New Delhi: There has been a change in the insurance premiums of cars depending on the location, model and year of manufacture.
If you have been paying a premium of Rs 7,000 or 8,000 for a car worth Rs 2.5 lakh, now you will pay only Rs 5,500 to 6,000. For a car priced at Rs 5 lakh, the premium has come down to Rs 12,000 to 13,000 from Rs 16,000 earlier.
But, even as the premium for own damage motor insurance was reduced after the tariff was removed, the Insurance Regulatory and Development Agency (IRDA) increased the third party premium.
Third party insurance covers damages caused to the car by a third person. From January, the prices of third party insurance have increased from Rs 500 to Rs 620 for a 1500cc car. For a car over 1500 cc, the premium has been increased by 300 per cent to Rs 2,500!
The following are excerpts from an interview with Karan Chopra, National Sales Manager, Bank Insurance, ICICI Lombard.
What are the things to keep in mind while buying a motor insurance policy?
You get a discount on the car premium by getting an anti-theft device fixed in your car. One should also take into account the quality of after-sales services of the company such as having a 24-hour call centre, agent and price.
To be able to get the company to react on time, find out about the number of cashless tie-ups a company has with the garages and the number of 24-hour call centres for registering claims. Also find out whether the process of paying claims is quality certified or not. Besides considering the price factor, remember that a company with higher paying ability has I AAA rating.
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PAGE_BREAK that you not only take the price into account but also the facilities provided by the company. You can’t negotiate on the premium as the company has a fixed price for a car model depending on the location and the manufacturing year.
I want to buy a second hand car. Is the insurance premium different for an old car? -Manij Singh, Chandigarh
The same formula is applied for a second-hand car as is for a new car. However, if you are buying it first-hand, you get the ‘no claim bonus’ as there is a ‘no claim record’ and you start from zero. Apart from this, all the factors remain the same. For the old car, we charge depreciation value on the insurance cover of the old car. Depreciation value is fixed and is described in the tariff rates for the next five years. If the car is more than five years old, the company and the customer together decide its depreciation value.
When you take a comprehensive cover for a new car, all parts assembled at the factory are covered in it. But if you have added anything later such as a car stereo etc, you should declare it at the time of taking the policy and get these insured as well.
What will be the impact of model and location on the car premium?
Jagdish Kumar, Surat
The cost of repair and spare parts are the main factors that decide the insurance premium of a model and it may vary in different locations. Service and cost of spare parts is generally higher for big cars and therefore their premiums are a little high.
Which one is better – cashless or reimbursement claim?
There are two ways to get motor insurance claim – cashless or reimbursement. A company may have a few garages to repair the cars insured by it. Companies and garages settle the bills amongst themselves, and the customer pays only for the spare parts which have not been insured.
In case of a cashless claim, the entire onus of repair is on the company. The surveyor takes the car, gets it repaired and returns it to the customer. While the company garage is more reliable than a normal garage, the paperwork here may delay repair. Surveyors also take time to inspect the car. Sometimes, company garages are expensive and burn a hole in your pocket if you were to make a payment.
In case of a reimbursement claim, the repair charges are reimbursed by the company. You can also get your car repaired immediately at a garage of your choice after taking stock of the damage. You can also get checked other parts which may not be affected during the accident. However, if the repair is not to your satisfaction, the onus is on you.
Once the repair is done, send the bills to the insurance company to claim them. Give original bills and payment receipts at the time of making a claim. There is a chance that a third party agent would make a huge bill of repair and pocket the rest after paying you your dues. So know all the aspects of your policy before taking the cover.
Have car insurance premiums come down after tariffs were lifted?
The impact is different on various locations and models. If the claims are lower at a particular location for a particular model, the customers are bound to get its benefit. Customers in the North pay more car insurance premium as compared to other parts of India. For example, the incidence of car thefts is more in Delhi and therefore the residents pay higher car insurance premium than in other parts. Premium in smaller towns is lower owing to lower incidence of claims.
Companies are also collecting data on other things including the driver’s age and profile, colour of the car, etc. Its impact will soon be seen on your car’s insurance premium. In the era of competition, the customers get the benefit since companies fix their own rates. After March 2008, the companies will also make the terms and conditions of the policy transparent.
Right now, it is fixed and the companies follow standard terms and conditions. With the implementation of the de-tariffing regime, the customer will have the option of choosing a policy after considering the price quoted by different companies.
What should a customer do to keep his/ her premium low?
First is to drive carefully. The customer can also choose a car with a lower premium. Some car models and colours have a low insurance premium. The benefit of ‘no claim bonus’ given on the basis of number of accident-free years is quite high and goes up to 50 per cent.
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