A PROJECT REPORT ON

“MOTOR INSURANCE IN INDIA”

SUBMITTED TO

UNIVERSITY OF MUMBAI
IN PARTIAL FULFILLMENT OF REQUIRMENT FOR
BACHELOR OF BANKING AND INSURANCE
SUBMITTED BY
RUSHIKESH K. PAWAR
ROLL NO: - 171524
UNDER THE GUIDANCE OF
PROF. TANISH HAZARI

VEDANTA FOUNDATION
VEDANTA COLLEGE OF MANAGEMENT &
INFORMATION TECHNOLOGY

1
 DECLARATION
I, MR. RUSHIKESH KALURAM PAWAR student of VEDANTA
COLLEGE OF MANAGEMENT & INFORMATION
TECHONOLOGY. Studying in Third Year of BACHELOR OF
BANKING AND INSURANCE (SEM VI) Roll No.171524 hereby
declare that I have completed the project on “MOTOR INSURANCE
IN INDIA” in the year 2017-2018.
The information submitted is true and original to the best of my
knowledge.

(RUSHIKESH K. PAWAR)

Date:
Place:

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 ACKNOWLEDGEMENT
Any work that is to be done is never completed without the help of
many people from many different quarters of life. It has been the same
for us as well. Many different people have helped me over the last 2
months in making this project a very successful venture. It would be
unbecoming of me not to thank them for all that they have done for me.
It is for them that I am writing these paragraphs.
My thanks first go to my project guide, Prof .TANISH HAZARI,
without whose thoughtful guidance and continuous prodding I would
not have been able to complete in time.
Last but not in the least, my thanks also go to my family and to
my friends, who would needle me, prod me, and help me to finish the
work. Without their enthusiastic support I would not have finished our
work on time.

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 VEDANTA college of Management
& information technology
Vitthalwadi Railway Station Road, Vithalwadi (W) Ulhasnagar 421003, Ph: 0251-2705865

CERTIFICATE

This is to certify that MR. RUSHIKESH K. PAWAR has

satisfactorily completed the project work on “MOTOR
INSURANCE IN INDIA” for partial fulfilment of the three
year full time course Bachelor of Banking and Insurance
(SEM-VI) Roll No.171524 of the University Of Mumbai for the
academic year 2017-18 under the guidance of Prof.
TANISH HAZARI.

Course coordinator

Internal Examiner

External Examiner Principal

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 Executive summary
In today’s modern world everything has become far more advanced and therefore insurance
plays a very vital role in every field and aspect of life. It is oriented towards the growth of
nation but also common man in general. Every transaction that takes place has an aspect of
banking and insurance involved in it.

All the industries that are existing today are all related to the banking and insurance activities.
Thus you can say that banking and insurance acts as a focal point for all activities. Why is
insurance necessary? The question contains the answer within itself. After all, life is fraught
with tensions and apprehensions regarding the future and what it holds for the individual.
Despite all the planning and preparation one might make, no one can accurately guarantee or
predict how or when death might result.

Motor insurance is one of the largest non-life insurance businesses in the world. This is because
it is statutorily mandated in most parts of the world. All motor vehicles are required to be
registered with the road transport authorities and insured for third party liability. There are
different classifications of vehicles and risks associated with each are different and the tariffs
are decided by the tariff advisory committee based on such a classification. The basic premise
is that motor vehicles could either cause injury or be a subject of damage and injury, and thus
require insurance.

The motor vehicle act of 1939 introduced compulsory insurance to take care of those who
might get injured in an accident. Motor insurance is more of a hedging mechanism rather than
a real investment avenue. It is essentially a mechanism that eliminates risks primarily by
transferring the risk from the insured to the insurer. The chances for a fatality or an injury to
occur to the average individual may not be particularly high but then no one can really afford
to completely disregard his or her future and what it holds.

Therefore, motor insurance is mandatory for all new vehicles be it for commercial or personal
use. Insurance companies are coming out with comprehensive policies for its customers.

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 INDEX

Chapter No. Name of the concept Page No.

Introduction 7

Executive summary 5

History Of Motor Insurance 9

I
Meaning 10

Need for Motor Insurance 11

Facilities provided by Motor Insurance 12

companies

II Principles Of Motor Insurance 13

III Types Of Motor Insurance 15

IV Types Of Motor Insurance Policies 19

V Introduction of First& Third Party Insurance 27

VI Information of General Insurance Companies 37

VII Bibliography 54

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 Chapter I

Introduction

Motor insurance is one of the largest non-life insurance businesses in the world.
All motor vehicles are required to be registered with the road transport authorities
and insured for third party liability. The basic premise is that motor vehicles could
either cause injury or be a subject of damage and injury and thus require
insurance. The motor vehicle act of 1939 introduced compulsory insurance to
take care of those who may get injured in an accident.

There has been a phenomenal rise in the motor accidents in the last 4-5 years.
Much of these are attributable to a sudden spurt in the number of vehicles. There
is a danger at every corner when it comes to Indian roads. Therefore, every
vehicle being driven on roads has to be compulsorily insured.

Legally, no motor vehicle is allowed to be driven on the road without valid

insurance. Hence, it is obligatory to get the vehicle insured.

Motor insurance policies cover any loss or damage caused to the vehicle or its
accessories due to the natural and manmade calamities like fire, explosion,
earthquake, flood, burglary, theft, riot, strike, malicious act etc. Motor insurance

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provides compulsory personal accident for individual owners of the vehicle while
driving. One can also opt for a personal accident cover for passengers and third
party legal liability. The third party legal liability protects against legal liability
arising due to accidental damages. It includes any permanent injury or death of a
person and damage caused to the property.

It represents a combined coverage of the vehicles including loss or damage to his

property or life and the third party coverage.

We read every day in the newspapers about accidents, bomb explosions taking
place. 30 out of 100 vehicles meet with accidents on the road. You step out of
your house and at every moment encounter number of risks that one cannot
imagine. What is worrying for all of us is not the operation of those risks but the
operations that are accidental, unforeseen and external.

