Mumbai, June 3: The Tariff Advisory Committee for the general insurance industry has decided to delete the depreciation clause in the private car and motor cycle/scooter comprehensive policies in the own-damage section of motor insurance. The new provision will be effective from July 1. This effectively means that in case of an accident, the owner of a car or a motorcycle/scooter can claim the 100 per cent cost of any replaced part of the vehicle.Earlier, a depreciation cost was deducted, calculated on the basis of the tenure of the vehicle from the actual price. The provision for depreciation ranges from 5 to 50 per cent. However, for tyres and tubes, the existing provision for limiting the insurers' liability to 50 per cent of the cost of replacement will continue.
TAC secretary CN Ravi said that the body has approved certain amendments to the own-damage section in order to make motor tariff more beneficial to the policy-holders. TAC has also effected a 10 per cent increase in the premium in thiscategory. This will generate an additional income of more than Rs 60 to 70 crore for the insurance companies.
For making a 100 per cent claim payment, the insurance companies have to shell out more than Rs 350 crore every year.
``Even though the own-damage motor insurance business will be now a virtually zero profit business, the step was necessary as a customer-friendly measure,'' Ravi said. Besides, the bonus content under the bonus clause applicable to various types of vehicles has been increased by 5 per cent at each level. The highest bonus now will be 65 per cent, increased from 60 per cent for private cars and taxies and 55 per cent for motor cycles/scooters and commercial vehicles, up from 50 per cent.
The provision for charging a flat additional premium of Rs 750 when the manufacturers' price includes inbuilt air conditioners and or any other electronic equipment has been deleted.
The towing charges, in case the vehicle is disabled, to be borne by the company towards the cost of protectionand removal to the nearest repairer and for redelivering to the insured, stand revised from Rs 1,000 to Rs 1,500 for private cars, from Rs 200 to Rs 300 for motor cycles/scooters, from Rs 1,000 to Rs 1,500 for taxies and from Rs 1,000 to Rs 2,500 for other vehicles.
The TAC has a stronger role to play in the new insurance market, which is now opened for private players, Ravi said.
``Along with the Insurance Regulatory Authority, the constitutional institution will protect the customers in any circumstance,'' he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
