Motor Insurance: Meaning &Types of Cover

What is motor insurance?

Generally, the origin of motor insurance can be traced from the history of the united kingdom {U.K} where the ever first motor insurance policy in England in 1894 covered third party risks.

However, the policy was furder made to cover accidental damages arising out of or in connection with the use of motor vehicles which is similar to what is known as comprehensive policy.

In most of the countries of the world like India, the motor vehicle insurance Act was enacted in 1939 and third-party insurance was introduced and made compulsory in 1946.

Following the high rate of accidental damages faced by people and the increase in the number of vehicles, some countries of the world like India, the united state of America {the USA} have made it compulsory before driving any vehicle in a public place it must be insured.

Motor insurance is that type of insurance that provides coverages against one’s own vehicle and other motorists in the event of loss or damage caused by an accident or any unforeseen phenomenon.

Types of cover:

The following are the major types of cover in motor insurance contracts.

1. Third-Party liabilities or property damages only: This type of cover provides compensation to the parties to risks in the event of an accident or other damages involved by the person or insured. It is stipulated to Act only, legal liability for damage to third party property.

It is the most common one among other various motor insurance covers. The Motor Vehicles Act of 1945 stipulated that all vehicle owners are in possession of this insurance policy for the protection of the vehicles against any risk that arises at the cause of using the vehicle.

2. Third-party fire and theft: This type of cover shares the same similarity with the third party only, it makes provision for protection against the damage of one’s vehicle caused by fire or one’s car is stolen.

Stipulates, in addition to third-party liability only, covers for fire or theft loss or damage to the vehicle.

3. Comprehensive policy: This type of insurance policy provides you the best of both the third party, fire, and theft cover for ones own damages {accidental damage of one own vhicle}. Including medical expenses are coverable under this policy.

4. Act only: This type of cover can be traced from the Road Traffic Act of 1945 which become active and operative in 1950. It stipulates legal liability for death or injury to any person arising from the use of the motor vehicle.

Types of motor insurance usage

Motor insurance for different usages and purposes can be looked at in the following form.

a. Private car Insurance: This should be the first thing to take into consideration after purchasing a vehicle.

This is because in the event of any damages caused by accident, earthquake, or other natural disaster or somebody steals or damages your car; private car insurance cover is the best option to be taken as a safeguard against such loss. In collaboration with the third party.

b. Commercial vehicle insurance: It is very necessary for the business owners or companies to make provision for ensuring all the vehicles belong to them, and this will enable them to stand strong regardless of any loss or damages that may occur.

c. Motorcycle

d. motor trade

Summary:

We have explained that motor insurance is very important in society. This is because it makes provision for financial settlement to cover the damages arising from motor vehicles or in connection with the third party claims.

However, we pointed out that third party liability, third party, fire and theft, and comprehensive policy among others are the types of motor insurance cover.

Also, private car insurance, commercial vehicle insurance, motorcycle, and motor trade insurance are the major types of insurance usage.