Need of Auto Insurance:

Internationally, traffic accidents kill more than one million people each year. Auto insurance is a must not only to cover risk to yourself but also to cover financial liability that may arise from an accident.

Young people, between the ages of 14 and 45 the most productive group in society are most likely to be killed or hurt. The studies says that, 85% of all road accident deaths occur in developing countries. In India, nearly 300,000 road accidents occur every year a world record. The death toll stood at 50,000 for the period. According to experts 70% of the accidents occurred because of poor roads, bad driving and lack of traffic sense. In fact, India accounts for 10% of road accident fatalities worldwide.

What is Auto Insurance:

Auto/Vehicle/Motor insurance is a must not only to cover risks towards yourself and your own vehicle but also to cover the financial liability that may arise from an accident in which an outside party is injured or property damaged.

It could be a great burden if all these costs had to be borne by you. But if your vehicle is insured, your financial liability is taken over by your insurance company.

In western countries, the average motor premium is about 6%, whereas it is 2 to 2.5% percent in India.

There are various insurance schemes for automobile vehicles, but the premium rates, terms and conditions of the scheme makes the difference in holding an Auto insurance plan. Hence, you may not find a huge amount of difference between what various insurers quote to you except few guidelines and give you some extras.

The comprehensive policy of Auto insurance, is an optional cover which takes care of loss or damage to the vehicle and its accessories, protection and removal costs, vowing costs, Third party damage, liabilities towards employees and personal accident benefits for the owner, passengers and employees. The mentioned losses or liabilities can be separately covered in conjunction with the liabilities covered under the scheme you have selected, by paying additional premium.

Factors for Premium Calculations:

• Type of vehicle: There is no doubt that heavier vehicles are more exposed to accidents since to resultant damages they incur are more. Similarly, vehicles with higher carrying capacity expose more passengers to risk. Therefore, heavier vehicles attract higher Premium rate for private vehicle. Whereas in commercial vehicles, the criteria are gross weight and passenger carrying capacity respectively.

• Age of Vehicle: The declared value of the vehicle is given benefits of description so that the sum assured decreases. However, the Premium rate percentage/tariff rate increases with age. The net impact on the premium you pay is usually a reduction in the out flow with time.

• Value of the Vehicle: The Premium rate is applied on the ex-showroom price (Selling price at retailer) of the vehicle to arrive at the premium payable. In case, if it is an old vehicle, the current ex-showroom price of the vehicle and depreciation rates applicable determine the sum insured.

One should bear in mind that, in Auto insurance, the basis for payment of claims is the market value of the vehicle at the place and time of loss. This market value may be understood as, the price that the vehicle would fetch in the second hand market.

Also note that in motor insurance, the limit of liability is per accident and not for the entire period insurance. In cases of partial loss or losses which may be made good by repairs, there is no limit to the number of accidents in any period of insurance.

d). Use of vehicle: Premium of scheme varies with use of vehicle. Private cars are lesser exposed than taxies, as the later is used extensively for maximum revenue. Taxies, therefore attract a higher rate of Premium. Similarly, the goods carrying vehicles which are used as private carriers and transport only their owners goods attract a lower premium, than those used a public carriers for transporting goods for hire.

Loss or Damage to the Vehicle Insured:

The insurer will indemnify the insured against loss or damage to the vehicle insured hereunder and/or its accessories whilst there on:

i). by fire explosion self ignition or lightening

ii). by burglary, housebreaking or theft

iii). by riot and strike

iv). by earthquake (fire and shock damage)

v). by floods, hurricane strum tempest inundation , cyclone, hailstorm frost

vi). by accidental external means

vii). by malicious act

viii). by terrorist activity

ix). While in transit by road, rail, inland water way

x). by land slide, Rock slide.

WHEN INSURERE IS NOT LIABLE:

Generally, the insurer is not liable to make any payment in respect of the following:

1). Consequential loss depreciation, wear and tear, mechanical or electrical breakdown failures or breakages.

2). Damage to tyres and tubes unless the vehicles is damaged.

3). Loss of or damage to accessories by burglary house breaking or theft unless the vehicle is stolen at the some time.

4). Any accidental loss or damage suffered while insured or any person driving the vehicle with the knowledge and absent of the insured is under the influence of intoxicating liquor or drugs.

5). Any accidental loss damage and liability incurred outside the geographical area.

6). Any claim arising out of any commercial liability.

The comprehensive insurance of your vehicle i.e., two wheeler, four wheeler or heavy vehicle is necessary. Do not postpone the decision of buying an Auto insurance. Take a comprehensive cover and rest assured. Insure your vehicle and drive safely.