There is hardly any industry i.e. manufacturing activity or service organization

that does not come within the scope of general insurance. Risk is inherent aspect
of human life whether individual or organization. Without risks there cannot be
progress. Occurrence of uncertainty cannot be predicted. Insurance is one certain
way of dealing with uncertainties because risk arises out of uncertainty and is a
pervasive force in the world.

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 History of Motor Insurance
Motor insurance had its beginnings in the United Kingdom in the early part of
this century. The first motor car was introduced into England in 1894. The first
motor policy was introduced in 1895 to cover third party liabilities. By 1899,
accidental damage to the car was added to the policy, thus introducing, the
comprehensive policy along the lines of the policy today.

In 1903, the car and general insurance corporation ltd was established mainly to
transact motor insurance, followed by other companies. After World War 1, there
was a considerable increase in the number of vehicles on the road as also in the
number of road accidents. Many injured persons in road accidents were unable to
recover damages because not all motorists were insured. This led to the
introduction of compulsory third party insurance through the passing of the road
traffic acts 1930 and 1934. The compulsory insurance provisions of these acts
have been consolidated by the road traffic acts 1960.

In India, the motor vehicles act was passed in 1939 introducing the law relating
to compulsory third party insurance. The practice of motor insurance in India
generally follows that of the U.k. market. The business is governed by a tariff,
whereas in U.k. the tariffs have been withdrawn. The motor vehicles act 1988 has
replaced the earlier 1939 act, and it became effective from 1st July 1989.

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 Meaning

Motor insurance is insurance where consumers can purchase for cars, trucks and
other vehicles. Its primary use is to provide protection against losses incurred as
a result of traffic and car accidents. An insurance company may declare a vehicle
totally destroyed (‘totalled’ or ‘write-off’) if it appears replacement would be
cheaper than repair. It is a comprehensive policy that not only covers you against
third party but also against accidents, damage, injury and much more.

Motor insurance is a legal requirement if you want to drive your car on public
roads. However, this doesn’t mean there aren’t still ways to save money, even if
you don’t belong to one of the traditionally safe group of drivers. The type of
insurance you take out, along with the type of driver you are, combining to
provide the overall likelihood that you will be able to get a cheap quote.

Compulsory motor insurance results in lowering the disposable income or it

results in a shift of income from lower group to the higher group. If it is not made
compulsory, there is a strong possibility that some may not buy these voluntarily.
This is because most of them think that the cost of accidents or losses will fall on
others or they underestimate the risk of loss. Also, compulsory insurance would
encourage people to drive safely which may reduce the cost of risk.

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 Need For Motor Insurance

In Indian conditions the vehicles are subject to many hazards like potholes, puddles, traffic
management system, jaywalkers, increasing number of accidents etc. Which accentuate the
need for automobile insurance. Some of these hazards are discussed below:-

 Footpaths: as footpaths are occupied by hawkers, pedestrians have a tough time dodging
between vehicles to reach the other end of the road. Large potholes during monsoons can
worsen the situation causing damage to the vehicle.
 Drunken driving: it is another major reason for increase in accidents, be it a car, two-
wheeler or even a truck.
 Reckless driving: majority of the youngsters drive recklessly caring little for the law,
causing serious accidents resulting in loss of life or limb.
 Fire: there is also a danger of fire or theft of vehicle therefore, motor insurance under such
unsafe conditions is a must not only to cover risks towards the owner and the vehicle but
also to cover the financial liability that may arise from an accident in which the other party
is injured or the cost of repairs that you may have to pay to other party in case of an accident.
 Theft: cases of stolen cars on the rise. Experts in stealing cars are well aware of the
loopholes that can be exploited and accordingly have been successful in manipulating with
the chases no. Of vehicles in order that they are not traced.

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Facilities Provided By Motor Insurance Companies

 Now buy online facility save on your motor insurance policy.

 Cashless claims at over 1500 preferred workshops pan India, 75% on
Account payment when cashless facility is not available.

 You can transfer your existing no claim bonus from any insurance provider ranging from
20% - 50%
 0% Emi option available on payment.
 Instant claims assistance and instant updates on your claim status on sms though our 24x7
call centres’ are available.
 Towing facility in an event of a breakdown/accident
 24/7 service by phone or online-even on holidays
 Huge savings with a comprehensive coverage for your vehicle
 Preferred workshops give you access to hassle free inspection, high servic standards and
cashless settlement of claims in event of an accident/breakdown
 Instant online policy renewal and issuance in just 4 easy steps that allows you to have a
peace of mind for another year.
 With 24x7 assistance, you can be sure we will be there for you whenever you need

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 Chapter II
Principles of Motor Insurance

1. Principle of utmost good faith: contracts of motor insurance are governed by the
doctrine of “utmost good faith.” It is the name of a legal doctrine which governs
insurance contracts. Under utmost good faith contracts if there is a violation it is
categorized as a material misrepresentation, a breach of a warranty, or concealment.
Some examples of material facts in motor insurance are the type of vehicle, the
geographical area of use, the physical condition of the driver, the driving history of the
driver etc.
2. Principle of contract of indemnity: the principle of indemnification is that the insured
should not profit from the policy. This does not preclude that the insured will suffer
some loss. In fact, many policies include a deductible which guarantees that the insured
will pay part of each loss himself. In the event of total loss of the vehicle, insurers pay
the market value of the vehicle at the time of loss or the sum insured whichever is less.
If vehicle is damaged, the cost of repairs is paid, but if old parts are replaced by new, a
suitable depreciation is charged on the cost of new parts.
3. Principle of insurable interest: insurable interest is one wherein loss would be
suffered from an adverse occurrence to the person insured. In motor insurance, the
vehicle is the property which is exposed to loss or damage. The insured also has a legal
liability towards third parties; he may suffer financial loss if he incurs that liability
caused by negligent use of the vehicle. Therefore, the insured has insurable interest
which entitles him to insure the vehicle against damage and liability risk. Motor policies
are extended to indemnify persons other than the insured in respect of third party
liability. Although owner insured has, no insurable interest in any such liability, he is
deemed as having acted as an agent in arranging the indemnity on behalf of other
persons who may drive the vehicle and incur liability. Otherwise, the injured third
parties will have no recourse to recover damages.

