Professional Documents
Culture Documents
INTRODUCTION
TO
MOTOR INSURANCE
Requirement of Policies
Q. What are the requirement under M.V. Act of a policy
of insurance issued for a motor vehicle? Mention the limits
of liabilities required to be compulsorily covered.
Ans. The policy of motor insurance is required to be issued by
an 'authorised insurer. Section 147 of the Motor Vehicles Act,
1988 requires that the policy of insurance must provide cover:
i) against any liability which may be incurred by the
insured in respect of death of or bodily injury to any person,
including owner of the goods or his authorised representative
carried in the carriage, or
ii) damage to any property of a third party; or
iii) against death or bodily injury to any passenger of a
public service vehicle, caused by or arising out of the use of
the vehicle in a public place.
The policy, however, shall not be required to cover:
i) any contractual liability; or
ii) any liability in respect of death arising out of and
in the course of employment of the employee of the
Insured, or in respect of bodily injury sustained by such
employee arising of out of and in the course of his
employment. The policy must however cover liability arising
under the Workmen's Compensation Act, 1923 in respect of
death or bodily injury to any such employee
(a) engaged in driving the vehicle, or
(b) engaged as conductor or ticket examiner in a public service
(13)
vehicle, or
(c) if it is a goods carriage, being carried in the vehicle.
Limits of Liability
Under Section- II- 1 (i) - As per Motor Vehicles Act, 1988
(The Act provides for unlimited liability in respect of third
party death or bodily injury).
Under Section- II- 1 (ii)Rs. 6,000/- in respect of any one claim
or series of claims arising out of one event.
For third party property damage the limit provided is that
required by the Act . The tariff however provides for increased
limits upto unlimited liability for T.P. property damage, on
2. Legal costs and expenses - The insurer will also pay all
legal costs and expenses incurred with its written consent.
CHAPTER 7
DOCUMENTS
OF
MOTOR INSURANCE
Q. Discuss the importance of various documents used for
Motor Insurance.
Ans. Various documents used for Motor Insurance with their
use and importance are enumerated as under:
(i) Proposal Form -The Proposal Form is compulsory in
Motor Insurance. The information/particulars given by the
insured in the Proposal Form, form the basis for the insurance
contract. The Declaration Clause in the form converts the
common law duty into a contractual duty of utmost good faith.
The effect of this is that the answers given in the proposal
become warranties.
(ii) Cover Note - Cover Note is issued pending issuance of
policy. It is unstamped document The cover note is to be
issued in the prescribed form and it is valid for a period of 15
days and can be extended upto two months.
(iii) Certificate of Insurance -The Certificate of Insurance is
an evidence that a motor vehicle is insured against third party
liability as required by the Motor Vehicles Act. The
Certificate is to be issued as per the form prescribed in the
Act.
(iv) The Policy - The Policy is a stamped document
evidencing the contract of insurance. It includes the terms and
conditions of the insurance cover.
(v) Various Endorsements- Endorsements are attached to
the policy to incorporate changes in the terms of the Policy. It
may be attached at the time of issuing the policy to provide
additional benefits and cover or to impose restrictions. The
wordings of the Endorsements are provided in the Tariff.
(81)
(vi) Renewal Notice - The Renewal Notice is reminder to the
insured about the expiry of the policy and calling for the
renewal for a further period of one year.
(vii)Renewal Receipt – While renewing the insurance some
insurers issue the Renewal Receipt in place of the Policy. It is
worded to the effect that, in consideration of receipt of the
renewal premium, the Policy is renewed for a further period of
12 months.
CHAPTER 8
MOTOR UNDERWRITING
Q. Discuss the primary factors in underwriting motor
business.
Ans. On the one hand where Motor business forms major part
of insurers insurance business, on the other hand it is
unprofitable also. In view of this it is necessary to adopt a
sound underwriting policy in motor business. The primary
factors in underwriting motor business may be grouped under
the following headings:
(i) The vehicle
(ii) The use of the vehicle
(iii) The geographical area of operation
(iv) The Proposer of the vehicle and
(v) The claims experience.