In law and economics, insurance is a form of risk
management primarily used to hedge against the risk of a
contingent, uncertain loss. Insurance is defined as the
equitable transfer of the risk of a loss, from one entity to
another, in exchange for payment. An insurer is a company
selling the insurance; an insured, or policyholder, is the
person or entity buying the insurance policy. The insurance
rate is a factor used to determine the amount to be
charged for a certain amount of insurance coverage, called
the premium. Risk management, the practice
of appraising and controlling risk, has evolved as a discrete
field of study and practice.
TYPES OF INSURANCE
• Auto insurance
• Home insurance
• Health insurance
• Accident, sickness and unemployment
What is it:
Auto insurance protects you against
financial loss if you have an accident. It is
a contract between you and the insurance
company. You agree to pay the premium
and the insurance company agrees to pay
your losses as defined in your policy.
• Property Damage Liability
• Bodily Injury Liability
• Medical Payments or Personal Injury
Auto Insurance in India deals with the insurance covers for the loss or
damage caused to the automobile or its parts due to natural and man-
made calamities. It provides accident cover for individual owners of the
vehicle while driving and also for passengers and third party legal
liability. There are certain general insurance companies who also offer
online insurance service for the vehicle.
Auto Insurance in India is a compulsory requirement for all new vehicles
used whether for commercial or personal use. The insurance companies
have tie-ups with leading automobile manufacturers. They offer their
customers instant auto quotes. Auto premium is determined by a number
of factors and the amount of premium increases with the rise in the price
of the vehicle. The claims of the Auto Insurance in India can be
accidental, theft claims or third party claims. Certain documents are
required for claiming Auto Insurance in India, like duly signed claim form,
RC copy of the vehicle, Driving license copy, FIR copy, Original estimate
and policy copy.
• Private Car Insurance
• Two Wheeler Insurance
• Commercial Vehicle Insurance
GLOBALLY MOTOR INSURANCE IS THE BIGGEST AND
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 NONLIFE 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
SOME OF THE FACTORS RESPONSIBLE FOR THIS GROWTH
• 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
• INTRODUCTION OF CHEAP AUTO LOANS.
• IN 1951, THERE WERE 3,00,000 MOTOR VEHICLES
• THE ROAD NETWORK AT THAT TIME WAS OF 4,00,000
• 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.
• 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.
• 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.
• 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.
• 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
• THE MOTOR VEHICLE ACT HAS THEREFORE MADE
THE THIRD PARTY INSURANCE COMPULSORY
• IT IS A PUNISHABLE OFFENCE TO USE THE VEHICLE
• NECESSARY PROVISIONS FOR ITS ENFORCEMENT
ARE THEREFORE ARE AVAILABLE WITH THE
FAILURE TO COMPLY THE PROVISIONS OF SEC.146
OF THE MV ACT IS PUNISHABLE BY ANIMPRISONMENT
OF THREE MONTHS OR A PENALTY OF RS. 1000 OR
BOTH (SEC.196 OF THE MV ACT).
• 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
• 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.
• 1939: MOTOR VEHICLES ACT (MVA) PASSED.
• COMPULSORY 3RD PARTY INSURANCE INTRODUCED ON 1ST
• PRACTICE IN INDIA FOLLOWS THAT OF U.K. MARKET.
• MVA 1988, REPLACED THE MVA OF 1939. EFFECTIVE FROM
JULY 1ST 1989.
• THE MANDATORY PART OF THE MOTOR INSURANCE IS
‘THIRD PARTY INSURANCE’
• THIS INSURANCE WAS FORMED ON THE BASIS OF MOTOR
• 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
• 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
• ALL COSTS AND EXPENSES INCURRED WITH ITS WRITTEN CONSENT.
• 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
• OBSERVES & FULFILL THE TERMS EXCEPTIONS AND CONDITIONS OF
• 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
• 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:
MOUNTING INTO/ DISMOUNTING FROM THE VEHICLE
WHILST TRAVELING IN IT AS A CO-DRIVER
CAUSED BY VIOLENT, ACCIDENTAL, EXTERNAL AND
WHICH IS INDEPENDENT OF ANY OTHER CAUSE
SHALL WITHIN SIX CALENDAR MONTHS OF SUCH INJURY
Nature Of Injury Compensation
1 Death 100%
2 Loss of two limbs or sight of both 100%
eyes or one limb & sight of one eye
3 Loss of one limb or sight of one eye 50%
4 Permanent total disablement 100%
• 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
• THE TOTAL LIABILITY OF THE INSURER SHAL NOT IN THE
AGGREGATE EXCEED THE SUM OF RS. 2 LACK DURING:
• ANY ONE PERIOD OF INSURANCE.
