Classification of insured vehicles
Vehicles are generally divided into the following four categories for insurance purposes:
(1) Private cars.
(2) Commercial vehicles referring to any type of power-driven vehicle used for business or commercial purposes. They can be passenger cars, goods vehicles or tractors.
(3) Commercial vehicles.
(4) Motorcycles.
Rates are promulgated for each classification and, for rate setting purposes, an additional classification is made based on the vehicle’s use within those classes.
Tariff and Non-Tariff Offices
Insurance companies are of two types. Those that are members of the Automobile Rates Association are called ‘Rate Offices’ and those that are not members of the Rate Association are known as ‘Non-Rate Offices’. Most companies are rate offices. The premium rates and the conditions of the policies of all the rate offices are regulated by the Rate Association. In Bangladesh there is a Tariff Association for commercial vehicles for the whole country, but for private cars and motorcycles there are regional tariffs. The country is divided into seven divisions, Dhaka, Rajshahi, Chittagong, Khulna, Sylhet, Barisal and Rangpur. Any insurance company that is in a particular division must become a member of that particular Regional Rate Association. Of course, there are no territorial limits or restrictions on driving in any division, but the insurance must be affected in a particular division. Similarly, a rate office in a particular region may insure a vehicle in some other region, but the premium and conditions must be governed by the Rate Association of the region in which the vehicle is located.
Types of coverage
Each vehicle policy can be divided into the following three types:
(1) Law Policy
An Act Policy covers all the risks for which the owner of a vehicle must necessarily take out a policy under the Motor Vehicles Law. In accordance with this Law, a policy must be taken out to cover any liability that the insured may incur with respect to the death or bodily injury of any person caused by or derived from the use of the vehicle in a public place. The extent of the amount at which a policy must be taken out is also specified in the Act. Again, an insurance policy is also necessary to cover any liability arising under the provisions of the Workers’ Compensation Act. of 1923, with respect to the death or bodily injury of any salaried employee who drives or otherwise assists or is transported on a motor. vehicle. All of these provisions along with the exceptions are printed on the policy itself. It should be noted that insurance is required only for personal injury and not for property damage.
(2) Third Party Policy
This policy covers not only third party risks for which an insurance policy is legally required as explained above, but also covers risks for which the insured may be liable under various laws, such as the Fatal Accidents Act of 1855 and customary law. Here the policy also includes damage to third party property for which the insured is responsible. The insurer undertakes to pay, in addition to compensation, all sums, including costs and expenses of the claimant, for which the insured is legally responsible.
(3) Comprehensive Policy
A comprehensive policy covers a wide variety of risks under one coverage. There are some very common risks that are the only ones covered by this policy and if you wish to cover any other risk, it can be added to the insured risks upon payment of additional premiums. An all-risk policy for private cars usually covers the following risks:
(a) Loss or damage to the automobile. The car, including lamps, tires and necessary accessories, is insured against loss or damage by accidental external means, fire, explosion, self-ignition, lightning, frost, theft, burglary, robbery, malicious act and road traffic , railway, inland waterway, elevator or lift.
(b) Travel expenses in respect of the transportation of the automobile to and from the nearest repair shop facility for any accident up to a certain limit.
(c) Civil liability, that is, the risks covered in the third party policy.
(d) Costs and expenses incurred with the consent of the company.
(e) Car repair expenses due to an accident that are the responsibility of the company up to a certain limit.
(f) Medical Expenses up to a certain limit incurred in connection with injuries sustained by the insured or any occupant of the automobile.
In addition to the above risks, the insured can also get additional benefits after paying additional premiums. These benefits can be (I) death or bodily injury of the insured alone or together with his wife, and of unidentified passengers, (ii) riots and strikes, etc., (iii) loss of carpets, coats or luggage due to robbery, theft or fire etc.
The policies related to commercial vehicles are not as complete as those that insure private vehicles. The main difference is the omission of personal accident benefits and the limitation of third party compensation with respect to property damage to Tk. 20,000 in any accident. Motorcycle policies are written along similar lines as automobile policies.
The conditions of the different policies are different and must be studied carefully.