Two Major Changes In Car Insurance Rules: How Will They Impact Your Car Insurance Premium

Over the last 12 months, there has been quite a few changes in the way we buy insurance for our four-wheelers.

- Manish Jain

The tenure of the car insurance policy and even the premium has undergone major changes and one needs to be aware of these new rules before buying a fresh cover or getting the renewal of the existing policy.

Basically, there are two types of motor vehicles policies, Liability only policy and Package policy. A Liability only policy provides cover to the insured against any third-party liability in case of any bodily injury and, or, death and damage to property. The policy also includes a personal accident cover for the owner-driver. It provides protection against any legal liability arising out of the use of the vehicle towards third parties resulting bodily injury or death of a person, any damage caused to third party property. Elsewhere, a Package policy covers loss or damage to the vehicle insured, in addition to all the covers provided by a Liability only policy.

Any motor vehicle policy, be it a liability only policy or a package policy, covers against any loss or damage caused to the vehicle or its accessories, which may be caused due to fire, explosion, self-ignition, or accidental damage by external means. The policy also provides cover against any damage in transit by road, rail, inland waterway, lift or elevator, air, lightning, earthquake, flood, typhoon, hurricane, storm, inundation, cyclone, hailstorm, frost, landslide, rockslide as well as loss or damage caused by burglary, theft, riot, strike, malicious act and terrorist activity.

In a vehicle’s insurance policy, the sum for which the vehicle is insured is called Insured’s Declared Value (IDV). The IDV of the vehicle will be deemed to be the ‘Sum Insured’ for the purpose of policy, which is fixed at the commencement of each Policy period for the insured vehicle.

The IDV forms the basis of settlement for all purposes, if the vehicle is stolen or is damaged beyond repair in an accident.