TYPES OF MOTOR INSURANCE POLICIES :
The All India Motor Tariff governs motor insurance business in India. According to the Tariff all classes of vehicles can use two types of policy forms. They are form A and form B. Form A which is known as Act Policy is a compulsory requirement of the motor vehicle act. Use without such insurance is a penal offence. Form B which is also known as Comprehensive Policy is an optional cover.
1. Liability only policy – This covers third party liability and/or death and property damage. Compulsory personal accident covers for the owner in respect of owner driven vehicles is also included.
2. Package policy – This covers loss or damage to the vehicle insured in addition to 1 above.
3. Comprehensive policy- Apart from the above-mentioned coverage, it is permissible to cover private cars against the risk of fine and/or theft and third party/ theft risks.
Every owner of motor vehicle has to take out a policy covering third party risks but insurance against other two risks is optional. When insurance policy covers third party risks, third party who has suffered any damages, can sue the Insurance Company even though he was not a party to the contract of insurance.
Insurance policies for the vehicles subject to the purchase agreements, lease agreements and hypothecation are to be issued in the joint names of the hirer and owner, lease and lessor, owner and pledge respectively. In case of policy renewal a notice of one month in advance before the date of expiry is issued by the insurers. The notice gives the details of premium payable for renewal.