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Why insures avoid third
party covers? |
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Soon, getting the mandatory third party cover even from
public sector non-life companies may become difficult as they too are going the
private insurers’ way - avoiding underwriting third party covers.
While for public sector insurers exceedingly high third party claims even over
200 percent was nothing new, a number of private non-life insurers who took the
plunge into motor insurance with offers of quick claim settlements and several
other had to shut shop within six months time - reason high third party claims.
But now public sector non-life companies too are slowly avoiding underwriting
third party covers taking into account the small premium payable and the
mounting losses. Besides consider the huge number of cases lodged at the Motor
Accident Tribunal and the figure could be astounding.
Since third party cover is compulsory, and it also being a loss making
business, state owned non-life insurers are working out ways to reduce third
party claims. In case of renewals state insurers are loading third party covers
with a premium of over 100 percent to be on the safer side.
The recently introduced new motor tariff that will come into effect from the
following July 1 has capped the third party premium at a maximum of 200
percent. General insurers have also decided not to have their agents canvass
for third party covers unlike previously. With private as also public sector
insurers working out ways to shun third party covers come their way the
insurance regulator may soon have to step in to make underwriting third party
risks mandatory. |
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Are you a car owner?
Find out the changes on Insurance happening
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From July 1 expect a steep hike in your motor insurance
premium for the new motor tariff policy will come into force and major changes
are in the offing especially for private car owners.
In case you have a bad claims history get set to shell out a higher premium on
policy renewal. But even if you have been a cautious driver with a claim-free
record you do not stand to benefit much unlike earlier times. The new tariff
policy allows a maximum discount of only 50 percent on premium in the fifth
policy year and if you file even once for a claim within those years your
discount on renewal will be nil and not reduced to the previous years level. In
other words, no rewards for a claims-free past.
As per the new motor tariff policy all cars will be rated on the basis of cubic
capacity. Which means advanced technology and safety features of your vehicle
will not be taken into consideration. Your vehicle’s insured value will be
determined on the basis of the insured’s declared value (IDV), which will
specify the percentage of depreciation. Which means indemnity for total
loss/constructive total loss will now be based on IDV instead of the earlier
IEV or market value.
What is Insured’s Declared Value (IDV)?
For the purpose of Total Loss/CTL Indemnity and for Premium computation, IDV
will be the Sum Insured. It will be determined and fixed at commencement or
each renewal of your policy.
Fixing IDV:
For the purpose of fixing the IDV of the vehicle, the reinstatement value of
the brand and model of the vehicle (with side car (s) and /or accessories if
any fitted to the vehicle but not included in the manufacturer’s list of
selling price of the vehicle) including the road tax paid, proposed for
insurance at the commencement of insurance/renewal period should be adjusted
for depreciation. The age of the vehicle will be considered at the time of
insurance/renewal.
Given below is the schedule of depreciation for IDV Private Cars/ Motorised two
wheelers :
| Age |
Depreciation |
| Not exceeding 6 months |
Nil |
| Exceeding 6 months but not 1 year |
10% |
| Exceeding 1 year but not 2 years |
15% |
| Exceeding 2 years but not 3 years |
25% |
| Exceeding 3 yrs but not 4 yrs
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30% |
| Exceeding 4 yrs but not 5 yrs |
35% |
| Exceeding 5 yrs but not 10 yrs |
45% |
| Exceeding 10 yrs |
50% |
Following is the Schedule of depreciation for IDV Obsolete Model of Private
cars and Motorised two wheelers.
| Age |
Depreciation |
| Not exceeding 6 months |
5% |
| Exceeding 6 months but not 1 year |
15% |
| Exceeding 1 year but not 2 years |
20% |
| Exceeding 2 years but not 3 years |
30% |
| Exceeding 3 yrs but not 4 yrs
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35% |
| Exceeding 4 yrs but not 5 yrs |
40% |
| Exceeding 5 yrs but not 10 yrs |
50% |
| Exceeding 10 yrs |
55% |
claims :
In case of claims the maximum liability will be the sum the vehicle is insured
for or the insured's declared value which will be the amount payable in case of
total loss or constructive total loss (CTL) irrespective of the market value of
the vehicle. also in case repair costs go over 75 percent of the IDV it will be
taken to be a CTL.
Do you have an anti-theft device installed in your vehicle? Well, heave a sigh
of relief for you'll be eligible for a maximum discount upto Rs 500 on your
insurance premium. |
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