CHAPTER-1

INTRODUCTION

INSURANCE

Insurance is a contract, represented by a policy, in which an individual or entity

receives financial protection or reimbursement against losses from an insurance
company. The company pools clients' risks to make payments more affordable for the
insured. Insurance policies are used to hedge against the risk of financial losses, both
big and small, that may result from damage to the insured or her property, or from
liability for damage or injury caused to a third party

​Motor Insurance

A motor insurance or an auto insurance or more popularly known as a car

insurance, is an insurance cover which is meant to protect your vehicle against the
losses incurred due to unforeseen instances. It covers you from the risk of loss from
theft, loss from accidents or any subsequent liabilities.

​What is motor insurance?

The answer to this question is very simple as it comprises two words i.e. motor +
insurance and motor means a vehicle of any sort which is running on the road and
Insurance means to provide cover for any unforeseen risk which may occur in day to
day life.

Then another question arises what is unforeseen risk? You are walking on the road a
car hits you from the back, you get a fracture in your leg and while coming out you
never thought that you will have an accident but it happened and this is unforeseen risk
i.e. a risk of happening of an event which may happen or may not happen. So Motor
Insurance as we all know is the insurance for motor vehicles, there are various risks
which are related with the loss of/ or damage to motor vehicles like theft fire or any
accidental damage so as to provide coverage for this motor insurance is taken.
 HISTORY OF MOTOR INSURANCE

If we see in real life, we can say that Motor Insurance is an important part of
General Insurance.

A compulsory car insurance scheme was first introduced in the United Kingdom with
the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be
insured for their liability for injury or death to third parties whilst their vehicle was being
used on a public road. germany enacted similar legislation in 1939 called the "Act on
the Implementation of Compulsory Insurance for Motor Vehicle Owners."

Incidentally, the first Motorcar was introduced in England in 1894. The first motor
policy to provide coverage for third party liability was came into existence in 1895. Third
party liability includes third party and liability incurred towards third party. Third Party
means any party other then owner /driver or the government, any liability occurring
towards third party due to use of motor vehicle is third party liability. It can be in the form
of bodily injury to third party or damage to third party property. So at the beginning, only
third party insurance came into existence but later on, in U.K they realized the
importance of insurance in terms of motor and with this an accidental comprehensive
policy also came into existence and later on the lines of U.K. we started using approx
the same policy.

After World War I, there was a considerable increase in the number of vehicles on the
road and when we have the number of the vehicles on the road there is an increase in
the number of accidents. As the concept of insurance was not that much in existence so
lot of accidental damages were not at all recovered and the motorists faced a lot of
problems for getting their treatments and damages to their vehicles.

After realizing this introduction of compulsory third party insurance through the
passing of the Road Traffic Acts 1930 and 1934 was done. Later on these Acts have
been consolidated by the Road Traffic Act 1960.
 ​DEFINITION

In many jurisdiction, it is compulsory to have vehicle insurance before using or

keeping a motor vehicle on public roads. Most jurisdiction related insurance to both the
car and the driver; however, the degree of each varies greatly.

Several jurisdiction have experimented with a "pay-as-you-drive" insurance plan which

utilizes either a tracking device in the vehicle or vehicle diagnostics. This would address
issues of uninsured motorists by providing additional options and also charge based on
the miles (kilometers) driven, which could theoretically increase the efficiency of the
insurance

Currently, Motor Insurance is one of the most flourishing industries in India. The
number of vehicles running on the Indian roads has grown manifold. Almost every
month, a new car is being launched by top car manufacturers such as Hindustan
Motors, Hyundai Motors India Limited, Mahindra and Mahindra, Maruti Suzuki, Tata
Motors, and Toyota Kirloskar Motors Ltd.Motor insurance in India is a mandatory
requirement for all vehicle owners.

Whether you use it for individual use or commercial purpose, you need to have an
auto insurance policy in place. Vehicle insurance policies in India have been devised to
insure private cars, two wheelers, and commercial vehicles.

The car insurance companies in India have associations with the top car
manufacturers in the country. You can get instant car insurance quotes by filling out a
simple and online application form.

In simple words we can say a motor vehicle is that which runs with a motor, but in
technical sense we can define a "Motor Vehicle" as as any mechanically propelled
vehicle adapted for use upon roads whether the power of propulsion is transmitted
thereto from an external source and includes a chassis to which a body has not been
attached and a trailer; but does not include a vehicle running upon fixed rails or a
vehicle of a special type adapted for use only in a factory or in any other enclosed
premises or a vehicle having less than four wheels fitted with engine capacity of not
exceeding 25 cubic centimeters.
 ​TYPES OF MOTOR INSURANCE

Vehicle insurance (also known as, GAP insurance, car insurance, or motor
insurance) is insurance

Motor Insurance is one of the most flourishing industries in India. The number of
vehicles running on the Indian roads has grown manifold.

