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Q. Discuss the importance of various documents used for Motor Insurance.

Ans. Various documents used for Motor Insurance with their use and importance are enumerated as under:

(i) Proposal Form -The Proposal Form is compulsory in Motor Insurance. The information/particulars given by the insured in the Proposal Form, form the basis for the insurance contract. The Declaration Clause in the form converts the common law duty into a contractual duty of utmost good faith.

The effect of this is that the answers given in the proposal become warranties.

(ii) Cover Note - Cover Note is issued pending issuance of policy. It is unstamped document The cover note is to be issued in the prescribed form and it is valid for a period of 15 days and can be extended upto two months.

(iii) Certificate of Insurance -The Certificate of Insurance is an evidence that a motor vehicle is insured against third party liability as required by the Motor Vehicles Act. The Certificate is to be issued as per the form prescribed in the Act.

(iv) The Policy - The Policy is a stamped document evidencing the contract of insurance. It includes the terms and conditions of the insurance cover.

(v) Various Endorsements- Endorsements are attached to the policy to incorporate changes in the terms of the Policy. It may be attached at the time of issuing the policy to provide additional benefits and cover or to impose restrictions. The wordings of the Endorsements are provided in the Tariff.

(vi) Renewal Notice - The Renewal Notice is reminder to the insured about the expiry of the policy and calling for the renewal for a further period of one year.

(vii)Renewal Receipt – While renewing the insurance some insurers issue the Renewal Receipt in place of the Policy. It is worded to the effect that, in consideration of receipt of the renewal premium, the Policy is renewed for a further period of 12 months.

Q. What are the questions commonly asked in Motor Proposal form?

Ans. Proposal Form -The Proposal Form is compulsory in Motor Insurance. It is designed to elicit information necessary for a proper evaluation of the risk and for rating. The information/particulars given by the insured in the Proposal Form, form the basis for the insurance contract. Following are the questions commonly asked in Proposal form:

(a) Particulars about the proposer

i) Proposer's name in full. This is required to establish the identity of the insured and to make enquiry concerning the moral hazard.

ii) Address-It is necessary for communications and area of use of the vehicle.

iii) Occupation- It indicates social status of the proposer and also gives some indication about the extent and purpose the vehicle is likely to be used.

iv) Physical disability and mental infirmity- Though this information is relevant from the point of risk involved, it is difficult to get precise answers as the vehicle may be driven by persons other than the insured.

v) Previous convictions- This throw light on driving habits.

(b) Details of vehicles to be insured

i) Registration, Engine and Chassis Number and Make of the vehicle -These give identification of the vehicles and are required for verification in case of accident.

ii) Year of manufacture -This is necessary to decide the age

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of the vehicle particularly for comprehensive cover.

iii) Type of body, Seating capacity and Cubic capacity- These are required for Rating.

iv) Date of Purchase – This is required for applying loading in case of late Registration

v) Insured's estimate of the value of the vehicle- Required for premium calculation and this is also the Sum Insured in Motor.

(c) Details of other vehicles – Details of Vehicles owned by the proposer and details of accidents during the past 3 to 5 years give some idea about the physical and moral hazard.

(d) Details of insurance history-This is to ascertain whether there were any adverse features, such as declinature, cancellation or imposition of special terms and conditions by previous insurers.

(e) Questions relating to extra benefits and eligibility for discount – Required for additional premium or discount of premium as the case may be.

(f) Certain other particulars in case of commercial vehicles – E.g. the type of permit, the total licensed passenger carrying capacity etc.

(g) Declaration - The answers to the questions are followed by declaration. The Declaration Clause in the proposal form converts the common law duty into a contractual duty of utmost good faith. The effect of this is that the answers given in the proposal become warranties.

Q. Certain common features appear in all types of Motor Certificates of Insurance. What are they?

Ans. In Motor Insurance, in addition to the policy, a Certificate of insurance in the prescribed form is issued as required by the Motor Vehicles Act. There are certain common features which appear in all types of motor certificates of insurance. These are as under:

(a) Certificate number.