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4. Principle of subrogation: subrogation is the transfer of the rights from the insured to
the insurer when the loss or damage to the vehicle is caused by the negligence of another
person. Insurers exercise the right to cover the loss from the person responsible.
Subrogation operates only after the claim is paid.
5. Principle of contribution: it arises when there is double insurance, that is, when the
same vehicle is insured under two policies. The contribution condition is specially
worded in private car policies because the owner is also covered for the third party
liability while driving cars not belonging to him.
6. Proximate cause: in this, the loss or damage to the vehicle is indemnified only if it is
proximately caused by one of the insured perils. The doctrine also applies to third party
claims. The third party injury or property damage must be proximately caused by the
negligence of the insured for which he is held legally liable to pay damages.

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 Chapter III

Types of Motor Insurance

1. Two Wheeler Insurance: two wheeler insurance provides a kind of personal

accidental cover for owners, while driving the vehicle. The policy generally
provides protection from any loss or damage to the vehicle arising out of natural
calamity like fire, injury, burglary etc. The amount insured will depend on the
current showroom price multiplied by the depreciation rate fixed by the tariff
advisory committee at the time of commencement of policy period. Fast and easy
claim process by most insurance companies will ensure existing customer loyalty
and widen the customer base.
2. Car Insurance: Car insurance is the fastest growing segment in the auto insurance
category. This is because insuring car is mandatory for everyone buying a new car.
Car insurance includes loss or damage by accident, third party insurance, insurance
against burglary etc. The amount of premium will depend on the make and value of
the car, state where the car is registered, year of manufacture etc.
3. Commercial Vehicle Insurance: This covers all vehicles not used for personal
purpose. Trucks and heavy motor vehicles are covered under this insurance. This
insurance protects against damage caused due to accident, third party injury etc.
The premium amount depends on a number of factors like showroom price of the
vehicle at the commencement of the insurance period.

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Classification of Motor Vehicles
For the purpose of insurance motor vehicles are classified into the following categories:

1. Private Cars:
 Vehicles used solely for social, domestic and pleasure purposes.
 Cars of private type including station wagons, used for domestic, business and
professional purposes of the insured or used by the insured’s employees for such
purposes.
 Three wheeled cars (including cabin scooters used for private purposes)
2. Motor Cycles And Motor Scooters:
 Mechanically propelled two wheelers with or without side car.
 Mechanically propelled three wheelers with engine capacity.
3. Commercial Vehicles:
 Goods carrying vehicles.
 Passengers carrying vehicles e.g. motorized rickshaws, taxis, buses.
4. Miscellaneous and Special Types of Vehicles:

 Agricultural tractors and fire tenders and salvage corps.

 Hearses, ambulances, cranes, excavators
 Cinema film recording and publicity vans
 Garbage dumping trucks, road rollers etc.

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 Motor Vehicle Act

In India the motor vehicles act was first introduced in 1939 and later it became effective from
1st July 1989. It introduced the law relating to compulsory insurance of any motor vehicle that
plies in public places. Motor vehicles act states that every motor vehicle plying on the road has
to be insured, with at least liability only policy. There are two types of policy one covering the
act of liability, while other covers insurers all liability and damage caused to one’s vehicle.
Since a single policy cannot meet all the insurance objectives, one should have a portfolio of
policies covering all the needs.

Some of the provisions of the act provide the following matters:

 Rationalisation of certain definitions with addition of certain new definitions of new

types of vehicles.
 Stricter procedures for grant of driving licences and period of their validity
 Laying down of standards for the components and parts of motor vehicles.
 Provisions for issuing fitness certificates of vehicles also by the authorized testing
stations.
 Enabling provision for updating the system of registration marks.
 Maintenance of state registers for driving licenses and vehicle registration and
constitution of road safety councils.
 Standards for anti-pollution control devices.
 Seeking to provide for more deterrent punishment in cases of certain offences.
 Liberalized schemes for grant of all-India tourist permits as also national permits for
goods carriages.
The liabilities that require to be covered under this act are:

 Any liability arising in respect of death or bodily injury to any person including the
owner of the vehicle or his authorized person in the carriage.
 Any liability incurred in respect of damage to any property of a third party.
 Any liability incurred in respect of the death or bodily injury of any passenger of a
public service vehicle.
 Any liability arising under workmen’s compensation act, in respect of injury or death
of:
 A paid driver of the vehicle

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  Conductor or ticket examiner
 Worker’s carries in a goods vehicle.
 Any liability for bodily injury or death of passengers who are carried for reward or hire
by reason of a contract of employment.
 The policy should carry a ‘no fault’ liability limited to a sum of Rs 50,000/- in case of
death, Rs 25,000/- in case of permanent disability and Rs 6,000/- in case of damage to
property.

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 Chapter IV

Types of Motor Insurance Policies

Legally, no motor vehicle is allowed to be driven on the road without valid insurance. The all
India motor tariff governs motor insurance business in India. According to the tariff, all classes
of vehicle use the following types of motor insurance policies as issued under car and two-
wheeler insurance.

Car insurance:

Suitability: one should possess a valid “liability policy” to use a motor vehicle in a public
place, as it is made compulsory by the provisions of motor vehicles act 1988. In case a vehicle
is purchased under hire purchase agreement, the financiers insist upon a package

Policy to take care of their interest as collateral security.

Salient features: insurance companies issue liability for “act risks” and package policy for
comprehensive risks under the motor vehicles insurance.

Liability policy: liability policy covers risks required to be covered under the motor vehicles
act. It is mandatory that every car owner be covered against act risks under section 146 of motor
vehicles act 1988. The scope of cover is to pay compensation for death of or bodily injuries to
third parties and damage to the property of third parties. While the insured is treated as the first
party and the insurance company second party, all others would be third parties.

