MOTOR INSURANCE :
There has been a sudden rise in the motor accidents in the last few years. Much of these are attributable to increase in the number of vehicles. Every vehicle before being driven on roads has to be compulsorily insured. The motor insurance policy represents a combined coverage of the vehicles including accessories, loss or damage to his property or life and the third party coverage. Persons driving vehicles may cause losses and injuries to other persons. Every individual who owns a motor vehicle is also exposed to certain other risks. These include damage to his vehicle due to accidents, theft, fire, collision and natural disasters and also injuries to himself. In 1939, motor vehicle act came into force in India and compulsory insurance was introduced by motor vehicle act to protect the pedestrians and other third parties.
Definition
Motor insurance policy is a contract between the insured and the insurer in which the insurer promises to indemnify the financial liability in event of loss to the insured.
Motor Vehicles Act in 1939 was passed to mainly safeguard the interests of pedestrians. According to the Act, a vehicle cannot be used in a public place without insuring the third part liability.
According to Section 24 of Motor Vehicles Act, “No person shall use or allow any other person to use a motor vehicle in a public place, unless the vehicle is covered by a policy of Insurance.”
Classification of Motor Vehicles
As per the Motor Vehicles Act for the purpose of insurance the vehicles are classified into three broad categories such as.
Private cars
(a) Private Cars – vehicles used only for social, domestic and pleasure purposes
(b) Private vehicles – Two wheeled
1. Motorcycle/Scooters
2. Auto cycles
3. Mechanically assisted pedal cycles
Commercial vehicles
(1) Goods carrying vehicles
(2) Passengers carrying vehicles
(3) Miscellaneous & Special types of vehicles
The risks under motor insurance are of two types:
(1) Legal liability due to bodily injury, death or damage caused to the property of others.
(2) Loss or damage to one’s own vehicle\ injury to or death of self and other occupants of the vehicle.