• THIS COVER IS SUBJECT TO:
• THE OWNER-DRIVER IS THE REGISTERED OWNER OF THE
• 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.
• NO COMPENSATION SHALL BE PAYABLE IN RESPECT OF
DEATH OR BODILY INJURY DIRECTLY OR INDIRECTLY
WHOLLY OR IN PART ARISING OR RESULTING FROM OR
• 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
• SUCH COMPENSATION SHALL BE PAYABLE DIRECTLY TO
THE INSURED OR TO THEIR LEGAL REPRESENTATIVES
BONUS AND DISCOUNTS
A no claim bonus is given to the policy holder if no claims are made; this
bonus can go up to 50% in some cases provided the policy is renewed
within 90 days of expiry of the previous policy. This no claim bonus is
transferable as it can be used even if one is changing the auto insurance
company. In addition to the premium which one pays to get the vehicle
insured an extra charge might be levied on a four wheeler owner under
special circumstances. These are as follows :-
•Extra premium is paid on electrical and electronic equipments which don't
come as part of the factory fitting but are bought separately or imported from
•Vehicles fitted with LPG or CNG kit have to be insured by payment of extra
•If the geographical area needs to be extended to other South East Asian
countries like Bangladesh, Nepal, Bhutan, Pakistan, Sri Lanka and
•Vehicles fitted with a fiber glass fuel tank
Discounts are also available on premium payments under special
• When the car is a Vintage one
•When No claim bonus has not been utilized
•If the owner is a member of a recognized automobile Association
•If the vehicle is fitted with ant-theft devices
•If the vehicle which is specially modified for the usage of physically
•If the vehicle is used with in insurer's premises and sites
• IMMEDIATE NOTICE OF LOSS IN WRITING TO BE
• FOR ACCIDENTAL LOSSES, ESTIMATE OF REPAIRS
AND CLAIM FORM TO BE
• FOR LOSS DUE TO THEFT OF VEHICLE, A COPY OF
F.I.R. ALONG WITH A CLAIM
FORM TO BE GIVEN
• TO APPOINT A SURVEYOR FOR ASSESSMENT OF
LOSS/ AN INVESTIGATOR TO INVESTIGATE THE
• ORIGINAL R/C, D/L TO BE PRODUCED
• REPAIRS CAN BE STARTED IN CASE OF PARTIAL
LOSS, AFTER INITIAL VERIFICATION BY SURVEYOR’S
• CLAIMS ARE SUBJECT TO COMPULSORY EXCESSES
• IN CASE OF TOTAL LOSS, LIMIT OF LIABILITY WILL
• ANY DISPUTE REGARDING ‘QUANTUM’ OF CLAIM
AMOUNT HAS TO BE REFERRED TO AN ARBITRATOR
• TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER IS
12 MONTHS FROM DATE OF SUCH DISCLAIMER.
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 ..
Property damage liability:This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.Bodily Injury Liability: This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savingsMedical Payments or Personal Injury Protection (PIP): This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. In some cases, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Car Insurance/PRIVATE INSURANCEThis is the fastest growing segment in the insurance sector as car insurance is mandatory while buying a new car. Major car manufacturers are tying up with leading insurance companies to provide quick insurance to its customers. Car insurance covers loss or damage by accident, fire, lightning, riots, earth quake, hurricane, terrorist attacks, explosion, theft, third party’s claims and damages (like liability for third party injury or death, third party property and liability to paid driver). On payment of appropriate additional premium it covers loss or damage to electrical or electronic accessories and other significant items.Two Wheelers InsuranceTwo wheeler insurance is another type of popular auto insurance in India. It is governed by the Indian Motor Tariff. This insurance provides protection against natural and man made calamities like: fire, rockslide, landslide, storm, hurricane, flood, earthquake, burglary, theft, riots or any damage caused to the vehicle in transit by road, air, inland waterway or rail. Two wheeler insurance provides mandatory personal accident cover of Rs. 1 lakh to the insurer. This accident cover can also be opted for passengers. It also protects against legal liabilities arising due to third party’s injury/death or damage caused to its property. Commercial Vehicle InsuranceThis type of insurance covers all those vehicles which are not used for personal purpose. Trucks, buses, heavy commercial vehicles, light commercial vehicles, multi utility vehicles, agricultural vehicles, ambulances etc are covered under this insurance. The premium is calculated on the basis of the make and model of the commercial vehicle, place of registration, year of manufacture, current showroom price and whether the insurer is individual or corporate. Insurance Companies in collaboration with the automobile manufacturing companies chalk out different kind of easy and less complicated plans for safe and easy insurance policy. HSBC India, New India Assurance, United India Insurance, Bajaj Allianz, ICICI Lombard etc are some of the prominent companies in India which provide commercial vehicle insurance.