Motor insurance: Does your motor insurance policy cover damage during riots?

Your motor vehicle could be badly damaged in a riot. In such a situation can you claim compensation from your insurer for damage to your insured vehicle?

A riot could lead to damages to the vehicle body, engine, windshield or even the entire vehicle could be burnt to ashes, damaged due to heavy stone-pelting or malicious damages to the vehicle body mostly due to breakage, etc.

Dhirendra Mahyavanshi, Co-Founder, Turtlemint – a Mumbai-based Insurtech Company, said that damage in riots is covered under comprehensive motor insurance policy but not under third party insurance. Thus, most insurers cover damage to your vehicle due to a riot under a comprehensive vehicle insurance policy according to their policy wordings. “However, there has to be a documented proof of the riot such as police FIR and/or newspaper cutting if the event has been covered by media. Also, there have to be no criminal charges against the insured for the same event,” he said.

Moreover, Neeraj Prakash, Managing Director, Shriram General Insurance, said “The insurance company will also pay for the death of or bodily injury to any person including occupants present/carried in your vehicle or damages to property other than property belonging to you.”

Why claims are paid under the comprehensive insurance policy?
The claim arising due to riots is paid under a comprehensive insurance policy only. A comprehensive motor insurance policy consists of two parts ‘Own damage (OD) cover’ and third-party insurance cover. If a policyholder has a comprehensive insurance policy, then the damage to the vehicle due to riots is covered under the OD section. It is the non-compulsory part of the comprehensive motor policy that actually pays you in case of damage to your vehicle.

The third-party (TP) only insurance, which is a mandatory cover, serves to protect you from claims made by a third party, when your vehicle is at fault/has damaged the third-party property or life. The TP section covers only your legal liability for – bodily injury, death and damage to third party property while using your vehicle.

How much of a claim is settled in case of damage to your car in riots?
The motor insurance policy document always mentions the coverage, exclusions and exceptions in the terms and conditions. The amount of reimbursement of damage cost that you are entitled to at the time of claim depends on various factors.

Rakesh Goyal, Director, Probus Insurance – An Insurtech Broking Company, said, “The claim amount depends on the repair cost and the amount is covered up to the Insured Declared Value (IDV) of the vehicle as stated in the policy, provided the policy is active. In case of total loss or where the damage is beyond repair, the claim amount will be Insured Declared Value (IDV) of the vehicle.”

However, any deliberate action by the policyholder to cause vehicle damage is not covered under the policy and hence, the claim is not payable. “The claim will be honoured if the damage to your insured vehicle happened accidently due to riots and is not deliberately inflicted. If found otherwise, the insurance company will not make any payments for such a claim,” Prakash said.

Intimation of losses and claim settlement
In the case of damage to your vehicle during riots, you should immediately inform the insurance company about the incident and damage that has happened. However, if you are also injured during the riot and are unable to inform the insurer immediately then in such case, you can initimate the insurer later. There is always a provision for condoning the delay of intimation. Insurers generally take the ground situation into account and allow a certain time period for policyholders to intimate, initiate and file the claim.

Prakash said that the clause requiring immediate intimation of the damage to the insurer does not work in isolation and is not absolute. He said, “It is true that the owner has to intimate the insurer immediately after the damage to/loss/ theft of the vehicle. However, this condition should not bar settlement of genuine claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances. However, consideration of delay depends upon the merits of the individual case.”

Prakash further explains:
“Based on the verdict of the Supreme Court, the Insurance Regulatory and Development Authority of India (IRDAI) had published a Circular dated September 20, 2011, whereby it stated that insurer’s decision to reject a claim shall be based on sound logic and valid grounds. It also stated that rejection of claims on purely technical grounds in a mechanical fashion will result in policyholders losing confidence in the insurance industry giving rise to excessive litigation. The Insurers shall not repudiate such claims unless and until the reasons of delay are specifically ascertained and recorded.”

How to initiate the claim process, documents required
You need to register a claim with your insurer by calling its customer care/toll-free number. If the vehicle is at the spot, a spot survey has to be done and if the vehicle has been moved from the spot it has to be taken to the workshop for the final survey.

Prakash said that in case of claims arising due to riots following documents help in getting the claim settled:

  • Duly filled claim form
  • Copy of insurance policy
  • First Information Report/Final Investigation Report
  • Fire Brigade Report, if called for
  • Survey/Assessment Report to substantiate quantum of loss due to damage to insured vehicle
  • Original Bills of Repairs/Replacement
  • Newspaper cutting wherein the incidence of riots has been reported

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