Motor Insurance
What the domain tests
This domain tests compulsory third-party motor liability, own-damage cover, IDV, no-claim bonus, deductibles, add-ons, and claim handling under the Motor Vehicles Act framework and policy wording.
Core rules and concepts
- Third-party liability cover is compulsory for motor vehicles. It responds to legal liability for death or bodily injury to third parties and, within the policy limit, property damage.
- Own-damage cover is optional and insures the insured vehicle against accidental damage, fire, theft, and specified perils.
- IDV is the insured declared value, the maximum own-damage sum insured, usually based on the vehicle’s market value less depreciation.
- No-claim bonus is a premium discount earned after a claim-free year, subject to policy terms.
- Add-ons include zero depreciation, engine protect, roadside assistance, and return-to-invoice cover.
- Claims may be cashless through a network garage or reimbursement.
Worked example
A car with IDV ₹6 lakh is damaged in an accident. Repair cost is ₹1.2 lakh. With a ₹2,000 compulsory deductible and no zero-depreciation add-on, plastic and rubber parts may suffer depreciation; the insurer pays the admissible amount less deductible. The third-party liability section is separate and responds if the insured is legally liable to another person.
Traps that cost marks
Do not treat own-damage cover as compulsory. Do not confuse IDV with market price or agreed value. Do not assume no-claim bonus survives a claim. Do not ignore licence, drunken-driving, and permit conditions. Do not mix third-party liability with own-damage claim limits.