What Do You Need to Know- Knock-for-Knock Agreement?

Often when we talk about car insurance policy, two terms that are most commonly discussed are- the third-party cover and own damages. As per the Motor Vehicles Act, third-party insurance is a mandate for all motor vehicles in India.  As for the own damage, the cover helps in case your motor vehicle incurs any damages because of an accident, man-made or natural calamities, theft, or undergoes complete loss. Third party insurance is helpful when your car incurs damage with no fault of yours. The expense of repairs will be borne by the driver who is at fault. To claim third party car insurance, file the FIR at the nearby police station. You need to prove that the other party was at fault. The process could be tedious and time taking. Hence, a majority of people do not claim under the third-party insurance plan. Wondering, what's next? Well, this is the time when a Knock for Knock agreement comes into the picture. Haven't heard about it? Read on to learn more

All About Knock for Knock Agreement in Motor Insurance

The general insurance companies in India have to sign an agreement on an annual basis with each other. As per the terms, the insurance companies choose to pay for the damages if both the parties have their own damage cover. It means not making the use of third-party cover when the driver is at a fault. This is what we call the Knock for Knock agreement. The Knock for Knock agreement is created by the General Insurance Council. The GIC was constituted by IRDAI in 2001 and represents all general insurance companies in India. Going by the dictionary definition it states, ‘an agreement between the vehicle insurance company in which each insurer pays for the damages to the vehicle insured by it, without attempting to establish blame’.

The Benefit of Knock for Knock Agreement in India

Take a look at the table below to know the benefits of knock for knock agreement:

For the Policyholder	For the Insurer
Recovers the incurred expenses to repair the damages quickly	Avoiding any unwanted delay that might arise when dragging the third-party claims to The Motor Accidents Claim Tribunal
It is convenient as third-party claims are cumbersome and tedious	It is time-saving and cost-effective

Disclaimer: The Knock for Knock agreement is not a mandate, yet is the result of an understanding between the insurance companies.

Is There Any Exclusion Under Knock for Knock Agreement?

Listed below are the exclusion under knock for knock agreement :

• It will not apply to railways or tramways.
• Remains unapplied to loss/ damage covered by the policy for any cover that is less than the issued comprehensive by either of the parties.
• It will only apply to mishaps/accidents that arise in applicable geographical locations specified in the policy.

The Bottom Line

The knock for knock agreement is voluntary. The customers have the alternative to go with third-party claims. In case a customer opts to go with their own damage cover, then the status of ‘No Claim Bonus’ will be lost. A motor insurance policy is of prime importance when plying on Indian roads. Evaluate every decision carefully.