Motor Trade Insurance: Coverage, Exclusions & Claim

Imagine running a thriving garage, car dealership, or repair shop- until one accident, fire, or theft ruins the hard work of months. In India, where the automobile industry contributes over 7% to the nation’s GDP and employs millions, such incidents can cause huge financial losses. This is where motor trade insurance steps in. It protects vehicles you buy, sell, service, or store from risks such as accidental damage, theft, and third-party liability.

So, let us break down what a motor trade insurance policy covers, how to claim it, and the exclusions you should be aware of.

What is Motor Trade Insurance?

Motor trade insurance, or road risk insurance, is an insurance policy that covers any kind of damage to the vehicle or third parties during transportation/ temporary parking for business. This insurance policy covers both the vehicle being transported and the vehicle used to transport it.

All businesses, whether they are part-time or full-time, can opt for this policy. Moreover, the size of the business also does not matter. The only thing that matters is that your business involves buying, selling, transporting, or repairing vehicles.

What is Covered Under Motor Trade Insurance?

Loss or Damage of Own Vehicle

Your insurer will compensate you for the loss or damage to the insured vehicle and its accessories, if the reason for the damage is:

1. Explosion, fire, self-ignition, or lightning

2. Malicious act, riot, or strike

3. Transit damage

4. Housebreaking, burglary, or theft

5. Natural calamities, such as floods, storms, frost, hailstorms, earthquakes, or cyclones

6. Landslide or rockslide

7. Accidental external means

8. Terrorist activities

Third-Party Liability Coverage

Under this, your insurer will protect you against legal liability arising from accidents involving the insured vehicle. It will cover:

1. Injury or death of third parties

2. Damage to third-party property

3. Drivers authorised under the policy

4. Legal representatives in case of the insured’s death

5. Legal expenses with insurer’s written consent

Trailer Coverage

This will cover any vehicle being towed by the insured vehicle, provided that:

1. No property or goods are being conveyed in the trailer

2. Liability limits remain unchanged

3. The legal limit on the number of towed vehicles is not exceeded

Safeguard your fleet against accidents, theft, and natural disasters with Bajaj General Motor Trade Insurance. Explore our coverage options and choose the best fit for your business.

Exclusions: What Motor Trade Insurance Does Not Cover

Under your motor insurance, the insurer will not cover the losses or liabilities that arise from:

1. Loss/damage outside the geographical area specified in the policy.

2. Any contractual liability of the business (e.g., penalties under business contracts).

3. Use of the vehicle outside permitted purposes as mentioned in the motor insurance policy document under ‘Limitations as to Use’.

4. Driving by unauthorised or unlicensed persons.

5. Wear and tear, mechanical or electrical breakdown, or depreciation.

6. Consequential losses, such as business downtime.

7. Damage caused by overloading or excessive strain.

8. Loss or damage due to the driver’s intoxication (under the influence of alcohol or drugs).

9. Damage to tyres and tubes only

10. Damage due to nuclear risks, radiation, or war-related events.

11. Property owned or held in trust by the insured.

12. Damage caused by war, invasion, rebellion, or mutiny.

How Does the Claim Process for a Motor Trade Insurance Work?

The working of the claim process in motor trade insurance is as follows:

Step 1: Notify the Insurer Immediately

You need to inform the insurance company in writing as soon as possible after any accident, theft, or loss. Always remember to provide essential details, such as the nature, place, and time of the damaging incident.

Step 2: File an FIR (if applicable)

In case the cause of the damage was a criminal activity or theft, you need to file an FIR at the nearest police station immediately.

Step 3: Submit Required Documents

After completing the above steps, you will need to submit essential documents that your insurance will need to process the claim, such as a vehicle registration certificate (RC), driving licence, photos of damage, FIR copy, and anything else.

Step 4: Inspection and Assessment

Your insurer will then appoint a surveyor to examine the damage and make an estimation for the repair costs.

Step 5: Final Claim Settlement

Finally, the claim will be settled after verification of documents and calculation of damages. If the claim is approved, your insurance company can choose to either repair the vehicle or replace it after taking into account the depreciation cost and the IDV (Insured Declared Value).

Do not let accidents slow your business. Experience speedy motor trade insurance claim settlements with Bajaj General Motor Trade Insurance. File your claim and let us take care of the rest!

6 Policy Conditions You Should Be Aware Of

Suppose you are planning to purchase your motor trade policy from Bajaj Insurance. In that case, it is important to be aware os some essential policy conditions to make a successful motor trade road risk policy claim. They are:

Duty of Disclosure and Cooperation

It is your duty to provide accurate information to your insurance. You also need to cooperate completely during all the investigations and the inspection process.

Proper Vehicle Maintenance

You must keep your vehicles in good condition at all times and regularly maintain them.

Timely Notification

You must notify your insurance immediately after any damaging incident. In addition to this, you should also send any legal documents to your insurance without any delay.

No Admission of Liability

Do not promise a payment or negotiate or admit fault in case of a third-party incident without the consent of your insurance.

Cancellation Clause

Remember that you can cancel your insurance policy by giving a 7-day written notice to your insurer.

Arbitration

In case of any disputes between you and your insurer, the Arbitration and Conciliation Act, 1996 can be used to resolve them if both parties agree.

Bottom Line

Motor trade insurance is essential for businesses involved in buying, selling, repairing, or transporting vehicles. It offers comprehensive protection against accidental damage, theft, and third-party liabilities, covering both vehicles in use and those under your care.

By securing this policy, motor traders can safeguard their business operations, reduce financial risks, and ensure legal compliance. Investing in the right motor trade insurance provides complete peace of mind and long-term security on and off the road.

Frequently Asked Questions

Q1. Do I need motor trade insurance?

If your company buys, sells, or trades vehicles, you will need motor trade insurance. It is necessary for any business that is involved in the care, custody, or control of any vehicle that they are doing business around.

Q2. Can I drive any car on a motor trade policy?

No, you cannot drive any car under a motor trade policy unless your policy documents state so.

Q3. Is motor trade insurance worth the cost?

Absolutely, motor trade insurance can often pay for itself many times over, even if you do not make a claim. It protects your business against costly risks, such as accidents, theft, or third-party damages and gives you the confidence to grow your operations, serve more customers, and boost profits.

Q4. On what factors does the cost of motor trade insurance depend?

The cost of motor trade insurance varies depending on several security factors. If the vehicles that you deal with are often around high-crime areas or frequent claim areas, then your premium might be high. On the other hand, if the vehicles’ surroundings have alarms, CCTV, and secure storage, it will help you lower the cost of your trade insurance.

Q5. What is part-time motor trade insurance?

Part-time motor trade insurance is designed for individuals who work in the motor trade on a casual or occasional basis. It is ideal for individuals who sell and buy vehicles, renovate and repair them in their spare time as a hobby.

Q6. What is the difference between motor trade insurance and commercial vehicle insurance?

Motor trade insurance covers more than one vehicle used for business, while commercial vehicle insurance only covers one vehicle owned by a business that is used for delivery or transport.

Q7. Does motor trade insurance cover test drives or demonstration vehicles?

Yes, most motor trade insurance policies cover cars that are used for test drives or demonstrations as long as the drivers are authorised by the policy.

Q8. Are spare parts or tools covered under motor trade insurance?

Some comprehensive motor trade insurance plans let you add coverage for tools, spare parts, and workshop equipment against theft, fire, or damage that happens by accident.

Standard T&C Apply

*Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.