Motor Insurance: Importance and Benefits Explained

Motor Insurance is legally mandated to protect the financial burden of vehicle owners. The insurance safeguards the financial losses or damages to the vehicle due to natural calamities, theft, riots, fire, etc. It is an agreement between a vehicle owner (policyholder) and the insurance company, wherein they discuss the terms and conditions of the insurance and its premiums.The policyholder is required to pay a premium amount for a specific period. They can get their insured amount on maturation or in the event of any vehicle damage or death. Let's look at the various modalities, exclusions, advantages, and the importance of Motor Vehicle Insurance.Also read: What is Motor Insurance?

Having a vehicle is no longer a luxury investment. It has become a necessity in life. Today, most of the population has a vehicle of some type. Life is uncertain, and there are high chances of road accidents even though you drive safely. Any unfortunate event can damage your vehicle and can also cause bodily injuries or even lead to death.Therefore, every motor owner must secure their finances against these damages and heavy accidents. If you purchase insurance but do not file any claim within a year, you will be eligible for a No Claim Bonus (NCB) . Think of it as a discount on your premiums for the upcoming year.Also read: Who needs motor insurance?

Provide coverage against natural calamities:

Motor Insurance policies cover the damage to your vehicle due to natural disasters. They offer reimbursement for the repair expenses and finances for your loss. Natural disasters like earthquakes, floods, fires, or lighting may cause damage to your motor.Repairing those damages will be expensive. Repairing those damages will be expensive. Without insurance, you will have to pay from your pocket. It is when you will realise the importance of Motor Vehicle Insurance. Therefore, having insurance for your vehicle and finding compensation for your losses is important.

Coverage against any unforeseen man-made events:

The risk of theft, accidents, or damage due to riots or terrorist attacks, etc., is always possible. Thus, you should be careful with your vehicle, and one of the wise decisions to protect your finances against these damages will be to take the right Motor Insurance.Choose the one that provides better coverage and enough compensation for damages. It will never leave you in financial distress. The optimum protection and coverage will act like a financial cushion to you in times of crisis.

Covers third-party liability:

If your vehicle causes any damage to a third party in the form of bodily damage, property damage, and death events, you will be responsible for compensating those liabilities. The liability of such damages may be huge. Paying out of your pocket may seem impossible at such a difficult time. However, having vehicle insurance will save you in such a situation. It will cover your liabilities and help you in your time of need.The Motor Vehicles Act states the importance of Motor Insurance in India and makes third-party liability insurance plans mandatory for people. This type of insurance reduces the liability burden by covering all the damages caused to third parties. Furthermore, if a third party files a case against you, insurance will cover you from any legal repercussions.

Cover in case of personal accidents or demise:

Personal accidents or demise can cause a huge financial burden on the family if there's no Motor Insurance. All expenses would need to be covered by family members. And if you are the family's sole earner, it becomes far more difficult for the family to arrange expenses for your treatment after an accident. And in case of death due to an accident, your family will end up alone, dealing with financial worries and liabilities.Thus, it is good to realise the importance of a Motor Insurance policy beforehand. Insurance will help your family manage liabilities and will provide financial backup. The pay-out-plan option will enable the family to live independently by dealing appropriately with daily expenses. Make sure to check the terms and conditions of your insurance company before buying.

Several additional coverages:

Motor Insurance plans come with comprehensive coverage options. They offer additional covers that help you sustain the huge expenses. Motor Insurance add-ons have various benefits with just a little extra cost in premiums.Some popular additional coverages are:

• 24x7 Roadside Assistance Cover
• NCB (No claim bonus) Retention Cover
• Personal belongings Cover
• Electrical and mechanical damages
• Zero Depreciation Cover
• Engine Protection Cover
• Passenger Protection Cover

Cashless facility:

Insurance companies offer the advantage of cashless payments in their network garages. It means that if you want service for your damaged car at any of their network garages, you won't have to pay for it. The insurance company will settle your expenses as per the policy agreement. This convenience of cashless repairing and servicing acts like a financial cushion amid difficult times.

