‘Loss or Damage’ to your insured vehicle? Is it payable?
We already know that motor insurance is compulsory by law. People pay thousands of rupees towards premiums to comply with this legal requirement.
We also know the phrases: Comprehensive and Third-Party motor insurance.
What is comprehensive motor insurance? The general misconception is that it simply covers everything! (?)
Specifically, the motor insurance policy states that the insurance company will indemnify the insured against loss or damage to the vehicle insured hereunder and / or its accessories due to:
- By fire, explosion, self-ignition or lightning
- By burglary, housebreaking or theft
- By riot and strike
- By earthquake (fire and shock damage)
- By flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm and frost
- By accidental external means
- By malicious act
- By terrorist activity
- While in transit on road, rail, inland-waterway, lift, elevator or air
- By landslide or rockslide
These are the ten “categories” given in the policy wording under which a motor claim is payable.
Recently, a customer purchased a Maruti Suzuki Swift VXI and insured his car through insurancepe for a gross premium of Rs 37,212/-. He then sincerely asked us “Sir! Can you explain this policy to me?”
Let’s be honest, neither the common-man, nor any highly educated person has any idea of the risks covered under motor insurance policy. For example:
Fire, explosion, self-ignition or lightning – begs the fundamental question What is Fire? You would likely answer: “Fire is fire!” You may show us a picture of fire, but not the definition.
Burglary, housebreaking, theft – If somebody were to steal the car, they break into the house to steal the car or steal the car that is kept in the house premises?
What constitutes housebreaking? What is the difference between burglary, housebreaking and theft? None of us know and are of the impression that all mean the same!
Flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm and frost.
The Maruti Suzuki Swift customer asked after paying premium “Sir, what do these terms starting with flood and ending with frost mean in insurance?”
Even experts who deal with motor insurance claims regularly may not have the same understanding.
The ten possible events that can cause loss or damage to the vehicle are not defined. In motor insurance contracts, the insured does not know what he is being covered for! And there is no attempt by the insurers to define these terms!
If there were to be a loss of our customer’s vehicle, he would spend his residual life running from pillar to post for the settlement of his claim; the insurer is bound to deny because his definition of these ten events do not match the understanding (or the lack of) of the customer.
Having paid the motor insurance premium, a customer lives in the fear of losing their car, the premium and the nightmare of running around to have his claim paid.
Of course, an insured can approach the insurance ombudsman for resolution; and then there is also the insurance regulator; and beyond the insurance regulator we have the courts.
But an insurer could easily get by not paying up as they never explicitly defined the risks that are covered. The Ombudsman likely will not understand the customer’s logic, the Regulator is busy regulating and for the Court, they have neither strength nor time for. Who is going to save motor insurance policyholders?
A fish always trusts the water but it does not know it can be cooked in the same water! Similarly, the compulsory insurance law forces customers to trust the insurers knowing well they may not pay up when they most need it!
This blog post is brought to you by the minds at insurancepe!
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