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New Motor Car Insurance

It has been long since insurers were proposing for a hike in motor tariff, reason being the heavy claims ratio in this class of business. Inspite of stiff resistance from truckers lobby and others, finally motor tariff has seen the light of the day. The new motor tariff is effective from 1st of July 2002.

To put it simply, premiums have been drastically increased or rationalised as insurers may call it. The result is insured will end up paying more than what he would have paid under the earlier tariff, for the same insurance cover. Some of the highlights of the new motor tariff are :

• Premiums are based on four factors namely, Zone, Age of the vehicle, cubic capacity and Insured Declared Value as opposed to earlier three factors namely zone, cubic capacity and Insured Estimated Value.

  
  

• Compensation for third party property damage under liability policy which was Rs.6000 earlier has been raised to Rs.7,50,000. But the compensation for the personal injuries to third parties remains unchanged i.e., it is unlimited as earlier.

  
  

• Personal accident cover of Rs. 2,00,000 for owner driver has been made compulsory.

  
  

• Scientific method of computing Sum insured i.e., Insured Declared Value: - TAC has suggested, computing the sum assured based on the manufactured selling price as on the date of commencement of insurance/renewal and age of the vehicle. Based on the age of the vehicle, depreciation is applied to the manufacturers selling price to arrive at the sum assured.

  
  

• Maximum limit for no claim bonus(NCB) has been reduced to 50% which was earlier 65%. Biggest blow to insured is the method of calculation of NCB. Take the case of an insured who makes a claim and is enjoying a NCB of 50 %. Under the present system NCB on the next renewal will be zero, whereas earlier, in case of claim, NCB was reduced by one slab and a NCB of 45% (for the above example) was awarded on next renewal.

  
  

• Compulsory deductible is applicable for each and every claim. Deductible is the amount of the loss which the insured has to bear in each and every claim. Insurance company shall be liable only when the amount of loss exceeds the 'deductible'. Ex: A policy with Rs.100 deductible would mean that policyholder has to bear the first Rs.100 for each and every claim under the policy. Amount of compulsory deductible is given by the TAC for each and every class of vehicle.

  
  

• Earlier insured could opt out Earthquake, Riot, strike malicious and terrorist damage and Storm, Tempest, Flood and Inundation covers and avail discount in premiums. This facility has been withdrawn.

  
  

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