“Vehicle” or “Car”? – “Loss” or “Damage”? (Motor Insurance)
So, you are sure you understand every term/phrase used in your motor insurance policy? What if we said that you do not?
VEHICLE OR CAR:
The term vehicle or car are used in the Private Car Package Policy application interchangeably. We all know what a vehicle or a car is, and it’s easy to picture one in our minds, however, a picture of car or vehicle cannot be its definition.
What is a vehicle? One of the fields to be filled in on a motor proposal form is: “Date of purchase of the vehicle by the proposer’ while emphasizing the word vehicle.
Insurance dictionaries and the policy wording are silent on the definition of the word Vehicle or Car. Both of these words are not defined in Private Car Package Policy wording. Section 1 of the policy wording says loss or damage to the vehicle is insured.
So, what is a vehicle then?
A vehicle EXCLUDES…
As per the policy wording, “vehicle” excludes rubber, nylon, plastic parts, tyres, batteries, tubes and airbags as there is a huge depreciation on them. Fibre glass components, painting, wear and tear, mechanical or electrical breakdown, breakages are also excluded from Vehicle!
BUT, when all these parts are combined in a harmonious manner, the vehicle comes into being. These parts on a standalone basis mean nothing. The vehicle does not exist either in the seats or in the steering wheel or in the engine or in the tyres.
The whole has parts, but the parts do not have whole! Yet insurers list out what they do not insure in a vehicle/ car! When you are not insuring all parts of a car, how can it be said the car is being insured?
LOSS OR DAMAGE:
The words loss or damage may seem like simple terms. The policy wording is silent about their definitions.
But the Dictionary of Insurance Terms defines these as:
Loss – (1) The basis of a claim for damages under the terms of a policy. (2) Loss of assets resulting from a pure risk. Broadly categorized, the types of losses of concern to risk managers include personnel loss, property loss, time element loss, and legal liability loss.
Damages – money whose payment a court orders as compensation to an injured plaintiff. Fines, penalties, or injunctive relief would not typically constitute “damages.”
The Dictionary of Insurance Terms gives a different meaning than that intended by the Private Car Package Policy.
We are now plucking feathers on an egg as evidenced in the words – loss or damage. So, let us ask ourselves a straightforward question:
Can there be a loss without damage? Or can there be a damage without loss?
Damage and loss coexist. In every loss there is a damage and vice versa. They are inseparable. If we were to take a book and tear off a page, is it a loss of page or damage or is it both?
A customer, having paid the motor premium as a result of their need to comply with the compulsory nature of motor insurance, would be thoroughly confused if he were to wonder about this as the motor policy document does not offer any explanations. Well, who would care to explain it to them? Billions of dollars are paid in yearly premiums by insureds in India. But for the compulsory element of law, no one would have opted for a motor policy. Motor insurance is considered as social responsibility – our responsibility towards the society, yet noone in the society know what these terms in the policy stand for!
This blog post is brought to you by the minds at insurancepe!
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