This policy provides personal accident cover of Rs2,00,000/- to owner driver. While the
compensation for the personal injuries to third parties is unlimited, property damage is limited
to Rs 7, 50,000/-.

Package Policy: This policy covers all the risks of liability policy as well as the loss of or
damage to insured’s vehicle, also the perils covered are:

 Damage to vehicle by accidental external means, fire, lightning, explosion, self ignition,
burglary
 Riot and strike, malicious acts and terrorist acts
 Earthquake
 Flood, inundation, cyclone etc

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  Landslide/ rockslide
Package policy can be restricted to loss or damage due to fire or theft or both. In case of liability
policy + fire, the premium is only 25% of own damage premium + liability premium. In case
of liability only policy + theft, the premium is only 30% of own damage premium + liability
premium and in case of liability only policy + fire and theft, the premium is 50% of own
damage premium + liability premium.

No Claim Discount: for every claim free year, the insured is rewarded with discounts in
premium up to an extent of 55%. In case of a claim in any year, bonus earned till that year is
wiped out.

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Two Wheeler Insurance:

Suitability: all two wheeler owners should avail the policy a or the “act policy” as it is made
compulsory by the provisions of motor vehicles act 1988. In case a vehicle is purchased under
hire purchase agreement, the financiers insist upon a comprehensive policy to take care of their
collateral security.

Salient Features: insurance companies issue policy a or “act policy” and policy b or the
comprehensive policy under the motor vehicles insurance.

Policy A (“Act Policy”): policy a covers risk required to be covered under the motor vehicles
act. It is mandatory that every two wheeler owner be covered against act risks under section
146 of motor vehicles act 1988. The scope of cover is to pay compensation for death of or
bodily injuries to third parties and damage to the property of third parties. While the insured is
treated as the first party and the insurance company as second party, all others would be third
parties. As per requirements of the motor vehicles act, while compensation for personal injuries
to third parties is unlimited, property damage is limited to rs 6,000 only. This limit can be
enhanced on payment of additional premium.

Policy B (Comprehensive Policy): for private cars and motor cycles, there are two sections in
the comprehensive policy.

Section 1 concerns loss or damage to the vehicle and covers the risks, this policy covers all the
risks of policy a as well as the loss of or damage to insured’s vehicle also, the perils covered
are:

 Damage to vehicle by fire, lightning, explosion

 Riot & strike, malicious acts and terrorist acts
 Earthquake
 Flood, inundation, cyclone etc
 Landslide/ rockslide while in transit by rail, road, air

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Policy b can be restricted to loss or damage due to fire or theft or both fire & theft in
combination with policy a or without. In case of “act policy”+ fire or theft, the premium is only
25% of own damage premium+ act premium. In case of act + fire & theft, the premium is 40%
of own damage premium + act premium. These extended covers can be obtained without
inclusion of “act” risks, provided the vehicle is not put to use.

The geographical limit for use of the vehicle is India, but the limits can be extended to Nepal
& Bhutan without extra premium and to Bangladesh by charging an extra premium of Rs 50
for comprehensive policy and Rs 10 for act policies. Policies can be issued for periods less than
one year. Long term policies can be issued for “act” only risks.

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 Motor Tariffs

The tariff advisory committee (t.a.c.) has laid down detailed rules, regulations, rates, terms and
conditions for transactions of motor insurance in Indian accordance with the provisions of part
2 (b) of the insurance act,1938. The tariff supersedes the provisions of Indian motor tariff in
existence up to 30th June 2002. There is no motor insurance in India which is non tariff. The
tariffs are administered by the miscellaneous sub-committee of the four regional committees
of the t.a.c. in Bombay, Calcutta, madras and Delhi.

Indian Motor Tariff: the Indian motor tariff has laid out certain general regulations that are
to be followed by the insurer and the insured to constitute a valid contract. The regulations
provide that the motor insurance in India cannot be transacted outside the purview of the Indian
motor tariff unless specifically authorized by the tariff advisory committee. Some of the
important general regulations under Indian motor tariff are as follows:

Gr-9: Depreciation On Parts For Partial Loss Claims:

The following rates of depreciation shall apply for replacement of parts for partial loss claims
in respect of all categories of vehicles.

 Rate of depreciation for all rubber nylon/plastic parts tyres and tubes, batteries is 50%
 Rate of depreciation for all parts made of glass is nil
 Rate of depreciation for all other parts like wooden parts depends upon the age of car.
Gr-12: Premium Rates For Short Period Cover:

Policies issued or renewed for periods shorter than 12 months will attract short period rates
which must also be applied in calculating the premium when policies are cancelled.

Gr-17: Transfer Of Rights To The Legal Heir In Case Of Death Of Insured Owner Of
Vehicle:

The existing motor tariff do not provide for automatic transfer of the rights to the legal heir in
case of death of insured owner of vehicle. In order to facilitate the smooth transfer of the rights
to the legal heir, it was decided at the tariff advisory committee meeting held to incorporate the
following provisions as a part of policy conditions.

In the event of death of the sole insured, this policy will not immediately lapse but will remain
valid for a period of three months from the date of the death of the insured or until the expiry

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of this policy (whichever is earlier). During the said period legal heirs of the insured to whom
the custody and use of the motor vehicle passes may apply to have this policy transferred to
his/her/their names or obtain a new insurance policy for the motor vehicle.

Where such legal heirs wish to apply for a transfer of this policy or obtain a new policy for the
motor vehicle he/she/they should make an application as per his/her/their requirements within
the aforesaid period to the company.

All such applications should be accompanied by:

 Death certificate in relation to the insured

 Proof of title to the motor vehicle
 Copy of this policy
Gr-20: Vehicles Subject To Lease Agreement:

It is not permissible to issue policies in the joint name of lessee and lesser. Policies must be
issued in the name of lessee and lassoer’s interest protected by the use of specified
endorsement.

Gr-21: Vehicles Subject To Hypothecation Agreement:

It is not permissible to issue policies in the joint name of register owner of the vehicle. Policies
must be issued in the name of register owner of the vehicle protected by the use of specified
endorsement.

