the risks of Fire,
Explosion, Self-Ignition and Lightning.
- Burglary,
Housebreaking and Theft.
- Riot, Strike, Malicious
and Terrorism Damage.
- Earthquake.
- Flood,
Typhoon, Hurricane, Storm, Tempest, Inundation, Cyclone, Hailstorm.
- Accidental
External Means.
- Transit by road, rail, inland waterway,
lift, elevator or air.
For
commercial vehicles, the risk of Frost Damage is also covered. From the above
coverage, for all classes of vehicles, strike, malicious and terrorism damage,
the risks of riot, earthquake, flood and storm can be opted out of with a consequent
discount in premium.
In addition
to these, section I covers the protection, removal costs and authorization of
repairs. Section II covers the liabilities towards third parties, i.e. liabilities
of bodily injuries and property damage.
For
Commercial Vehicles, however, an additional Section III covers third party liabilities
that the insured vehicle or the one being towed may incur as a result of an accident.
This is provided the towed vehicle is not towed for reward/remuneration. Further,
the insurance company is also not liable for damages to the towed vehicle or any
property being conveyed thereby.
Compensation
Offered
Insurance policy will
provide compensation for the motor vehicle owners from these liabilities.
- Unlimited liability towards bodily injury
to any third party.
- Unlimited liability towards
bodily injury to passengers of the vehicle.
- Liability
towards third party property damage.
Liability
towards employees of the owner of the insured vehicle while traveling or using
it, against bodily injury to the extent required by the Workmen's Compensation
Act. If a motor vehicle is disabled as a result of loss or damage due to the perils
mentioned above, the insurance company bears the reasonable cost of protection
and removal to the nearest repairer and the cost of redelivery to the owner/insured
subject to a maximum limit, in respect of any one accident.
Reinsurance
The very fundamental principle
of spreading of the risk is actually practised by the insurance companies by reinsuring
the risks that they have insured.