24/7 roadside assistance:

Various insurance companies offer this advantage to policyholders. In any emergency on the road, you can get the required services through your insurance company. They will settle the payment without bothering you. You simply need to inform them about the damage caused to your vehicle. Their services involve sudden breakdowns, towing, jump starts, flat tires, dead batteries, key lockouts, etc. Discuss these terms and services with your insurer while buying a Motor Insurance policy.

Wide coverage and less financial impact:

When your vehicle gets damaged, stress increases. And in case of any severe accidents, you face significant financial losses. You would have to deal with your anxiety, injuries, and many other things during those times.With the right Motor Insurance plan, you can avoid stress about your expenses and ensure your family's financial protection.The insurance company will cover all your financial losses. And in case of your death from a vehicle accident or damage, it will provide your family with enough money to continue living peacefully. If you have add-on insurance plans, you will get multiple offerings that cover your basic hospitalisation expenses and other liabilities.

Motor Insurance is significantly essential for a vehicle owner in India. It provides financial coverage to the vehicle against any damages. According to the Motor Vehicles Act, Motor Insurance is mandatory for all vehicles that operate in public spaces. Moreover, insurance should include at least third-party liability insurance coverage.According to the Act, every driver should have an appropriate license. Therefore, every vehicle owner must carry their driver's license and insurance documents on the road. Driving without insurance documents and a license will lead to remedial legal actions.

Now that you understand the importance of Motor Insurance, let's uncover its types. Essentially, there are two types: third-party Motor Insurance and comprehensive Motor Insurance. Investing solely in third-party insurance is best if you want adequate financial and legal support. It's important to note that all vehicle owners must have a minimum of a Third-Party Liability Motor Insurance policy paired with their basic insurance plans.

Both these policies provide coverage against the damage of a vehicle caused by any unforeseen events. The insurance company compensates against these damages and financially protects you and your family. Let's briefly look at these two types of Motor Insurance policies and their coverages:

• Third-party Motor Insurance policy This Motor Insurance Policy (a 'Liability only' policy) offers coverage against liabilities due to third-party damage. When your vehicle causes any damage to another party in the form of bodily injury, property damage, etc., you become responsible for compensating the other party. The insurance company covers this liability to help you in times of urgency. Therefore, the importance of Motor Insurance in India with at least a third-party policy increases due to rising cases of on-road accidents.
• Comprehensive Motor Insurance This policy (aka package policy) is one with comprehensive coverage options. It includes any personal damages, several add-ons, and third-party damages. With 360-degree protection of your vehicle, this insurance has a slightly more expensive premium than third-party policies. So, if you want end-to-end protection and have enough funds to pay the premiums, you can opt for it, though it is not mandatory by law.

Motor Insurance has certain limitations in terms of coverage. For example, an insurance company does not cover the vehicle if used for specific purposes.Following are the exclusions to the usage of Motor Insurance .

• Driving without a valid license and insurance documents
• Violating the guidelines provided by the vehicle manufacturer
• Loss or damage occurred after the insurance has expired
• Driving after the consumption of alcohol or drugs
• Damages due to war, nuclear radiation, or foreign invasion
• Loss due to deliberate accidents or any collision
• For the purpose not specified under the policy

Vehicle/Motor Insurance is mandatory under the Motor Vehicle Act of 1988. Every vehicle owner must have this insurance before they ply their vehicle on the road. Motor Vehicle Insurance has several advantages. Such insurance protects against natural damages, third-party liabilities, and in the event of your death or any man-made calamities.Moreover, Vehicle Insurance is mandatory for second-hand vehicle owners. Every vehicle, whether second-hand or new, requires Vehicle Insurance to be legally driven on roads.

You can use the Motor Fleet Insurance Policy if you want an insurance policy covering more than one vehicle. This policy offers comprehensive coverage against damages to all your vehicles. However, it has some limitations regarding conditions for the coverage. The following are some of the exclusions in the motor fleet insurance policy:

• Regular wear and tear of the tires
• Driving without a license and insurance documents
• Damage occurring due to alcohol or drug consumption
• Wear and tear in mechanical parts or oil leakage of engines
• Damage during transportation of vehicle from one place to another

If you want to know about all the exclusions in a motor fleet insurance policy, click here.