Motor insurance gives protection to the vehicle owner against (i) damages to his/her vehicle and (ii) pays for any Third Party Liability determined as per law against the owner of the vehicle. Third Party Insurance is a statutory requirement. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by or arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable offence under the terms of Motor Vehicles Act.
Types of Motor Insurance Policies
Broadly there are two types of insurances policies that offer motor insurance cover:
1. Liability Only Policy (Statutory requirement)
2. Package Policy (Liability Only Policy + Damage to owner’s Vehicle usually called O.D Cover)
What is covered and what is excluded under the motor policy
Loss/damage due to specified perils like, fire, theft, riot, strike, earthquake, terrorism etc is covered under the policy. Any loss under the motor policy is excluded if the driver does not have a valid Driving License, is under the influence of intoxicating liquor/drugs, vehicle is being used for unlawful purposes, electrical/mechanical breakdown.