Gr-22: Cover Note:

Cover note insuring motor vehicles are to be issued only in form 52 in terms of rule 142 sub
rule (1) of the central motor vehicles rules 1989 and as per section 6 of the India motor tariff.
A cover note shall be valid for a period of 60 days from the date of its issue and the insurer
shall issue a policy of the insurance before the date of expiry of the cover note.

Gr-23: Certificate of Insurance:

it is issued by the insurers in relation to every vehicle is the only evidence acceptable to the
police authorities to show that valid insurance exists. This document has to be produced when
demanded by an authorized police officer. It cannot be backdated. Hence, if a policy is not
renewed on or before the expiry date, the certificate of insurance in respect of new insurance
will be effective only from the date of new insurance.

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Gr-24: Cancellation of Insurance And Double Insurance:

Cancellation Of Insurance: a policy can be cancelled only after ensuring that the vehicle is
insured elsewhere and the original certificate of insurance is surrendered. If no claim has bee
reported or made, a pro-rata refund subject to minimum premium being retained, can be made
if the vehicle has been insured continuously for at least 12 months preceding the date of
cancellation under a policy in the name of the policyholder.

If the policy has been in force for less than a year, the refund should be on short period basis
subject to minimum premium being retained. If a claim is made or reported, no refund of
premium should be allowed. It is important that the insurer should inform the R.T.O by
registered post about the cancellation of insurance. In every case when policies are cancelled
at insured’s request to take advantage of pending rate changes, refund of premium must be
calculated on short period basis.

Double Insurance: in case of double insurance, on cancellation of one of the policies by either
of the parties, refund should be granted on pro-rata basis and not on short basis for period both
the policies are in force concurrently.

Gr-25: Cancellation and Issuance Of Fresh Certificate Of Insurance:

Whether any alteration is made in the policy affecting the information shown on the certificate
of insurance, then it must be returned to the insurance company by the insured for cancellation
and a new certificate must be issued. When a policy is cancelled by the insurer, the insurer
should, within seven days, notify such cancellation to the registering authority concerned.

Gr-34: Registration, Use and Insurance:

It is not permissible to insure any vehicle used for a purpose other than that permitted by rta
concerned and also to insure any vehicle in the name of an insured not conforming to the name
recorded as owner of the vehicle in the vehicle registration document excepting:

 In case of temporary substitution

 In respect of motor trade risk

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 Chapter V
First Party Insurance
Type of insurance policy under which an insured (the first party) is paid by his or her insurer
(the second party) in the event of an accident, injury, or loss whether caused by itself or
someone else (the third party).See also third-party insurance.
First-party insurance is insurance that is purchased to cover the named policy holder
(“insured”) against damages or losses suffered by the policy holder to his person or property.
The policy holder may be a company, an individual or group of individuals of a particular class
(such as employees of a company, a named insured’s family or occupants of a particular
vehicle). Some examples of first-party insurance are:

 Personal injury protection coverage under an automobile insurance policy

 Health insurance
 Medical payment coverage under an automobile or homeowner’s policy
 Uninsured or underinsured motorist coverage under an automobile policy
 Damage to covered personal or business property for wind, storm, hail, fire, flood, or other
disaster
 Renter’s wall-in insurance coverage

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 Third-Party Insurance

Third-party insurance is insurance that is purchased to protect the named policy holder against
liability for damages or losses caused by the named insured to another’s person or their
property. The policy holder may be a company, an individual or group of individuals of a
particular class (such as employees of a company, a named insured’s family or occupants of a
particular vehicle). Some examples of third-party insurance are:
 Liability insurance coverage under an automobile policy
 General commercial liability coverage
 Homeowner’s liability coverage for personal injury causes by the insured
 Umbrella insurance policies
 Commercial motor vehicle liability coverage
 Animal or canine liability insurance
 Professional liability insurance
 Public liability insurance
 Product liability insurance
 Directors’ and officers’ liability insurance

Benefits Of Third Party Car Insurance Policies Are:

Provides Legal Cover And Financial Assistance:

Third party car insurance policy covers the insured person’s legal liability in case of
death or disability to any third party, and any loss or damage to a third party property.
The legal and financial burden is taken care of in such a scenario. Though the direct
beneficiary is neither the insurer nor the insurance company, but a third party, it is
the most essential benefit a third party car insurance secures for the driver/owner of
the motor vehicle involved in such circumstances.

Ensures Peace Of Mind:

Third party car insurance policies bring peace of mind when dealing with traumatic
situation that completely hinges on financial payments. Hence, instead of worrying
further about such unforeseen expenses, the focus is just on the immediate relief
from stress and coping up with the incident.

27
Easy and fast process to procure third party car insurance:
Third party car insurance policies are easily accessible and easy to buy or renew.
They can also be bought or renewed online, which is a fairly quick and simple
process to fulfil when opting for the third party car insurance. Hence, it can easily
be availed by anyone as per their time and convenience.

Third Party Liabilities For Car Insurance

cost-effective and beneficial to the insurer in any unforeseen event:
The inclusion of third party vehicle liability insurance component in the overall car
insurance policy, as either an add-on or an essential part of the main plan, is
extremely cost-effective and beneficial in terms of financial costs and premiums.
Also, when calculating the compensation, the evaluation is done on the income of
the insurer.
Easy round the clock availability of third party car insurance:
Unlike other policies that are limited to only the traditional offline method of
renewal or application, third party car insurance policies or renewal of the policy is
easily available online round-the-clock, that is, 24x7, 365 days a year from any
location. Hence, the easy accessibility and mobility makes this so popular.

Top Five Car Insurance Companies in India

Therefore, third party car insurance policy premiums and claim covers may vary
from policy to policy, company to company. In fact, it may also be determined on
the make/model/variant of the motor vehicle in question there’s no denying the legal,
financial and mental peace offered by third party insurance to those owning, driving
or buying a new car. This insurance saves them against all possible hassles that may
arise out of any unforeseen circumstances.

