Motor Trade Insurance: Coverage, Claim & Exclusions

Updated: 17-05-2019 11:49:17 AM

It is important to get an insurance for your vehicle, whether it is your private car or the one used for trade and business. In case of the second situation, a motor trade insurance helps manage financial losses incurred during the business involving cars.

 

What is Motor Trade Insurance?

A motor trade insurance, also known as road risk insurance, is a policy designed to cover any injury, loss or damage to the third-party caused by the vehicles involved in the business. This insurance is ideal to meet the business needs of individuals who are into business of cars, motorbikes, or are involved in buying and selling of cars, serving, or running a garage etc. It doesn’t matter whether the business is small or big, or part time or full time. From tool and machinery replacement value to vehicle replacement everything is taken care under the Policy.

What all Motor Trade Insurance Covers?

• It provides coverage against legal liability under which the company would be bound to pay compensation for any injury or death caused to third-party from the usage of the insured vehicle
• It will cover any loss, destruction or damage caused to the insured vehicle or its accessories by an insured event as stated in policy wording
• It covers cases arising out of natural calamities such as explosions, fire, lightning, earthquake, flood, etc.
• Man-made calamities such as theft, strike, territory activity, riot, or any damage by road rail, lift are covered
• Policy can be extended to cover driving for demonstration purposes
• Depreciation or any sort of consequential loss will not be covered under this Policy
• Some insurance company with an extra cost also offer additional legal liabilities under this Policy like employees travelling in the vehicle or driving the vehicle apart from the paid drivers

Eligibility Criteria

To be eligible to purchase a motor trade policy, one should

• Be 18 years of age and above
• Possess driving license
• License or certificate of business showing motor trade business (car dealership)

How Motor Trade Insurance Functions?

Buying a motor trade insurance is as important as knowing its functioning. Here are some of the steps to know how motor trade insurance functions:

• Apply for a motor trade insurance
• Insurer will check the eligibility of motor trade for the insurance
• The premium will be calculated on size of business and revenue generated through motor trade
• In case of any unforeseen event caused to the vehicle, the insured can apply for the claim amount
• The insurer will validate the claim and will respond accordingly
• Company will settle the claim, if found genuine, otherwise, the claim will be rejected

Claim Process

The claim process for motor trade insurance varies for different companies. However, following are some general procedures common to almost every insurance provider in India.

• After the untoward incident, immediately provide a written notice about the incident to the company with the date and time of the incident and the damage or loss caused
• You can also report any loss by calling on insurance provider company’s toll-free number, Relationship Executive’s handheld device, company’s e-mail id, or visit the nearest branch office of the insurance company
• The business or an individual must cooperate with the insurance company executives on call for an authentic check on all relevant documents such as accounts books, sales sheets, Invoicing, Balance Sheet, or any other document requested by the insurance executive
• If it is evident that the loss of life was a result of the insured event then the insurance money would be deemed
• Compensation will be payable as per the compensation payment mentioned in the policy wording
• After following proper rules and regulations of the policy, all the claims under this insurance would be payable to the insured person
• The policy amount will arrive at the insurance company and they will be paid to the policyholder

Documents Required for Claim Process

• Duly filled & signed Claim Form
• Copy of the registration of the vehicle
• Driving License Copy
• Policy document (first two pages)
• FIR on a case-to-case basis
• Original estimate
• Original Repair Bill and Receipt of Payment

Time Taken to Settle Claims

For Motor Trade Insurance, company will act efficiently and will settle the claim as soon as possible until and unless no fraudulent activity is involved.

Exclusions under Motor Trade Insurance

Exclusions are situations or cases not mentioned or covered under the norms of the policy wording will not be considered in such an event of loss occurrence as follows:

• In case of contractual liability, the insurance cannot be claimed
• Damage caused to the insured vehicle by a person under influence of alcohol or drugs will not be considered
• A person without driving license damages insured vehicle while driving shall not be covered
• Damage caused to tyres and tubes might not be covered until the complete insured vehicle is damaged as the cost of the replacement is only 50%
• The Insurance may repair or replace the vehicle or its accessories or even pay in cash the amount of the loss or damage provided it shouldn’t exceed the limit insured
• In case of death or bodily injury to any person due to alighting from the vehicle insured at the time of the incident will not be covered under this Insurance
• Certain companies can also cancel the policy by giving 7 days’ notice provided and return the premium paid less the pro-rata portion for short period
• If there were any claim made under the policy during the Policy Period in that case there would be no refund of the premium amount
• The original policyholder will not be able to cancel the Policy if found the ownership of the vehicle was transferred, as it would require to produce evidence of being insured elsewhere

Companies offering Motor Trade Insurance in India

Some of the companies offering Motor Trade Insurance in India are:

• Oriental Insurance
• Magma HDI
• SBI General
• TATA AIG General

 Important Aspects

Before purchasing a motor trade insurance, individuals shouldn’t ignore the below mentioned critical things:

• Sum Insured of the vehicle
• Claim settlement ratio of the company
• Exclusions under the policy

Advantages of Buying Motor Trade Insurance

Benefits under Motor Trade Insurance vary from company to company providing protection to the motor trade business but the benefits can only be obtained in genuine cases. Let’s take a look at the benefits covered under this policy:

• Motor Trade Insurance Policy can be extended to cover the person who could be using the vehicle for work purpose or for pleasure
• The policy will cover all costs and expenses incurred as per the policy wording
• Legal liability will only be covered and policy shall be liable to pay compensation for third-party property damage only if it is arising out of the insured vehicle usage
• Under Motor Trade Insurance Policy upon returning the invoice one can claim reimbursement for the difference in the costs of a new vehicle similar to the one insured
• If tyres of the vehicle are beyond the repairing condition, the policy will cover the cost of new tyres
• In case the old set of ignition keys gets stolen or damaged, the cost for new set will be covered
• The Policy will cover the cost for child parts of the engine in case of hydrostatic lock damage of the engine
• Motor Trade Insurance protects against the loss of personal belongings whilst the vehicle was locked and parked.
• The insured vehicle will be delivered back home only if it is disabled and being repaired in a place at or under 100 km away from the registered address in the policy

FAQs

 Q1. How big should the motor trade business be in order to get insured?

The size of the business doesn’t matter. The insurance covers all types of motor trade business.

Q2. What third-party liabilities are covered under the policy?

Damage or theft, fire or loss to vehicles are the third-party liabilities are covered under the Motor Trade Insurance Policy.

Q3. Up to what distance can the car be delivered if immobile and given for repair?

The insured vehicle will be brought back home only if it is immobile and being repaired at least 100 km from the registered address.

Q4. Does this insurance provide the facility of repairing or replacing the vehicle?

The insurance may repair or replace the vehicle or its accessories or even pay in cash the amount of the loss or damage, provided it doesn’t exceed the insured limit.