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January 2016

Classification of Vehicles Insured

Classification of Vehicles InsuredClassification of vehicles insured

The vehicles are generally divided in the following four categories for the purposes of insurance:

(1) Private cars.
(2) Commercial vehicles which refer to any type of mechanically driven vehicle used for business or trade purposes. They may be passenger vehicles, goods vehicles or tractors.
(3) Trade vehicles.
(4) Motor cycles.

Rates are promulgated for each classification, and for rate-making purposes further classification on the basis of the use to which the vehicle is put is made within those classes.

Tariff and Non-Tariff Offices

The insurance companies are of two types. Those which are members of the Motor Tariff Association are called ‘Tariff Offices’ and those which are not the members of the Tariff Association are known as ‘Non-Tariff Offices.’ Most of the companies are tariff offices. The premium rates and policy conditions of all the tariff offices are regulated by the Tariff Association. In Bangladesh there is one Tariff Association for commercial vehicles for the whole country, but for the private cars and motor-cycles there are regional tariffs. The country is divided in seven divisions, Dhaka, Rajshahi, Chittagong, Khulna, Sylhet, Barisal and Rangpur any insurance company lying in a particular division has to become the member of that particular regional Tariff Association. Of course there are no territorial limits and restrictions for the driving of vehicles in any division but the insurance must be affected in a particular division. Similarly a tariff office in a particular region can insure a vehicle in some other region but the premium and the conditions must be governed by the Tariff Association of the region in which the vehicle is.

Types of coverage

Each vehicle policy can be divided into the following three types:

(1) Act Policy

An Act Policy covers all risks for which a policy is necessarily to be taken by the owner of a vehicle under the Motor Vehicles Act. According to this Act, a policy must be taken to cover any liability which may be incurred by the insured in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place. The extent of the amount to which a policy should be taken is also specified in the Act. Again a policy of insurance is also necessary to cover any liability arising under the provisions of the Workmen’s Compensation Act 1923, in respect of the death of or bodily injury to any paid employee engaged in driving or otherwise in attendance on or being carried in a motor vehicle. All these provisions together with the exceptions are printed on the policy itself. It should be seen that insurance is compulsory as to personal injury only and not as to damage to property.

(2) Third Party Policy

This policy covers not only those third party risks for which an insurance policy is legally necessary as explained above but also covers such risks for which the insured may be held liable under various laws, such as Fatal Accidents Act 1855 and common law. Here the policy includes also the damage to property of third parties for which the insured is liable. The insurer undertakes to pay in addition to the compensation, all sums including claimant’s costs and expenses for which the insured becomes legally liable.

(3) Comprehensive Policy

A comprehensive policy covers a wide variety of risks under single coverage. There are some very common risks which alone are covered by this policy and if any other risk is to be covered it can be added to the risks insured after the payment of extra premiums. A comprehensive policy for private cars usually covers the following risks:

(a) Loss of or damage to car. The car including necessary Lamps, Tyre’s, and Accessories thereon is insured against loss or damage by accidental external means, fire, explosion, self-ignition, lightning, frost, burglary, housebreaking, theft, malicious act and in transit by road, rail, inland waterway, lift or elevator.

(b) Removal charges in respect of removal of the car to and from the premises of the nearest repairers for any accident up to a certain limit.

(c) Third party liability, i.e., risks covered in third party policy.

(d) Costs and expenses incurred with the consent of the company.

(e) Repair charges for the car due to accident for which company is liable upto 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 car.

In addition to the above risks, the insured can also secure additional benefits after paying extra premiums. These benefits may be (I) death or bodily injury of the insured alone or together with wife, and of unnamed passengers, (ii) riots and strikes, etc., (iii) loss of rugs, coats or luggage by theft, larceny or, etc.

Policies relating to commercial vehicles are not as comprehensive as those by which private cars are insured. The main difference being the omission of personal accident benefits and the limitation of third party indemnity in respect of damage to property to Tk. 20,000 on any one accident. The policies on motor cycles are issued on similar lines as the cars.

The conditions of different policies are different and must be studied carefully.


What Credit Cards and Auto Rental Insurance Share

Fortunately for travelers who rent cars, most credit card companies offer auto rental insurance as an incentive. So why is it then that about twenty percent of users steadfastly opt to buy extra coverage upon renting a vehicle while another twenty percent intermittently do? According to studies, sixty-two percent of auto renters determine that their personal auto policy do not protect their rental car, and another twenty-four percent are not entirely certain if their credit cards do or not.

Want to know what the major cards cover in terms of auto rentals? A detailed report took stock of the four most utilized credit cards and this is what it came up with.

CC Car Renters Insurance

• Every one of the 4 major cc companies do deliver rental coverage of some sort.

• Every one of the 4 major cc companies provided coverage on condition that the renter charged the full rental car sum on its card and declined any form of supplement insurance that the car rental corporation offered.

• All of these credit card companies have the same policy: they do not provide protection for exotic, pricey or antique automobiles; trucks; open-bed vehicles; and ATV vehicles.

• Four of the cc companies deliver coverage for accidents that occur on dirt/gravel roadways. However, one of the four limits this coverage to cars that are maintained on a regular basis.

• Every one of the four major credit cc companies exclude the rental of vehicles that go above mentioned time parameters, while most insure dependent on country limits.