We’re sure now you understand why it is so important to invest in a third party car
insurance. Remember, this is the best way to gain comprehensive coverage against
losses that you might incur if your car gets damaged or sto len, or causes injury, death
and damage to third party or third party property.

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How Are First-Party Insurance Claims And Third-Party Insurance Claims Different?

Under a first-party insurance claim, the insured makes a claim directly against his own
insurance company and what he is entitled to recover is defined by the terms of the
contract. Because the contract is made between the insured and the insurance company
directly, it carries with it certain fiduciary duties and obligations owed by the insurance
company to the insured such as the duty to act in good faith. It is a fiduciary-type relationship.
Additionally, that relationship is regulated by the state of Texas under the Texas insurance
code. Failure of the insurance company to honour the strict terms of the contract may result not
only in a breach of contract, but also violations of the duty of good faith and fair dealing as
well as other duties that are set forth under the Texas insurance code. These violations could
subject the insurer to penalties such as treble damages and/or 10% interest on the funds
wrongfully withheld.

Under a third-party insurance claim, the person making the claim (“claimant”) is not the
insured. The claimant’s claim is against the insured party, not the insurance company itself. As
a result, the insurance company has no contract with the claimant and owes no duties to the
claimant to act in good faith or otherwise. Instead, all duties are owed to the

Insured. Thus, if the insurance company fails to handle the claim in good faith, the insured, not
the claimant, has a potential cause of action against the insurance company. This cause of action
only comes into existence if the claimant (or his attorney) send a showers’, the insurance
company fails to settle the claim resulting in a verdict higher than the policy limit, and a jury
determines in a subsequent trial that the adjuster failed to act with the same degree of care in
settling the claim as he would have in the management of his own affairs.

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 Documents

Proposal Forms: In motor insurance contract the proposal form is used as a rule, it constitutes
the means of communicating the offer to the insurers or for making proposal for motor
insurance. It is so desired as to elicit all information necessary for a proper evaluation of the
risk and for rating. The questions commonly asked are:

 Particulars about the proposed: name, address and occupation

 Details of the vehicle to be insured: registration letters and numbers make of the vehicle,
date of purchase and price paid etc.
 Details of other vehicles owned by the proposer and details of the accidents during the
past 3 to 5 years
 Details of insurance history
Certificate of Insurance: This is a document evidencing that a motor vehicle is insured against
third party liability as required under the act. Certain features which appear in the certificate
are:

 Certificate number
 Registration mark and number or description of the vehicle insured
 Effective date for commencement of insurance
 Date of expiry of insurance
 Limitations of use
 Persons or classes of persons entitled to drive
Cover Note: It is usually issued when the policy and certificate of insurance cannot be
immediately issued for any reason. It has to be issued in a prescribed form and is valid for a
period of 15 days.

Policy Forms: Policy forms like proposal forms vary within wide limits as between different
classes of insurance, but they have certain features in common. The policy is not the contract
itself, but the evidence of the contract. As soon as the policy is issued, the cover note is
cancelled.

Endorsements: It is a document which incorporates change in the terms of the policy. It may
be issued at the time of issuing the policy to provide additional benefits and covers or to impose
restrictions.

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Renewal Notice: It is the practice of companies to issue renewal notice to the insured usually
one month in advance of the date of expiry of the policy.

Renewal Receipt: This is a simpler document than the policy. It is worded to the effect that in
consideration of receipt of renewal premium, the policy is renewed for a further period of 12
months

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 Claims

Motor insurance business in India is generally considered to be an unprofitable class of

business. In recent years, the claims under motor insurance have shown signs of deterioration.
With the increase in the number of vehicles and traffic density, higher costs of labour and spare
parts and escalating awards for third party claims, control of claims cost is imperative.

The insurance companies in India are therefore required to pay the compensation amount to
accident victim or the family members within 90 days. If the insurance company fails to do so,
then the motor accident claims tribunals (mact) must impose a penalty of Rs 5,000/- on such
companies for the delay. If after 90 days the insurance company fails to pay the amount it shall
be the duty of the banker to deposit the cheque drawn in the name of claimant with the mact in
one week of 90 days expiry period.

Most of the people perceive that procedure involved in claiming insurance is not too
complicated and cumbersome. Smaller claims are processed within a period of two weeks but
larger claims involve more procedures at the insurance company’s office and thus take longer
time.

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 Settlement Of Claims Under Motor Insurance

For settlement of insurance claim under motor vehicle insurance the following claims usually
occur in the following ways:

Claims For Own Damage:

On receipt of notice of loss, the policy records are checked to see that the policy is in force and
that it covers the vehicle involved. The loss is entered in the claim register and a claim form is
issued to the insured for completion and return. The insured is also requested to submit a
detailed estimate of repair charges.

 Assessment Of Survey Report: Independent automobile surveyors are assigned the

task of assessing the cause and extent of loss. They inspect the damaged vehicle. And
submit their report along with the copy of the policy, claim form and estimate cost of
repairs.
 Claims Documents: The other documents required for processing the claim are:
 Driving licence
 Registration of certificate book
 Fitness certificate
 Police report
 Financial bill
 Satisfaction note from the insured
 Receipted bill from the repairer if paid by insured

 Settlement of Claim: On the basis of survey report and claim documents the insurance
company determines the extent of its liability and the loss is indemnified. The insurance
company may get the vehicle repaired instead of making cash payment to the insured
in case of damage of motor vehicle.
Claims For Theft Or Total Loss Claims:

Total losses can also arise due to theft of the vehicle and its remaining untraced by the police
authorities till the end. These losses have to be supported by a copy of the first information
report (fir) lodged with police immediately after the theft has been detected. If the police
authorities do not succeed in recovering the vehicle for theft claims, the insurer is requested to
submit the certificate of side no. Or Cr no. Certification of true and undetected r.c. books and

33
taxation certificate of vehicle along with documents related to vehicles and insurers. On the
basis of investigation or inspection with valid documents the insurance company determines
the total loss or theft.