Almost every month, a new car is being launched by top car manufacturers such as
Hindustan Motors, Hyundai Motors India Limited, Mahindra and Mahindra, Maruti
Suzuki, Tata Motors, and Toyota Kirloskar Motors Ltd.
Motor insurance in India is a mandatory requirement for all vehicle owners. Whether you
use it for individual use or commercial purpose, you need to have an auto insurance
policy in place. Vehicle insurance policies in India have been devised to insure private
cars, two wheelers, and commercial vehicle Motor insurance can be generally
classified into 3 broad categories.

Private Car insurance​:

It covers all kinds of losses or damage by accident, fire, any kind of
natural calamities, theft and the third party claims.

Private Car type vehicles are used for social, domestic and pleasure purposes and
sometimes for professional purposes of the insured or used by the insured's employees
for such purpose It excludes use for hire or reward, racing, pace making, reliability trial,
speed testing and sue for any purpose in connection with the motor Trade. It also
excludes carriage of goods other than samples.
Two wheelers insurance​:
This type of auto insurance is meant for the two wheelers. It
provides protection to
the vehicle from the loss or damage from natural calamities like earthquakes, floods,
hurricanes and man-made calamities like fire, landslide etc

It excludes carriage of goods other than samples of the insured or used by the
insured's employees for such purposes but excluding use for hire or reward, racing,
pace making, reliability trial, speed testing etc.

Commercial vehicle insurance​:

It covers all those vehicles which are not used for
personal purpose. Vehicles like trucks, passenger buses, heavy commercial vehicle,
light commercial vehicles, agricultural vehicles, multi-utility vehicles, ambulances etc are
covered under this type of insurance.

Motor insurance is also mandatory by the law. It is a legal requirement in India to have
insured a minimal

​MOTOR INSURANCE COVERAGE

Based on coverage, motor insurance policies can be classified into the following
types:

1.Third-Party insurance​:
This compensates only third-party injuries and their property damages. It’s the
type of insurance that people opt for just because it’s mandatory. It protects a policy
holder against losses which arise due to bodily injury/death to a third party or any
damage to property

2.Collision Coverage​:
If there is a covered accident, collision coverage will pay for the repairs to your
car. If your car is totaled (where the cost to repair it exceeds the value of the vehicle) in
an accident, collision coverage will pay the value of your car.

3. Comprehensive Coverage​:
What if something happens to your car that is unrelated to a covered accident -
weather damage, you hit a deer, your car is stolen - will your insurance company cover
the loss? Liability insurance and collision coverage cover accidents, but not these
situation

4.​ Engine and Electronic Circuit Cover:

This insurance covers expenses incurred when there is a damage to the insured
vehicle’s engine or electronic circuits.
5.Personal Injury Protection​ :
Personal Injury Protection (PIP) covers your medical bills when you or the
passengers in your car get hurt in an accident. It's known as "No-Fault Insurance"
because your insurer pays out regardless of who is at fault

OBJECTIVE OF THE STUDY

1. To create an awareness about the Motor Insurance Policy of the Company

2. A aim of insurance is to promote and reward responsible behavior of customer

3. To identify the potential policy holders among end users and to create a relationship
between the companies and potential customers.

4. To find out the customer satisfaction level with Bajaj Allianz company.

5. To study third party motor insurance

 LIMITATIONS OF THE STUDY

Even though every effort was made to complete all areas of the project, it
still has its own limitations.

1. Due to time constraints the sample was restricted to 50 respondents

2. The time factor was not in favor as the period of study was limited to one
month

3. The respondents were willing to provide information. They were free to

share their information

4. The tools used for analysis has its own limitations.

IMPORTANCE OF THE STUDY

1. The importance of this project is concerned with the study of the

Awareness of Motor Insurance Policy provided by the Company.

