Motor Insurance
What is Motor Insurance?
Motor insurance, also mandated by the Motor Vehicles Act, 1988, is a financial contract between you (the policyholder) and an insurance company (the insurer). It protects you from financial liability arising from accidents involving your motor vehicle. There are two main types of motor insurance plans available in India:
- Third-Party Liability (TPL) Insurance: This is the mandatory minimum coverage required by law for all vehicles operating on Indian roads. It covers your legal liability for bodily injury, death, or property damage caused to a third party in an accident involving your vehicle.
- Comprehensive Motor Insurance: This plan offers broader coverage compared to TPL insurance. It provides protection for your vehicle against loss or damage arising from accidents, theft, fire, natural calamities, and other perils as specified in the policy wording.
Why Do You Need Motor Insurance?
Motor insurance is essential for several reasons:
- Legal Requirement: As mentioned earlier, Third-Party Liability (TPL) insurance is mandatory as per the Motor Vehicles Act. Operating a vehicle without valid motor insurance can result in penalties and legal action.
- Financial Protection: Accidents can cause significant financial losses. Motor insurance safeguards you from the burden of covering third-party liabilities and repairs to your own vehicle in case of an accident.
- Peace of Mind: Knowing you are financially protected in the event of an accident provides peace of mind, allowing you to focus on resolving the situation.
- Additional Benefits: Many comprehensive motor insurance plans offer additional benefits like 24/7 roadside assistance, personal accident cover for the owner-driver, and coverage for accessories installed on your vehicle (subject to policy terms and conditions).
Is IDV (Insured Declared Value) important in Motor Insurance?
Yes, IDV (Insured Declared Value) is a crucial factor in motor insurance. It represents the market value of your vehicle at the time of insurance and is the basis for claim settlement in case of theft or total damage. Here's why IDV is important:
- Claim Amount: The insurance company will settle your claim based on the IDV mentioned in your policy, minus depreciation as per industry standards. A higher IDV ensures you receive a closer reflection of your vehicle's current market value in the event of a claim.
- Premium Amount: The IDV also impacts your motor insurance premium. Generally, a higher IDV translates to a higher premium, as the insurer assumes a greater risk. However, it ensures you receive a more substantial payout in case of a claim.