Claims For Third Party:

On the receipt of notice of claim from the insured, or the third party or from motor accident
claims tribunal, the matter is entrusted to an advocate. The insured is requested to submit full
information relating to accident along with the following documents:

 Driving licence
 Police report
 Details of driver’s prosecution
 Death certificate
 Medical certificate
 Details of age, income, no of dependents etc.
On the basis of the written statements the matter is then filed with motor accident claims
tribunals by the advocate, the mact determines the amount of claims to the third party.

A Claim Is Not Honoured Under The Following Circumstances:

 Any accident outside the geographical boundary of India

 Any accident when the vehicle is driven by a driver without a valid license.
 Person driving under the influence of liquor or drugs
 Wear and tear: consequential loss, depreciation, mechanical or electrical breakdown,
failure or breakages.
 War and allied perils
 Carrying of persons or goods more than the permitted capacity by R.T.O

34
 Chapter VI

List of Insurance Companies

Public Sector Life Insurance Company

 Life Insurance Corporation Of India

Other Life Insurance Companies

 AEGON Life Insurance Company

 Aviva India
 Bajaj Allianz Life Insurance
 Birla Sun Life Insurance Company Limited
 Edelweiss Tokyo Life Insurance
 Exide Life Insurance
 HDFC Standard Life Insurance
 ICICI Prudential Life Insurance
 IDBI Federal Life Insurance
 India First Life Insurance Company
 KOTAK Life Insurance
 Max Life Insurance
 Peerless Group
 PNB MetLife India Insurance Company
 Reliance Life Insurance
 Sahara India Pariwar
 SBI Life Insurance Company
 TATA AIG

 Non Life Insurance Companies

Public Sector Non-Life Insurance Companies

 National Insurance Company

 New India Assurance
 The Oriental Insurance Company
 United India Insurance Company
 Agriculture Insurance Company Of India
 Export Credit Guarantee Corporation Of India
Other Non-Life Insurance Companies

 Apollo Munich Health Insurance

 Cholamandalam Ms General Insurance
 Bajaj Allianz General Insurance
 Bharti Axa General Insurance
 Cigna Ttk
 Future General India Insurance

35
 HDFC Ergo General Insurance Company
 ICICI Lombard
 IFFCO Tokio
 KOTAK Mahindra General Insurance
 Liberty Videocon General Insurance
 Reliance General Insurance
 Royal Sundaram General Insurance
 Star Health And Allied Insurance
 Tata Aig General
 Universal Sompo General Insurance Company
 Royal Sundaram General Insurance
 Cholamandalam Ms General Insurance
 Religare Health Insurance Company Limited

Re Insurance Companies

 General Insurance Corporation Of India

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Bajaj Allianz General Insurance Is a private general insurance company in India. The
company is a joint venture between Bajaj finserv limited (formerly part of Bajaj auto limited)
owned by the Bajaj group of India and Allianz se, a germen financial services company.

History

Bajaj Allianz general insurance received an insurance regulatory and development authority
of India (IRDA) certificate of registration on 2 may 2001 to conduct general insurance
business, including health insurance, in India. In the first year of its operations the company
had 36 offices and around 100 employees. The company started its operations with a paid up
capital of ₹1.10 billion. Bajaj Finserv limited holds 74% and the remaining 26% is held by
Allianz se. Bajaj Allianz is headquartered in PUNE with offices in over 200 cities in India
and more than 3,500 employees as of 2015.

The company lists 97 filed and approved products, of which 27 are health products.

In January 2014, the company announced it would open up all-women branches. As of 2015,
the company has 30 such branches in India.

37
Reliance General Insurance was incorporated on 17 august 2000. It received the license to
conduct general insurance business in India from the insurance regulatory development
authority of India (IRDA) on 23 October 2000. Unlike most insurance companies, who have
foreign partners, the firm is promoted solely by reliance capital.

Services

Reliance general insurance offers insurance services across the domains of motor, health, travel
and home. The commercial insurance services include commercial vehicle, office and marine.

motor insurance covers four wheeler, two-wheeler and commercial vehicle. Services such as
roadside assistance and cashless facilities through a network of around 2400 garages are
provided. Under health, there are several plans to choose from. They include health gain (can
be availed in instalments), wellness, critical illness and personal accident.

In travel, reliance general insurance provides plans for overseas trips such
as schengen, Asia and the us. Travel plans tailored for students and senior citizens are also
available. The home insurance portfolio covers house contents against theft and damage. The
cover also provides home assistance services.[3]

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Bharti Axa General Insurance Company Ltd. Is a joint venture between bharti
enterprises and axa business group that operates in India. Bharti enterprises shares 51% stake
in the venture while axa group shares 49% stake. The company offers general insurance
products to retail and commercial clients.

Bharti axa started its operations in India from august 2008. Currently, it has 79 branches around
the country. The company is the first one in the general insurance industry to receive dual
certifications of ISO 9001:2008 and ISO 27001:2005. It is headed by sanjeev srinivasan, who
is Coe and the managing director

History

Bharti axa general insurance company is a joint venture between bharti enterprises (a leading
business group with interests into telecom, agro business, financial services, manufacturing,
and retail sector) and axa group (an international insurance and asset management company
operating out of France). The company was incorporated on 13 July 2007 and commenced its
national operations in august 2008. It is headquartered in Bangalore and operates at 100
locations around the country.[4]

Products And Services

Bharti axa general insurance company ltd is a general insurance company that primarily offers
over 50 products catering to retail, rural, and commercial clients. The primary general
insurance products in the domestic category include car insurance, two wheeler
insurance, health insurance, critical illness insurance, personal accidental insurance, home
insurance, and travel insurance. Bharti axa general insurance

39
Kotak Mahindra General Insurance Is a 100% subsidiary of kotak Mahindra bank ltd, it was
incorporated in December 2014 and received an approval from the insurance regulatory and
development authority to start a general insurance business in April 2015, post which it
commenced business operations from December 2015 onward.

The company aims to cater to a wide range of customer segment & geographies offering an
array of non-life insurance products like motor, health, and others.