Given the statistics, how should an auto renter proceed?

• Get in touch with your insurance agency. An experienced independent agency should have no trouble reviewing your standard policy to see if you have the necessary coverage.

• Find out from your cc company if there are any limitations to the auto rental insurance that is provided.

• Be wary of long-term auto rentals. Your coverage may not extend to such a situation.

• Acquaint yourself with the terms of coverage. Although your personal auto plan may cover the rental, it may not be applicable for business travel usage.

• When choosing the type of automobile you wish to rent, opt for one that is of comparable worth to your personal vehicle. This will ensure chances that it will be covered.

• Should your existing plan not cover a certain car you wish to rent, explore the possibility of adding a rider that does include the coverage for.

• In the event you do not own your own car, think about buying non owner auto insurance coverage.


Parking Lot Car Accident and What You Need to Know About Insurance

This article tells you what to do and what not to following a parking lot car accident so that you don’t break the law and can protect your finances.

Did you know that one in every five accidents happens in the parking lots? Although most of them are minor ‘fender bender’ types, many drivers don’t know how to handle the situation. Should I report it to the police? Should I inform my insurer? A number of questions crop up following parking lot accidents. The fact that a parking lot is a private property and a unique set of right-of-way guidelines governs it differentiates it from other types of car accidents. Here are four insurance related issues to consider in case of a parking lot accident.

Insurance Cover

Since parking lots fall under the category of private property, accidents that occur in such spots come under the preview of a special type of insurance policy – the collision insurance. Whether you are at fault or not, this policy keeps you covered in both cases. If you are at fault, your insurer will pay for the damages made by you. If you are not at fault, you may file a claim seeking reimbursement for repairing costs. However, before disbursing payments, your insurer may investigate what had actually happened, and who exactly was at fault. The compensation depends on their findings.

Determination of Fault

There is a set of rules to determine who is at fault when an accident occurs in a parking lot. Some of the rules are universal. For example, if you hit another vehicle from the rear, you are at fault. Several rules apply uniquely to the parking lot scenarios. For example, you are at fault when you overlook a ‘stop’ sign and strike another car from the back, or violate the right of way guidelines for the cars that enter the larger paths from the feeder lanes. In addition, you are also at fault if you hit pedestrians from behind.

Car Insurance Premium

You will have to pay higher premium if your insurance providers find you at fault in a parking lot accident. However, you can bypass this rate hike if your policy includes an accident forgiveness clause and if that is applicable to the particular accident. It’s important to note that legal ramifications of any accident is same regardless of where it took place – in a public place or in a private area. If the accident is the result of driving under influence, you may receive a DUI charge. You may also get demerit points to your license.

Hit-and-Run Accidents

Many accidents can happen even to your parked car. For instance, another driver may hit it or someone may open the car door and slam it against your vehicle, thereby damaging it. If all these happen in your absence, your insurance company is likely to treat it as a hit-and-run case. In such situations, you will get a reimbursement under the collision coverage. However, if you are at fault in the accident, there will be an increase in your premium rate.

In case you are at fault and don’t have a collision-coverage, you will have to bear the expense of repairing the damage. You will have to pay a deductible to cover the expense. Nevertheless, you will have to inform the police about the incident and obtain a report.

Whether it’s a public street or a parking lot, if you are involved in a car accident, never ever get into an argument about who was at fault, and more importantly, never admit your fault. However, by avoiding to park in spots that are too crowded, you can avoid such predicaments.

How to Be Safe With Better Auto Insurance Rates

You are an experienced driver. You pride yourself on your expertise. Then, the inevitable thing occurs while texting on your cell phone: you get into an accident!

It’s a rock solid fact that no one in the auto insurance industry will deny. If you drive recklessly and get into an accident with your car, truck, van, motorcycle or RV, your coverage rates will go up – and that’s across the board with all the companies and carriers.

One of the most widely highlighted auto distractions is talking on your cell phone. But experts cite other sources of distraction that you may not have even considered before. With your life and other lives at stake, nothing – they say – but the road should be your focus. Anything other than the road will put you at a risk, causing you to become dangerously preoccupied.

Mind over Matter

Of course, if your mind is on something other than the matter of driving your vehicle, it is not a good thing. Despite our best efforts, the human mind is limited – able to process but a few things at a time. Thus, trying to do several duties simultaneously is definitely life-threatening.

Sight Distractions

Can you even imagine driving with your eyes shut? It’s a ridiculous notion, correct? When drivers preoccupy themselves with other activities while operating a car, it basically amounts to the same thing. Studies indicate that if you text while driving your vehicle at a speed of fifty-five miles per hour, you become distracted from your activity for about four and a half seconds. The risk makes you approximately twenty-three times more probable to get into a collision.

While texting certainly is the most common example of driver distraction, further instances consist of eating, drinking, changing radio stations, music and GPS gadgets, putting on cosmetics, perusing information and stretching your arm out to grab things. Every single one of such activities radically intensifies your chances to become involved in a crash.

A driver that becomes distracted is so much more likely to get into an auto accident:

• You are nine times more probable to crash when grabbing a moving object
• You are three times more probable to crash while perusing information
• You are two times more probable to crash when he or she eats and drives
• You are three times more probable to crash while applying cosmetics

Drive safe, be safe!