Why Is Motor Insurance Compulsory?

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Auto insurance protects the vehicle owner from damage to the vehicle and pays for all the vehicle owner’s obligations under the law. The vehicle owner is legally responsible for any personal injury or damage to life or property caused by the use of the insured vehicle.

Car insurance is compulsory to help the deceased’s family, who may die in a car accident. Compensation under the Motor Tribunals Act was introduced to ease the burden on families.

Car insurance is compulsory for all two- and four-wheeled vehicles such as cars, bikes, scooters, trucks that travel on India’s roads. Vehicle owners can take advantage of car insurance, even for trucks. Auto insurance is an essential document for all vehicle owners/drivers. Its main goal is to provide complete protection against physical damage or loss suffered by the insured vehicle due to natural disasters and human-made calamities. In addition to covering your damage, the auto insurance policy also covers obligations to third parties arising from accidental damage, injury, or a third party’s death. Thus, the policy ensures peace and safety on the roads.

Motor Insurance

Types of Motor Insurance

Motor insurance can be broadly divided into the following sections:

Car insurance

Car insurance protects against accidental loss or damage to your car or a third party. When choosing an car insurance policy, you should always compare the premium offered by different insurers to make sure it is the best deal. The premium will depend on the car’s make and value, the country in which it registered, and the year of manufacture.

Two Wheeler Insurance

Two-wheeled vehicle insurance protects bikes and scooters. It covers two-wheeled vehicles from any personal damage, as well as from any accidental damage to property or a third party. As with car insurance, the premium for a two-wheeled vehicle policy depends on the bike’s age, its make and model, year of registration, etc.

Commercial Vehicle Insurance

Commercial vehicle insurance helps all commercial vehicle drivers reduce their losses due to damage to their vehicle. Commercial vehicles are not used for personal purposes, such as transporting goods, trucks, etc.

How is the motor insurance premium calculated?

Many factors, such as IDV, deductibles, seating capacity, cubic capacity, previous insurance history, etc., influence the amount of car insurance premium you pay. For comprehensive insurance plans, premiums vary by the insurance company and depend on the coverage provided. Compare insurance premiums to get the best deal. The IRDA determines third-party premiums.

How long is the motor insurance policy valid?

In principle, an auto insurance policy is valid for one year and must be renewed before the due date to avoid insolvency. To make your insurance more comfortable, always pay your premium before the due date. If your policy has expired, your vehicle will be checked. If the comprehensive insurance policy is cancelled for more than 90 days, the No Claims Bonus will not be awarded.

What is a “No Claims Bonus” in Motor Insurance?

“No Claim Bonus” is the benefit accrued to the policyholder if he did not file a claim during the entire period of the policy. According to the current Indian regulations, it is between 20 and 50% of the total insurance plan. NCB does not apply to third party car insurance plans. If a claim is filed, the No Claim Bonus is lost for that policy period. NCB is granted to the policyholder and not to the insured vehicle, two-wheeler, or commercial vehicle. During the vehicle transfer, the insurance plan can be transferred to the new owner, but the NCB cannot be transferred. Responsibility for paying the balance remains with the new purchaser. The original/former vehicle owner can use NCB when purchasing a new vehicle.

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