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Are you covered?

Mon, 17/05/2021 - 12:12

Over the years, as CAG has interacted with citizens across Tamil Nadu on road safety issues, we have noticed that many of us are unclear on insurance matters. Do we need insurance to drive a vehicle? What is third party insurance? What is mandated by law?

Hence, on 19th January 2021, CAG organised a webinar on insurance and road safety titled – Are you covered? K. Sathyajit from Futurisk Insurance Broking Pvt Ltd and Mr. Vijayaraghavan, Advocate spoke. Both speakers have had many years of experience and knowledge in this sector and were able to break down the complex space of insurance for the layperson.

Mr. Sathyajit noted that insurance is one of the most important but overlooked aspects of our financial planning. Most people consider it to be an expenditure instead of recognising that it is an important tool that hedges against risk. He then succinctly explained relevant types of insurance – health, accident, motor vehicle, and life insurance.

He stressed the point that taking health insurance is critical as in India the private sector hospital costs are high and social security is very limited. He noted that premiums are low when one is younger since the expectation is of low disease burden and so it is best to take a health insurance policy when one is in their 20s or early 30s.

Talking about insurance related to vehicles he noted that motor vehicle insurance is mandatory in India as is third party liability insurance for any vehicle driven on public roads.

This was followed by insights from Mr. Vijayaraghavan who is an advocate at Madras High Court, and an author of books on legal matters. He too underscored the point that insurance must be viewed as an investment. He also noted that reading the fine print is very important when it comes to such policies! He addressed the common misconception that third party (in a motor vehicle accident) refers to passengers in the vehicle when it actually refers to those who are outside the vehicle. For example if a two-wheeler and a car collide and in the process a pedestrian is injured, the pedestrian is covered under third party insurance. The pillion rider or the car passengers, however, are not covered unless the vehicle owner has taken a comprehensive insurance policy.

Noting that ‘act only policies’ are those that meet the bare minimum required by law while comprehensive insurance refers to anything that is wider but this may not cover everybody and anybody. Under a comprehensive insurance policy there can be a component called own damage cover which as the name says covers damage to the vehicle. This, along with third party policy is a comprehensive policy package and usually has a built in add on to cover the passenger.

Mr. Vijayaraghavan also clarified that while a hired driver of a vehicle is covered under certain labour laws, if the driver is the owner of the vehicle then she is not covered. Tracing some of the interesting history of how the courts have tried and been unsuccessful in rectifying this, he noted that part of the problem was that citizens buying a vehicle baulk at the increased premium forgetting that the purpose of the insurance is not to protect yourself but to benefit your family being left behind.

These were some of the details and myths around insurance that the speakers clarified. This was followed by a question and answer session. The webinar ended with a vote of thanks to both speakers for sharing useful insights into the insurance space and emphasizing the importance of understanding and taking appropriate insurance for oneself, to the participants.

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