The procedure involved in taking motor insurance
policy is as follows: (i) First of all,
the person who is interested in taking a motor policy known as proposer, will
have to submit a proposal form with the insurer. The proposal form is divided
into three parts: (a) Identification of vehicles, Registration No., horse
power, shape and size, model, etc. (b) Risk information, past insurance, type
of policy, etc. (c) Declaration- the declaration that all information given is
true and correct. This is necessary under the principle of utmost good faith.
(ii) After having received the proposal form, the insurer will determine the
rate of premium. The insurer will charge rates according to the schedule for a
particular vehicle under particular policy. The schedule gives “basic premium”
and any amount for an additional risk is added to the basic premium while
rebate allowed is deducted from it. (iii) As soon as the amount of premium to
be charged on the proposer is determined, the same will be conveyed to the
proposer by the insurer. (iv) On receipt of the letter from the insurer, the
proposer will pay the amount of premium and the insurer will, after receiving
the premium, issue a cover note along with a certificate of insurance. The
cover not serves as an evidence of the acceptance of the risk by the insurer
till the final policy is issued.
The certificate of insurance can be produced
before the Regional Transport Authority as a proof of insurance. (v) Finally,
the insurer prepares the motor policy (to replace the cover note) and sends the
same to the insured. The motor policy is generally issued for one year. In
case, the insured wants to sell his insured motor vehicle and replace it by a
new one, the policy can be transferred to the new vehicle. The amount of
premium, if necessary, can be adjusted proportionately. Motor Policy
Conditions- The usual conditions incorporated in the motor policy are as
follows: (i) Notice of Accident- Immediately after occurrence of accident, the
same has to be brought to the knowledge of the insurer by serving a notice of
accident. (ii) Supply of data- The insured should provide all necessary
information to the insurer whenever needed. (iii) Keeping vehicle in good
condition-
It is the duty on on the part of the insured to keep his vehicle in good condition and permit the insurer to inspect the vehicle at any time. (iv) Double Insurance. In case, the vehicle is insured with more than one insurer, the amount of compensation will have to be claimed in pro-rata from all the companies. (v) Utmost good faith- The insured is supposed to observe good faith throughout the running of the policy. He should fulfil all the terms and conditions of the policy. (vi) Arbitration clause- If there is any dispute between the insured and the insurer over the amount of claim, the matter will be referred to the arbitrator. The decision of the arbitrator will be final. (vii) Renewal of policy- When a policy is renewed, bonus in the form of reduction of renewal premium will be allowed, provided that there was no claim under that policy in the previous year.
It is the duty on on the part of the insured to keep his vehicle in good condition and permit the insurer to inspect the vehicle at any time. (iv) Double Insurance. In case, the vehicle is insured with more than one insurer, the amount of compensation will have to be claimed in pro-rata from all the companies. (v) Utmost good faith- The insured is supposed to observe good faith throughout the running of the policy. He should fulfil all the terms and conditions of the policy. (vi) Arbitration clause- If there is any dispute between the insured and the insurer over the amount of claim, the matter will be referred to the arbitrator. The decision of the arbitrator will be final. (vii) Renewal of policy- When a policy is renewed, bonus in the form of reduction of renewal premium will be allowed, provided that there was no claim under that policy in the previous year.
(viii) Policy Information- The motor
policy contains information such as policy number, name and address of the
insured, period of insurance, registration number, horse-power, seating
capacity, date of proposal and the amount of premium, etc. (ix) Cancellation of
Policy- The insured may cancel the policy at seven days notice and demand the
return of the proportionate premium, provided that no claim has arisen during
the then current period of insurance.