Auto insurance

Defining Auto Insurance

Auto insurance (also known as vehicle insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

Auto Insurance Coverage

Auto insurance provides property, liability and medical coverage
  • Property coverage pays for damage to or theft of the car.
  • Liability coverage pays for the legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses

Coverage Levels

Vehicle insurance can cover some or all of the following items:
  • The insured party
  • The insured vehicle
  • Third parties (car and people)
  • Third party, fire and theft
  • In some jurisdictions coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto accident (No Fault Auto Insurance)

What it Covers?

The auto insurance generally includes:
  • Loss or damage by accident, fire, lightning, self ignition, external explosion, burglary, housebreaking or theft, malicious act.
  • Liability for third party injury/death, third party property and liability to paid driver.
  • On payment of appropriate additional premium, loss/damage to electrical/electronic accessories.

Exclusions


Typically, the motor insurance plan does not provide for
  • Normal wear and tear or general ageing of the vehicle.
  • Mechanical/electrical breakdown.
  • Depreciation, wear and tear of consumables like tubes and tires.
  • Damages that occur while a person is driving with invalid driving license.
  • Damage that occur while a person is under the influence of drugs or liquor.
  • Damage due to a war, civil war, mutiny, or nuclear risk.
  • Claims arising out of contractual liability.
  • Use of vehicle other than what it is meant for. For example, if a private car is being used as a taxi and gets involved in an accident, the owner will not be able to claim damages.