Kotak Mahindra Bank, a part of kotak Mahindra group founded by uday kotak. Its wide range
of products caters to the financial needs of individuals & businesses alike. In Feb. 2003, kotak
Mahindra finance ltd., the group’s flagship company received a banking license from
the reserve bank of India, becoming the first non-banking finance company in the country to
convert into a bank.

40
Hdfc Ergo General Insurance Company Limited Is a joint venture between HDFC
ltd. and ergo international ag, a Germany-based company that is part of the Munich re group.
HDFC holds 51 per cent, and ergo the other 49 per cent. The firm operates in 91 Indian cities
with over 108 branches and 2,000 staff members.

History

In 2002, HDFC ltd. And ergo international at formed a general insurance joint
venture company, named HDFC ergo general insurance company limited with its headquarter
in Mumbai. Under the agreement, ergo acquired 26 per cent share, the rest being held by
HDFC. During its initial years the company saw a slump and recorded an underwritten
gross premium of Rs. 196.78/- crores (FY 2006-07) as against Rs. 206.89/- crore in the
previous year (FY 2005-06). The company made a strong come back and escalated its gwp to
rs.239.69 crores (FY 2006-07).

In 2015, ergo bought 23% more stake in the HDFC venture, making them a 49% stakeholder.

The firm is a public company and is categorized as Indian non-government company. The
company’s authorized share capital is Rs. 6,000,000,000/- and its paid up capital is Rs.
5,386,202,600/- it received an ISO certification in 2010.

In June 2016, the company announced the buyout of the l &T general insurance for around rs
551 crore, this was around 1.1 times the gross premium of the latter. The merger completed on
23 august 2017.

41
Tata Aig General Insurance Company Limited Is An Indian general insurance company and
a joint venture between the Tata group and American international group (aig). Tata group
holds a 74 percent stake in the insurance venture with aig holding the balance of 26 percent
.Tata aig general insurance company, which started its operations in India on 22 January 2001,
provides insurance to individuals and corporate. It offers a range of general insurance products
including insurance for automobile, home, personal accident, travel,
energy, marine, property and casualty as well as specialized financial lines. The company's
products are available through distribution channels like agents, brokers, banks (through bank
assurance tie ups), and direct channels like telemarketing, digital marketing, worksite etc.

History

Tata aig general insurance company limited (Tata aig general) is a business collaboration of
the Tata group and American international group, inc. (aig). Tata aig general merges two major
finance organizations: the Tata group's prominent headship place in India and aig's global
presence as the world's leading international insurance and financial services organization. This
joint venture has started its operations in India from 22 January 2001. The company provides
corporate and personal insurance services.

The organization offers an array of general insurance covers which are well thought-out under
commercial and consumer demands. The commercial sector
covers energy, marine, property and specialized financial covers.

42
Data analysis
Data analysis gives meaning to the data that has been collected. More than 48
respondents were given questionnaire by mail. After verification as to completeness of
collected questionnaire, samples were finalized. In the data having responses both male and
female. The majority of male is more than female. The majority of female is 16 & male is 32.

Q1] What Is Brand Your Vehicle?

 Figure 1

people Reaponse

15%

9% Honda
suzuki
53% Yamaha
Bajaj
23%

Explanation: 53% people choose Honda Brand

23%People Choose Suzuki Brand

9%People Choose Yamaha Brand

15%People Choose Bajaj Brand

43
Q2] Which Insurance You Have Taken?

 Figure 2

People Response

26%

Bike 74.40%
Car 25.60%

74%

Explanation: 74% People Choose Bike Insurance

25%People Choose Car Insurance

44
3] Are You Aware About General Insurance?

 Figure 3

People Response

14%

Yes 86.10%
No 13.90%

86%

Explanation: 86.10% People Satisfied General Insurance

13.90%People Are Not Satisfied General Insurance

45
4] Which Company You Have Taken Insurance?

 Figure 4

People Response

New India Assurance

22% co.Ltd/Gic
35%
Bajaj Alianz General
Insurance Co. Ltd

27% ICICI General

Insurance Co. Ltd
16%
Reliance General
Insurance Co.Ltd

Explanation: 22%People Choose New India Assurance Co. Ltd.

27%People Choose Baja Allianz General Insurance Co. Ltd.

16%People Choose ICICI General Insurance Co.Ltd.

35% People Choose Reliance General Insurance Co.Ltd.

46
Q5] How Rank Your Insurance Company ?

 Figure 5

Ranking

45%
40%
35%
30%
25%
20%
Ranking
15%
10%
5%
0%
1
2
3
4
5

Explanation: People Choose The 40% Position (Good /Bad) Of Your Company

47
Q6] How Many Years Has It Been Since Purchase Your Vehicle?

 Figure 6

People Response

9%

Less than one year

18%
more than one year

more than three year

59%
14%
more than five year

Explanation: 9% People Choose Limit of Less Than One Years

18% People Choose More Than One Years

14%People Choose More Than Three Years

59%People Choose Limit of Five Years

48
Q7] Where You Want Insurance Company To Improve?

 Figure 7

People Response

19%

Service
Premium Amt.
18% claims
63%

Explanation: 63% People Are Improve For Service From Insurance Company

18%People Are Improve For Premium Amt From Insurance Co.

19% People Are Improve For Claims From Insurance Company

49
Q8] Reason For Shifting The Insurance Company?

 Figure 8

People Response

26%

Service
Premium Amt.
56% Easy claim

18%

Explanation: 45% People Are Choose Reason Service For Shifting Company

14%People Are Choose Reason Premium Amt. For Shifting Company

22% People Are Choose Reason Easy Claim For Shifting Company

50
Q9] What Are Different Types Of Insurance

 Figure 9

People Response

41%
Life Insurance
General/Non life
59%

Explanation: 41%People Choose Life Insurance

59%People Choose General Insurance

51
 BIBLIOGRAPHY

Newspapers:

 Economic Times

Search Sites:

 www.autoinsurance.com
 www.irda.org
 www.wikipedia.com
 www.google.com
 www.indianinfoline.com

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