Inclusions and Exclusions of a Motor Insurance Policy

Not every loss or damage is covered under a motor insurance policy. While your insurer may pay for incidents such as accidents, theft, or third-party liabilities, some situations may not be covered at all. Hence, knowing the inclusions and exclusions in a motor insurance policy can help you avoid surprises at the time of a claim and make better insurance decisions.Read more

What are the Types of Motor Insurance Policies?

Motor insurance in India includes two major types of coverage. These include:

1. Third-Party Insurance Cover

   Third-party insurance is a mandatory insurance cover that every car owner must have in India. It covers the policyholder's legal liabilities for causing a third party's injury, death or damages to the third party's property or vehicle by the insured car during an accident. It also provides personal accident cover to the car's owner-driver.

   You must know that this type of insurance cover does not provide financial assistance against any damages caused to your own car.

2. Comprehensive Insurance Cover

   Comprehensive insurance policy covers car owners against the theft, loss or damages sustained by the insured car due to unexpected situations, such as fire, accidents, calamities, etc. It also covers any third-party property damages, injury and death that may arise during a road accident. Moreover, you will also get personal accident cover for the owner-driver of the car under this policy.

   Thus, comprehensive insurance covers both a car owner's liability towards the insured vehicle and third-parties.

What is Covered Under Motor Insurance?

Here are some popular inclusions under a comprehensive motor insurance policy:

1. Third-Party Bodily Injuries

   Vehicle insurance covers bodily injuries of a third party person if caused by the insured car in a road accident. It also provides compensation to the third party in case the accident leads to disability.

2. Third-Party Death

   The death of a third party caused by a road accident involving the insured car is covered under the insurance policy. The compensation amount is ascertained by the Motor Accidents Claims Tribunal.

3. Third-Party Property Damages

   Third-party property damages, including the third party's vehicle, are covered under the motor policy. Car insurance plans in India cover third-party property damages of up to Rs 7.5 lakh.

4. Natural Calamities

   Comprehensive insurance provides coverage in case any natural calamity, such as landslides, lightning, cyclones, or floods, etc., causes damages to the insured car.

5. Manmade Disasters

   Damages caused to the insured car due to manmade disasters, such as riots, vandalism, strikes, etc. are also covered in a comprehensive insurance policy.

6. Vehicle Theft

   Vehicle theft is a common inclusion of motor insurance cover. In case an insured vehicle is stolen, the resultant loss will be covered under the comprehensive insurance policy. The insurance company will compensate an amount equal to the stolen car's IDV or current monetary value in case it is not recovered.

7. Personal Accident Cover

   A personal accident cover provides financial assistance in the event of the owner-driver's death, bodily injuries, impairment or mutilation from an accident involving the insured car. This cover of Rs 15 lakh is mandatorily granted as part of the comprehensive policy as well as the third-party liability-only policy.

8. Fire

   A car insurance policy also covers damages sustained by the insured car due to fire, explosion, and self-ignition.

9. Accidents

   In case the insured car gets damaged in a road accident, the resultant loss or damages will be covered by the insurance company under the motor policy.

What is Not Covered Under Motor Insurance?

The following are some scenarios for which a motor insurance policy does not offer coverage. Take a look:

1. Damages Under Intoxication

   Drunk driving is a popular exclusion of motor insurance. If the insured vehicle is damaged in a road accident while the driver had consumed alcohol or any other intoxicating substance, then the insurance company will not pay for the incurred damages.

2. Driving Without a Valid Driving Licence

   If a car sustains damages while it was being driven without a valid driving licence, then the insurance company will not provide financial cover against such damages.

3. Claim on a Lapsed Policy

   A motor policy is a contract that has to be renewed yearly, except for new cars. When the policy is not renewed before the due date, it expires and can also lapse. In the case of a lapsed/expired insurance policy, the car owner cannot claim any financial aid from the insurance company.

4. Damages Outside India

   Any accidental damage or loss sustained by the insured car outside India will not be covered by the insurance company. Thus, if a vehicle owner is driving outside India, he/she will lose his/her right to claim damage repair expenses under the policy.

5. Wear and Tear

   An insurance policy is unlikely to cover wear and tear that has occurred to the vehicle over time. Insurance companies only cover unexpected losses and not something caused by gradual deterioration or everyday use.

6. Mechanical or Electrical Damage

   Mechanical or electrical breakdown of a vehicle is also not covered under a standard motor policy.

7. Consequential Losses

   Similarly, consequential losses (such as damages due to towing of the car in a road accident), which are a result of a certain action by the car owner or third party, also come under exclusions of motor insurance.

8. Tyres and Tubes

   Damage to the tyres and tubes of the insured car is only covered when the vehicle has met with an accident.

Are Labour Charges Covered Under Motor Insurance?

Yes, labour charges for repairing accident-related damages to your car are covered under a valid motor insurance policy. However, the final claim amount depends on:

• Policy terms
• Deductibles
• Depreciation
• Nature of repairs

*Note: Always check your claim terms before starting repairs.

Add-on Covers Available in Motor Insurance

The coverage of a motor insurance policy can be extended by purchasing certain add-on covers. However, buying an add-on will also increase the premium of the insurance policy. Some of these common car insurance add-ons include:

• Zero depreciation cover
• Return to invoice cover
• Engine protection cover
• Tyre protection cover
• Passenger cover
• Consumables cover

Why Should You Understand Motor Policy Exclusions?

Most claim issues happen when policyholders ignore motor insurance exclusions. Hence, it is important to carefully review them so you can:

• Set realistic claim expectations
• Avoid rejection due to policy violations
• Choose suitable add-ons
• Understand your own repair costs

Wrapping Up!

While motor insurance offers the essential financial protection against many unforeseen situations, its coverage is always subject to policy terms & conditions. By carefully going through these details before purchasing or renewing your policy, you can ensure that you have the right level of protection as per your requirements.