Third Party Liability insurance is mandatory for all vehicles plying on public roads in India. This covers Liability for injuries and damages to others that you are responsible for. In addition, it is prudent to cover loss or damages to the vehicle itself by way of Comprehensive/Package policy, which covers both “Liability” as well as “Own damage” to the insured vehicle. Liability Only cover is also known as Act Only cover.

Many factors determine the premium you will pay. For Own Damage cover different insurance companies charge different premiums for similar coverage. Shop around; getting three or more comparison quotes is worthwhile. Check various insurers’s websites; it will help you compare premiums. Do not forget to compare deductibles, coverage and IDV’s as premium may be lesser of one insurer but with higher deductibles, lower coverage and lower IDV, which will adversely impact you in the event of claim settlement.

Be prepared to give your agent information about the following items that are commonly used to determine your premium: Vehicle registration details with Engine No., Chasis no., Class of vehicle, cubic capacity, seating capacity, etc. (In fact, all relevant details are in the RC book/card and a copy of same may be handed over) Tax paid details; Certificate of fitness, Driver details - age, gender, qualifications, licence validity Previous insurance history, if any.

The Own Damage coverage is left to be rated by individual insurance companies after duly filing rates with the Insurance Regulatory and Development Authority. The same is determined  on following factors amongst others -- Age of vehicle; Discounts / loadings- Appropriate Bonus / loading/ discounts along with past claims experience are taken into account while calculating premium. IDV (Insured Declared Value).

Third Party Liability Premium rates are laid down by IRDA.

In case of break in insurance, vehicle inspection would be required and extra charges will have to be incurred for the same.

The sum insured for the vehicle is called “Insured’s Declared Value” and should reflect the current market value of the vehicle. Under Liability insurance, Third Party Liability insurance is covered. There is unlimited coverage to Third parties injury and Third party property damage is covered up to a sum of Rs 7,50,000.

The Insured has the option to restrict coverage for Third Party Property damage to Rs 6,000 and this will result in a lower ”Liability Only” premium.

A motor policy is usually valid for a period of one year and has to be renewed before the due date. Pay the premium on time. No Insurer offers a grace period for paying the premium. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also lost.

No Claim Bonus (NCB) is the benefit accrued to an insured for not making any claims during the previous policy period.  As per current norms in India, it ranges from 20% on the Own Damage premium (and not on Liability premium) and progressively increases to a maximum of 50%.

If, however, a claim is lodged, the No Claim Bonus is lost in the subsequent policy period.

NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB. The new owner has to pay the difference on account of NCB for the balance policy period.The original owner can, however, use the NCB on a new vehicle purchased by him.