Motor Insurance Policy available is of two types, Liability only policy and Package policy.
Liability only policy covers the legal liability of insured towards third party personal injury and property damage arising out of an accident involving the insured vehicle. It is mandatory that every car owner be covered against such risks under Section 146 of the Motor Vehicles Act 1988. The scope of cover is to pay compensation for death of or bodily injuries to third parties and damage to the property of third parties. While the insured is treated as the first party and the Insurance Company second party, all others would be third parties.
Package Motor Insurance policy covers third party liability as well as loss or damage to the insured vehicle. The Package Policy indemnifies the insured against loss or damage to the vehicle insured in due to fire, explosion, self ignition or lighting, burglary / theft, riot and strike, earthquake, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, accidental external means, any malicious act, terrorist activity, landslides or rockslides.
Also certain add on covers are available under a package policy for electrical / electronic accessories, non electrical accessories, LPG / CNG Kits, personal accident cover for passengers, workmen’s compensation for employees.
Recently many general insurance companies have launched Premium Covers for Private Cars that offer extended coverage. These covers on offer vary between different insurance companies. Some of the Premium Covers available are namely, nil depreciation, 24x7 spot assistance, engine protector, return to invoice, daily allowance, key replacement, Emergency transport and hotel expenses, No Claim Bonus Protection etc.
Broadly some exclusions in motor insurance policies are normal wear and tear of the vehicle, mechanical and electrical breakdown, damage to/by person driving vehicle without valid license / under the influence of alcohol / drugs, loss due to nuclear risks, consequential loss. Claim on private cars given on hire or reward are not payable under the policy.