The Motor Vehicles Act, 1988, makes it mandatory for all vehicles on Indian roads to have a valid motor insurance policy. A minimum of third-party liability insurance is necessary to avoid being penalised by law. Considering that motor insurance is such an important purchase, it still does not get the attention that is garnered by cosmetic upgrades and upholstery treatments for a vehicle. The truth is that there are several hundreds of two-wheelers plying on the roads today without a valid license.
The repercussions of not having a valid license are many, the most prominent one among these being the fact that the vehicle-owner will be exposed to a range of risks and unprecedented financial losses.
Importance Of Motor Insurance
Motor insurance protects the vehicle owner from the following risks:
Own damages - A part of the comprehensive motor insurance coverage offers protection for the insured vehicle from the following incidents:
- Theft and burglary
- Accidental damages
- Losses incurred while in transit via rail, road, air, inland waterways, and lift
- Damages suffered from natural calamities such as earthquakes, typhoons, lightning, cyclones, landslides, etc.
- Losses due to man-made disasters such as strikes, terrorist activities, malicious acts, etc.
- Third-party liabilities - All motor insurance policies have a third-party liability cover that is an intrinsic part of the plan. This protects the vehicle owner from liability claims raised by a third party, following an accident. Liabilities for third-party injuries, death, and property damage are covered under this insurance. Most motor insurance companies also offer this coverage as a standalone plan at a reduced cost. Although the coverage under such a plan will be limited, it will be useful for vehicle owners who are keen on procuring insurance at minimal costs.
- Accidental injuries, disabilities, or death of the owner - A comprehensive motor insurance policy protects the vehicle’s owner-driver from accidental injuries or death. Permanent partial/total disabilities are also offered coverage under the plan. Additionally, the policyholder can choose to protect the named passengers in the vehicle through a personal accident add-on cover.
The coverage offered by a comprehensive motor insurance plan can be amplified by purchasing appropriate add-on covers from the same insurance company.
Motor Insurance Providers In India
The motor insurance companies in India and their incurred claim ratios are listed in the table below:
|Insurer||Incurred Claim Ratio (for the year 2015-16)|
|Liberty Motor Insurance||85.32%|
For a specific duration, the incurred claim ratio (ICR) is essentially the ratio of the value of total claims paid out by the company to the total amount of premium that it collects, represented as a percentage. When buying motor insurance, it is advisable to select an insurer with a high incurred claim ratio, as it indicates that the company is successfully paying out the claims raised by policyholders.
So for instance, if a company settles a total claim amount of Rs.78 crore in a year and the total premiums collected is Rs.100 crore, the incurred claim ratio is calculated as shown below:
ICR = (78/100) * 100 = 78%
If the ICR is above 100%, it indicates that the claims paid out are more than the premiums collected, i.e., the company is running at a loss.
It should be noted that ICR is not the only point to note when buying motor insurance from a company. There are several other factors as well; so consider all aspects of the insurance company and the product before making a purchase.
- Bajaj Allianz Motor Insurance
- Bharti Axa Motor Insurance
- Chola MS Motor Insurance
- Future Generali Motor Insurance
- ICICI Lombard Motor Insurance
- IFFCO Tokio Motor Insurance
- Liberty Motor Insurance
- Magma HDI Motor Insurance
- National Motor Insurance
- New India Motor Insurance
- Oriental Motor Insurance
- Reliance Motor Insurance
- Royal Sundaram Motor Insurance
- SBI Motor Insurance
- Shriram Motor Insurance
- Tata Aig Motor Insurance
- United India Motor Insurance
- Universal Sompo Motor Insurance