Page 218 - Motor Insurance Ebook IC 72

The Insurance Times

account density of population, density of road traffic,
etc. it also takes into account the types and quality of
roads over which the vehicles would normally ply.

The normal parking location of the vehicle is also of
consideration. Open parking is a higher risk than
closed parking. The vehicle is exposed to sun and
rain and winds which results in more wear and tear.

In addition if the vehicle is parked on public areas
and not within residence or business premises, there
is the risk of theft of the vehicle or partial damages
by passing vehicles or public.

Q 5. What is Moral Hazard? How it is important in
Ans: analyzing the "Claims experience?"
Moral hazard is, perhaps, more important in underwriting
motor insurance than in other classes of insurance. The
owner or driver of a motor vehicle is more responsible
for bad claims experience than the physical condition of
the vehicle or the use to which it is put or the area in
which it is used.

It is in rare cases that mechanical breakdown causes
road accidents. It is the attitude, the temperament and
the personality of the driver that is responsible for
accidents. While considering acceptance of new

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