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What is Certificate of Insurance in Motor Vehicles Act

By Vikas Chandra Das
21 July 2022, 11:46 AM

The Motor Vehicles Act, 1988 is comprehensive legislation that regulates all aspects of vehicular movement on road starting from registration of vehicles to automated fitness testing for the vehicles to controlling permits and penalties. Third-party insurance or an act only cover is mandatory liability insurance that a car owner must purchase under the Motor Vehicles Act, 1988. An own damage cover or a comprehensive cover, on the other hand, is not mandatory and can be purchased at the discretion of the car owner.

What is a Certificate of Insurance?

Rule 141 of the Motor Vehicles Rules states that the insurer must issue a Certificate of Insurance along with the policy document where the policy is purchased or renewed. The format must be as per Form 51 under the rules. The purpose of the certificate is to prove that the car owner has an effective insurance cover for the vehicle.

If the certificate of insurance has not been granted to the insured on time and only a cover note of the car insurance policy has been given to the insured, then it is the duty of the insurance company to expedite the process and provide the said certificate within seven days of the expiry of the cover note attached to the insurance policy.

The effect of the certificate of insurance has been outlined in Rule 156 of the Motor Vehicle Rules. It is pertinent to note that this provision provides greater legitimacy to the certificate of insurance than the terms of the policy itself by stating that the particulars in the certificate are deemed to be the terms even though it is more favourable than the terms of the policy document itself.

The certificate is so procured, it must be kept in the vehicle at all times. The police may even ask the owner to produce it at the time of random inspection of the vehicle.

Also note, the certificate of insurance may be transferred from one person to another under Section 157 of the Motor Vehicles Act. This may happen when there is a transfer of ownership of the car.

What is Form 51 and the Details Included in It?

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What Should be the Ideal Motor Insurance Plan

The third-party car insurance cover guarantees only a basic level of protection i.e. it covers for eventualities such as partial disability, permanent total disability, death, and property damage of the third party person. But it offers no protection to the owner of the vehicle. This is where the comprehensive policy steps in and offers 360-degree protection to the insured, against both third-party liabilities and own damage. It covers a range of eventualities such as theft, damage caused by third parties, riot damage, arson or vandalism, natural disasters, etc.

A comprehensive car insurance policy is full of promises. This policy cover must be opted in as opposed to other policy covers due to the following advantages it offers –

  • Firstly, it covers both own damages and third-party liabilities – combining the positive aspects of these policies effectively.
  • Secondly, an option for add-ons can be availed in this policy to enhance coverage of the policy. For example, the Road Assistance cover can be availed for emergency services, towing, refueling, resolving technical issues, etc. The Consumables cover is an add-on that is opted in to cover consumable expenses for small parts such as nuts and bolts, screws, etc. more beneficial for luxury cars that have expensive components. The Engine protection add-on provides compensation in cases of repairs or replacement to the engine and its components in case of leakage of oil, water ingression, etc.
  • Thirdly, some insurance companies offer the insured the privilege of customizing the IDV i.e. the market value of the car.
  • Fourthly, it protects the automobile from natural disasters such as floods, earthquakes, etc and also offers compensation in case of theft/total loss of the vehicle.

Your key takeaways!

Insist on receiving the certificate at the earliest from the insurance company, it is your legal right to have the certificate issued to you by the insurance company. It is of utmost importance that you carry the certificate of insurance along with all other requisite car documents at all times to ensure that you encounter no trouble on the road. Be vigilant and well informed of your rights and duties and act in accordance with those.

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