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What is a Floater Policy in Motor Insurance?

Author: Team Finpage
Thursday, April 25, 2024

There was a 30% jump in the average budget for purchasing cars in India in 2022, as per a Mileage Report. The same year also saw an 81% surge in people purchasing their second car. If you have decided to buy another car, do consider protecting both your vehicles with a floater policy. It allows you to cover all your four-wheelers and two-wheelers under one insurance plan with one renewal date. This makes insurance more convenient and affordable.

Features of a Motor Insurance Floater Policy in India

Motor floater insurance is extremely beneficial for policyholders in India. Here’s why:

  • The premium to cover all cars is lower than getting separate policies for each vehicle.

  • The hassle of paying multiple premiums and remembering different renewal dates is eliminated.

  • Managing a single insurance policy is easier.

  • Getting all the details in one place helps you save time and effort.

Floater policies offer a lot of flexibility by allowing you to add or deduct cars and bikes mid-term.

Know that the policy applies to a single owner of multiple vehicles. You cannot insure your dad’s car or your brother’s bike under one floater policy. Further, the premium can be usage-based, and driver behaviour is taken into consideration.

How Does Floater Motor Insurance Work in India?

Third-party insurance is mandatory in India. If your vehicles already have this, you can choose a standalone own-damage cover. Else, you can take a comprehensive policy that provides own-damage plus third-party liability cover.

If you do not claim the policy term, a No Claim Bonus (NCB) is added to the premium during insurance renewal. Generally, up to 5 vehicles can be covered under a floater policy. The vehicle with the highest value is considered as the primary vehicle. The remaining ones are secondary.

Inclusions of Motor Insurance Floater Policy

Here’s what a typical floater policy will cover:

  • Damage caused by fire or explosion.

  • Accidental damage to the car in transit.

  • Damage during strikes and riots.

  • Theft and burglary.

  • Natural calamities like floods, landslides, and severe storms.

Exclusions of Motor Insurance Floater Policy

  • Below are a few aspects that are typically not covered by a motor insurance floater policy:

  • Damage to an insured vehicle when the driver was drunk.

  • Damage to an insured vehicle when the driver does not have a valid driving license.

  • Repair or replacement of car parts due to wear and tear.

  • Damage caused by reckless driving or improper handling of the insured vehicle.

  • Further, mechanical or electrical breakdowns and depreciation of the insured car are not covered under the policy.

Can a Floater Motor Policy Be Cancelled?

Yes, this is possible under a few specific circumstances. The owner-damage cover will stand cancelled if the primary vehicle is lost or stolen. If a secondary vehicle is lost or stolen, the insurance will cover the primary vehicle and remove the secondary one from the policy.

If one of the vehicles is transferred to a new owner, the policy will no longer cover it. Also, the entire policy will be cancelled if all the vehicles are destroyed in a single incident.

Take the stress out of shopping for several motor insurance policies. Instead, opt for a floater policy to enjoy ease of paying and tracking premium, simpler documentation, and convenient renewals.

Team Finpage

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