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Motor Insurance: Common inclusions and exclusions to look for in your car insurance policy

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It is a well-known fact that you have to get your car insured before it can be driven on the road. So, even if you hold a valid licence, driving a car out of the showroom right after purchasing it without an insurance policy is not allowed. Any insurance policy may be bought from an insurance company directly, through an intermediary or an insurance aggregator platform, who have a tie-up with an insurance company. No matter where you buy from, here are a few things you should be aware of.

Inclusions in a Car Insurance Policy

As per the IRDAI regulations, there are two types of car insurance policies in India, the first one being Third-party Cover (TP), which is a mandatory cover. The cover basically aims at protecting the insured from the different claims arising from a third party, but only when the insured’s vehicle is at fault. This cover even pays for any financial liability apart from taking care of the legal repercussions, arising due to the accident. However, it only covers the insured s legal liability for the damages caused to a third party which may include bodily injury, death and damage to third party property. One must learn that the cover does not pay for repair of the damage caused to own car.

The second one is the Comprehensive Policy that covers your car against theft loss as well as the repair cost against the damage (OD) caused to the vehicle during an accident. ‘Own-damages Cover’ is generally the non-compulsory part of the comprehensive policy that pays for the damages or theft of the car. The policy even provides coverage against damages caused by fire, explosion, self-ignition, lightning, riots, strikes or act of terrorism as well as natural calamities.

Exclusions in a Car Insurance Policy

While making a claim, as a policyholder you must know that you may not be entitled to the entire claim amount unless you have taking a zero-deprecation car cover. Under a regular car insurance cover, there are a few restrictions and specific exclusions. This list includes the following situations in which loss of or damage to your car is not covered.

1. The motor policy is a yearly contract and has to be renewed without a break. In case any damage happens post the expiry of the policy, the loss is not covered.

2. If the vehicle was being driven by a person without a valid driving licence.

3. If the vehicle was being driven by a person under the influence of alcohol or drugs or any other intoxicating substance.

4. Any accidental loss or damage and/or liability caused sustained or incurred outside the geographical area mentioned in policy. i.e. accidents which happen on the soil of Indian territory will be covered only. There is an add-on available which covers your vehicle against any accident outside Indian territory Sri Lanka, Bhutan, Myanmar, Pakistan & Nepal as well.

5. A standard motor policy does not cover any damage to the car due to war, terror attacks, invasion, foreign enemy action, civil war, mutiny, rebellion, hostilities, radiation or nuclear material/weapons.

6. All those losses incurred due to a certain action resulting by the policyholder or a third-party (whether intentional or by accident) and are not an outcome of an uncertain event may not be covered in a car insurance policy. To understand it matter, let s take example of engine damage caused due to water ingression (water seeping inside the engine area) during monsoon season. This is one of the most common consequential losses as the loss does not happens because of flooding or the rains, but because someone cranked up the car in a water-logged area. This is considered as a deliberate act committed in an emergency situation. Any such loss won’t be covered by the insurer.

(By Tarun Mathur, Chief Business Officer-General Insurance,