What Are Vehicle Insurance Coverage Types and Exclusions? [2022]

Vehicle Insurance: Vehicle damage insurance is a form of insurance that covers the financial risk associated with vehicle damage. It is also referred to as auto-motive/auto-motive insurance or motor insurance. Policies related to four-wheelers, three-wheelers, and two-wheelers are covered by these policies.

What is Vehicle Insurance Policy?

The accident, third-party damage, traffic collision, and collision with other objects damage cover is provided to vehicle owners in order to protect them against financial losses caused by accidents, third-party damage, traffic collisions, and collisions with other objects.

Vehicle insurance, in addition to car insurance, bike insurance, and commercial vehicle insurance, covers damage to vehicles due to weather conditions or natural disasters.

Commercial vehicles include auto rickshaws, ambulances, taxis/cabs, agricultural vehicles, and multi-utility vehicles. They also include heavy vehicles like trucks, buses, etc. that are not for personal purposes.

All insurance policies seek to spread the risk and associated cost among a number of people. These individuals are exposed to risk and must pay premiums to get insurance when required. The risks and premiums are pooled and invested to generate more wealth for insurance providers.

When few claimants seek insurance from the accumulated premium, they pay out the insurance money, reinvesting their premium payments, as well as their reinvestments in the insurer. The same occurs for car owners and other vehicle drivers.

Car insurance, bike insurance, and the like are all provided by insurers. In addition to distributing risk and costs evenly, this also pays out the insurance money to those who demand it from the same amount.

Coverage Provision

Vehicle insurance policies provide three types of coverage, based on the amount of insurance chosen by the vehicle owner, and the conditions laid by the insurance provider. The coverage provided also depends on the specific terms of a vehicle insurance policy.

There are three main coverages available from vehicle insurance policies:

Property Insurance-

  • If there is any missing part of the vehicle due to theft, or any loss of personal belongings from the vehicle, Property Insurance – This covers the damage that happened to the vehicle in an accident or collision if there is any missing part of the vehicle due to theft or loss of personal belongings.

Liability Insurance

  • Liability Insurance is paid out to individuals or businesses in case of damage caused by third parties in a collision or in an intentional act.

Medical Insurance

  • The costs of treatments for an accident or collision of the owner/driver if s/he meets with an accident or collision. An insurance policy takes care of the medical expenses for injuries and rehabilitation. Sometimes, the lost wages or funeral expenses may also be claimed.

The insurance providers set the premium based on the coverage and other factors. The premium is determined by the size of the insurance coverage, the location (the higher the premiums in urban areas, the higher the premium), and vehicle type/conditions (age of the vehicle, model, engine number, type of fuel, and so on).

What Are Exclusions & Clauses to Vehicle Insurance?

A vehicle insurance policy has certain terms and conditions that apply in certain situations. For example, certain circumstances are not covered by the policy such as:

  • You cannot be covered under the cover for underage drivers or if you do not have a driver’s license.
  • You are not eligible for insurance if you are involved in an accident because of alcohol or drug intoxication and meet that objective.
  • Damage that occurred while fighting a war/a nuclear attack
  • An automobile’s damage that is caused by age, wear and tear, or mechanical failure or breakdown.
  • An unpaid reason not listed in the vehicle insurance policy mentioned as ‘exclusion’ or ‘not covered in the policy, or with a certain clause to it, is not covered.

You might not be able to receive the insurance amount if there is a clause to any condition that would prevent your claim. In addition, if you do not meet with the terms required.

Vehicle Insurance Policies are Different Types

A particular vehicle insurance policy may cover up for accidental damage but not theft, for example. In the same way, the policies for car insurance and bike insurance may vary. The various types of vehicle insurance policies are:

1. Third-Party Insurance

Third-party vehicle insurance policies are costly because they don’t cover accidental injuries or damage caused by the driver or owner. In other words, this type of insurance protects you from any damage or injury caused by a third party. The premium of a third-party vehicle insurance policy usually is lower than others.

2. Own Damage Insurance

A vehicle or parts of it may be stolen, natural causes such as fire, weather conditions, etc. Also, man-made problems such as vandalisms, riots, and the like can result in loss. The owner damage policy covers these damages as well as the costs of repairing/loss of belongings in case of accidents.

3. Comprehensive Damage Insurance

The financial cover for both third party liabilities as well as own damage is included in this policy, It is a comprehensive policy that provides in-depth protection against a variety of damage and end-to-end coverage, it also has a deductible and a higher premium.

4. Collision Insurance

A motor insurance policy that covers collision damage to a stationary object or another automobile on the road is of this type. Damage from potholes or rolling vehicles is covered, but not if the car is broken down or if it has been damaged by wear and tear. The own damage policy, on the other hand, normally covers these expenses.

5. Additional Policies

There are different types of motor vehicle cover, apart from the basic cover categories discussed above. Glass insurance (for rear/side windows and sunroofs) is one example. You can also take Gap or Depreciation Covers as add-on policies.

Engine protector cover is for the costs associated with repairing an engine that has been damaged by water ingression or oil/lubricant leakage. The cover is for consumable items like washers, AC gas, bearings, engine oil, fuel filter, and so on.

To depreciate (the gap between the actual cost and the current market value) the vehicle at the time of accident, there is a Gap Insurance Policy or Depreciation Cover.

Benefits

The listed benefits are the advantages these policies provide.

  • The driver has been stopped for traffic violations and his vehicle has been Burgled/Thefted.
  • Vehicle insurance covers repairs and damage due to accidents, collisions, and catastrophes.
  • The ability to prove and collect damages or enter a legal fight is a tedious process that third parties would otherwise be able to freely accomplish.
  • They also cover physiological damage, such as broken bones.
  • The policy allows for an up-front payment in the event of a driver’s death.

Wrapping it up:

No matter whether the benefits of the policy attract motor vehicle owners or not, automotive insurance is critical. The Indian government requires third-party insurance for all new automobiles in India. Whether they are for personal use or commercial purposes, light or heavy vehicles, the third-party policy is a must.

One must obtain an insurance policy for their automobiles and renew it when it expires, or else they will be subject to punishment. When buying a new motor vehicle, one can get insurance rates for their vehicle the very same day of purchase.

Insurance providers cooperate with manufacturers and you can get insurance quotes for your car the moment you make your selection. It is possible to buy a new motor vehicle only when it is insured.

FAQ

What will happen if I don't get vehicle insurance?

If you are not carrying a vehicle insurance policy, you may be fined or have your driving license suspended if you are caught by the traffic police and your driving license is revoked. Your vehicle registration may also be cancelled.

What documents are needed for a vehicle insurance claim?

You must have an insurance copy for the vehicle insurance claim. Other vehicle-related documents such as transfer papers or No Objection Certificates (NOC) may also be required. If the vehicle is stolen or involved in an accident, you will require an FIR copy.

Can my vehicle damage insurance claims be rejected?

Yes, if you don't have proper documents, if you don't fit under the T&Cs of the policy or if you make any modifications to your vehicle without informing the insurers and the RTO, your vehicle insurance claims may be rejected.

Leave a Comment