In earlier times the persons who got injured or killed through the negligence of the motorists, could not get financial redress. They and their legal heirs were always deprived of their due as there wasn’t any policy or scheme of insurance present at that time. To mitigate the financial hardships caused to the persons, the motor vehicles act, 1939 as amended from time to time has made it compulsory for the motorists to insure against the risk of liability to third parties.
The rate of premium is standardized because the business is tariff. No insurer can charge lower rates than the tariff rates and no insurer can grant benefits exceeding than those prescribed for the tariff. Vehicles used for the purpose of insurance are private cars, commercial vehicles such as goods carrying vehicles, passenger vehicles tractors and motorcycles, scooters and auto cycles.
The three main policies under motor insurance are act liability policy, third party policy and comprehensive policy.
Act liability policy is designed to meet the requirements of motor vehicles act 1939, which provides for compulsory insurance in regard to liabilities arising out of the use of motor vehicles in a public place. This kind of policy is limited to bodily injury or death of the third parties.
Third party policies cover the liabilities of the third parties who suffered loss in connection with the damage of property and personal injury or death. Thus this policy indemnifies the insured against his legal liability in respect of damage to property of third parties over and above Rs. 2000.
The comprehensive policy covers the risks as damage to car parts or body, removal charges for repairs, third party liabilities and costs and expenses incurred with risk. However this policy can be extended to include fire, theft risks and legal liabilities.
The procedure which is required to insure vehicles is: identification of vehicles, risk information and declaration. Also a few processes like rating the motor insurance, issue of policy, terms of insurance and addition of benefits is also a part of getting the policies of motor insurance.
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