(b) Registration mark and number or description of the

vehicle insured.

(c) Effective date of commencement of insurance for the purpose of the Act;

(d) Date of expiry of insurance;

(e) Persons or classes of Persons entitled to drive;

(f) Limitations as to use

The above details are followed by a certificate signed by the Authorised Insurer to the effect that the Policy and the Certificate of Insurance are issued in accordance with the provisions of the Chapters X & XI of the Motor Vehicles Act, 1988.

Particulars(a) to (d) are same in all certificates.

Differences in wordings are found in the particulars (e) and (f).

Q. Describe the wordings appearing in Certificate of Insurance for Private Car for the following:

(i) Persons or classes of persons entitled to drive (ii) Limitations as to Use

Ans.

(i) Persons or classes of persons entitled to drive Any of the following:

(a) The Insured.

(b) Any other person who is driving on the Insured's order or with his permission

-Provided that the person driving holds or had held and has not been disqualified from holding an effective driving license with all the required endorsements thereon as per the Motor Vehicles Act and the Rules made there under for the time being in force to drive the category of motor vehicle insured hereunder.

(ii) Limitations as to Use

Use only for social, domestic and pleasure and for the Insured's own business.

The Policy does not cover the use for hire or reward or organised racing, pacemaking, reliability trials, speed testing,

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the carriage of goods (other than samples) in connection with any trade or business or use for any purpose in connection with Motor Trade.

Q. Describe the wordings for Limitations as to Use for:

(a) Goods Carrying Vehicle (b) Passenger Carrying Vehicle Ans.

(a) Limitations as to Use for Goods Carrying Vehicle - own goods or general cartage:

Use only for carriage of goods within the meaning of the Motor Vehicles Act, 1988.

The Policy does not cover

(1) Use for organised racing, pacemaking, reliability trial or speed testing.

(2) Use whilst drawing a trailer except the towing (other than for reward) of any one disabled mechanically propelled vehicle.

(3) Use for carrying passengers in the vehicle except employees (other than driver) not exceeding six in number coming under the purview of Workmen's Compensation Act, 1923

(b) Limitation as to Use For Passenger Carrying Vehicle:

Use only for carriage of Passengers in accordance with the permits (Contract Carriage or Stage Carriage) issued within the meaning of the Motor Vehicles Act, 1988.

The Policy does not cover

-(1) Use for organised racing, pacemaking, reliability trial or speed testing.

(2) Use whilst drawing a trailer except the towing (other than for reward) of any one disabled mechanically propelled vehicle.

Q. Describe Motor Cover Note.

Ans. Motor Cover Note is a document issued in advance of

the Certificate and the Policy. It is valid for a period of 15 days from the date of its issue. If for any reason the insurers are not able to issue a policy during that period, the validity of the Cover Note may be extended for a further period of 15 days at a time but in no case the total period of validity of a Cover Note shall exceed two months.

Motor Cover Note is to be issued in the following form prescribed by the Motor Tariff:

"The Insured described in the Schedule below, having proposed for insurance in respect of the Motor Vehicle(s) described therein and having paid the sum of Rs.... as premium the risk is hereby held covered under the terms of the Company’s usual form of.... Policy applicable thereto (subject to any Special Conditions or Restrictions mentioned overleaf) for the period between the dates specified in the schedule unless the cover be terminated by the Company by notice in writing in which case the insurance will thereupon cease and a proportionate part of the premium otherwise payable for such insurance will be charged for the time the Company had been on risk."

The Cover Note further contains the following particulars:

(1) Registration mark and number, or description of the Vehicles insured / Cubic capacity / Carrying capacity/Make / Year of manufacture.

(2) Name and Address of the Insured.

(3) Effective date and time of commencement of insurance for the purpose of the Act.: Time Date

(4) Date of expiry of insurance.

(5) Persons or classes of persons entitled to drive.

(6) limitations as to Use (7) Additional Risk if any (8) Special Conditions

The Motor Cover Note incorporates a certificate to the effect that it is issued in accordance with the provisions of Chapters X and XI of the Motor Vehicles Act, 1988.

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