2. Make an Aware of Features, Benefits and the Claims of a Policy

3. Identifying the Customer needs and feedback on the existing policy

4. The result arrived out of this study would know about their need for
better
performance in future

5. Study on the benefits earned by the customer through the policy of car
insurance
Gives suggestions to the customer to choose the services at the time of
buying a

PRINCIPLES OF INSURANCE

1. Utmost Good Faith

2. Insurable Interest
3. Principal of Indemnity
4. Proximate cause

1. Utmost Good Faith:

Contract of insurance have all essential elements of nature of
general contract. According to Indian Contract Act, the valid contract must have the
essential element of offer and acceptance, considerations, legal parties, sound mind
and free consent of the parties. Like every other contract the insurance Contract is the
sort of contract it is approved by the Indian Contract Act. Contract of insurance comes in
to an existence where there is an offer and the underwriter or proposal of one side and
the insurer accepts it by issuing the policy.

Contracts of motor insurance are governed by the doctrine of utmost good faith. It is
one of the important principles of that implies to the contract of insurance It refers that
both the parties involved in insurance contract insurance It refers that both the parties
involved in insurance contract should make the disclosure of all material facts and
figures relating to the subject matter of the insurance contract.

If either party does not disclose the utmost good faith the other party may avoid the
contract. The insured's duty to disclose all material facts known to him but unknown to
the insurer. Similarly the insured's duty of utmost good faith is disclosing the scope of
insurance at the time of contract. Any concealment, misrepresentation, fraud or mistake
concerning the material facts to the risk should be disclosed. No important material facts
and figures must be concealed. Thus, responsibility of disclosure of both parties should
be a reciprocal duty i.e. disclosure is absolute and positive. Some of the few examples
of disclosure of material facts such as: Life insurance: Age, income, education,
occupation, health, family size, etc. Fire insurance: Inflammable materials, nature and
its uses, fire detection etc. Motor Insurance: Type of car, value and details of driver, the
driving history and traffic convictions of the driver, past loss experience, etc i.e. which
vehicle he is using, in which area he will be driving the vehicle
In the context of the principle of utmost good faith, it is pertinent to note the provisions of
the Motor Vehicles Act 1988. This section provides that: it is compulsory to take the
insurance policy if a vehicle is plying on the road and if a certificate of insurance is being
issued then insurer can not cancel or avoid a third party liability under this policy In
other words It means that any one who is driving a vehicle on the road can not drive the
vehicle without an insurance policy it may be a comprehensive policy or only a third
party liability policy.

2. Insurable Interest:
Insurable Interest means the insured must have some legal right
to insure the subject matter. Insurable interest is an important and fundamental principle
of insurance. Thus it is necessary for valid contract of insurance. According to the
definition of insurable interest in the event of the legal right to insure arising out of a
financial relationship should be recognized under the law between the insured and the
subject matter of insurance. It means that insurable interest must be a pecuniary
interest. The insured must have an insurable interest in the subject matter of insurance.
Without insurable interest the contract of insurance is void and unenforceable. A person
said to have an insurable interest in the subject matter has to have benefit from its
existence and prejudice by its destruction. Thus, insurable interest must be actual and
real and not arising out of mere expectation.
3. Principal of indemnity:
Indemnity means to indemnify the loss or to put the insured
back in same position as he was before the loss. The word "indemnity" implies that
protection, security against damage or loss of security against legal responsibility.
According to this principle the assured in the case of loss against the policy made shall
be fully indemnified. Indemnity is one of the fundamental principles that except life
insurance, personal accident insurance, other contracts of insurance such as fire,
marine and accident insurance are contracts of indemnity
4. Proximate cause:
It means the actual cause of the loss due to which a loss has
occurred. Causa Proxima is necessary for a valid contract of insurance. It has been
defined as "The active efficient cause of that sets in motion a train of events which
brings about a result, without the intervention of any force started and working actively
from a new and independent source". The doctrine of proximate cause applies to motor
insurance as to other classes of insurance. The loss or damage to the vehicle is
indemnified only if it is proximately caused by on of the insured perils. Insured perils
means the perils covered by insurer under the policy. The doctrine also applies to third
party claims. The third party injury or damage must be proximately caused by the
negligence of the insured for which he is held legally liable to pay damages.
 WHY ONE SHOULD GO FOR MOTOR INSURANCE ?

As you all know in our country crores of vehicles are plying on the road and lot of
accidents occurred daily, and due to these accidents damages to material and third
party occurs.

Third party is any person other then the owner. But the question arises how the loss
is to be compensated? After realizing all these problems it was made mandatory for all
the vehicles which are plying on the road to have an insurance which can provide
coverage to general public against the risk of loss or damage to motor vehicles and with
this the motor insurance concept has come into existence and Act made this insurance
compulsory for everyone those who are driving the vehicle on the road so it become
quite popular among people and than motor insurance policies become available to
provide a comprehensive cover and a third party liability cover.