Hyderabad:
The insurance regulator IRDAI is planning to revamp the ways insurers do motor insurance business, own damage,including the methods for calculating the depreciation and sum isured of motor vehicles while settling any claims.
Considering the various developments in technology relating to motor vehicles as well as the fast changing eco-systems, IRDAI had set up a working group(WG) to revisit the product structure in respect of motor own damage segment.The working group made various recommendations, after which it has been decided to work on the product design and draw up the proposed policy wordings, including the terms and conditions in plain language, keeping the large motor segment in mind, said IRDAI on Monday.
Currently, the wordings, terms and conditions in respect of the basic policy for Motor Own Damage cover are driven by the erstwhile India Motor Tariff, 2000.However, insurers have been permitted to sell add-ons to the basic cover within the framework provided under the extant product filing Guidelines for general insurance.
For private cars and two wheelers (other than brand new), the sum insured will represent the current day manufacturer’s listed price of the vehicle insured including value of all accessories fitted thereon by the manufacturer, and adjusted by age wise depreciation to arrive at the sum insured as per new depreciation table suggested.
Brand new Private Car upto three years:
The sum Insured will represent the current day on-road price of the vehicle insured including Invoice value, Road Tax& Registration charges and value of all accessories fitted thereon by the manufacturer. The value of accessories fitted by the Insured shall be separately mentioned.
For vehicles beyond three years: The sum Insured will be as per the suggested new depreciation table. Beyond 7th year, Sum Insured shall be arrived at a mutually agreed value between the Insured and the insurer.
For Commercial Vehicles:
The sum Insured shall represent the current day invoice value plus cost of body building, if any, and all accessories fitted thereon by the manufacturer adjusted for depreciation at the rate of 10 per cent per year or part thereof subject to maximum of 75 per cent . For total loss, theft and constructive total Loss claims, the amount payable shall be the sum insured.
For all classes of vehicles, the WG has recommended that sum insured shall represent the on-road price of the vehicle insured, at the time of purchase of the vehicle, including Invoice value, Road Tax and all accessories fitted thereon by the manufacturer plus the value of the accessories fitted by the Insured. A new depreciation table is suggested upto 15 years.
Depreciation for Partial Loss claims
-Partial Loss claims will be payable subject to depreciation as per the new scale. Proportionate premium for reinstatement of Sum Insured from the date of loss till expiry shall be deducted from all partial loss claims.
-total Loss / Constructive Total Loss Claims: In addition to the existing provision, it is recommended that in all cases of Total Loss / CTL and Theft claims, the Registration Certificate of the vehicle shall be cancelled and claim shall be settled only after the Insured surrenders such cancelled RC. The policy shall be cancelled without return of premium.
-It is however, clarified that the entitlement of No Claim Bonus will be applicable for the substituted vehicle subject to the provision that the substituted vehicle on which the entitled NCB is to be applied is of the same class (as per these Regulations) as the vehicle on which the NCB has been earned and subject to submission of evidence of sale of the vehicle on which the NCB was earned.
-Vehicle age-based depreciation has been recommended for partial losses to make it completely objective and remove all ambiguity and subjectivity in claim settlement.
-Revised schedule of compulsory deductibles based on Sum Insured has been recommended. Standardized NCB grid is introduced for long term policies. For brand new private cars, a new Sum Insured option has been recommended where Return to Invoice is a part of basic cover.
-Upto the first three years, no depreciation will be applicable. After that, there will be a depreciation of 40-60 percent, depending on the age of the vehicle from above three years till the seventh year.
-The level of depreciation has also been lowered in the exposure draft. This means you will get a partially-higher amount of insurance even if the vehicle is older.
At present, the depreciation ranges from 5 percent for vehicles upto six months old to 50 percent for vehicles that are five years old.
The IRDAI working group said that, beyond the seventh year, the sum-insured will be arrived at a mutually agreed value between the car-owner and insurer. The draft is based on the recommendations of a working group set up to look into motor own damage product structure.
It is also recommended that all the occupants traveling in motor vehicles will have Rs25,000/- medical expenses coverage arising out of an accident to the insured vehicle covered under the basic policy & appropriate premium for this shall be charged by the insurers.It is recommended to adopt
The draft proposal has suggested creating a central repository of telematics data where data from various sources flows to create a common pool. IIBI which acts as data repository for insurance companies can manage the data and its protection.Any Loss / damage caused by insured or any person driving with the consent of the insured s under the influence of psychotropic or narcotic substances is excluded
Any damage to engine parts, gear box parts and transmission arising out of ingress of water due to accidental means is included Educational institutions/Staff buses are in a distinct risk category and are accordingly recommended to be treated as separate category.Electrically powered vehicles may be classified in the respective categories based on the usage as per registration certificate.
-Goods carrying vehicles have only one permit and the distinction of private and public carriers may be done away with in due course.
-Two-Wheelers employed by e-retailers including App based food delivery companies are separate risk category but under the current MV Act there is no provision for their registration as goods carrying vehicles.
–Private cars type vehicles with carrying capacity upto 13 (including driver), i.e Maxi cabs should also be categorized as Taxies.