Classification 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 f.re, 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.