MUMBAI, June 3: The Tariff Advisory Committee, the constitutional body to regulate the tariff rate for the general insurance industry, has decided to delete the depreciation clause appearing in the private car and motor cycle/scooter comprehensive policies in the `own damage section' of the motor insurance. The new provision will be effective from July 1.This means the owner of a car or motor cycle/scooter in the case of accidents can claim 100 per cent cost of any replaced part of the vehicle under the own damage section. TAC has also effected a nominal increase of 10 per cent in the premium in this category which will generate additional premium income of more than Rs 60-70 crore to insurance companies.
Earlier, the insurance company used to deduct a depreciation cost calculated on the basis of the tenure of the vehicle from the actual price for making any insurance claim. The provisioning for depreciation ranges from five per cent to 50 per cent. However, for tyres and tubes the existing provision forlimiting the insurers' liability to 50 per cent of the cost of replacement will continue. According to C N Ravi, Secretary, TAC, with a make view to make the motor tariff more beneficial to the policy holders, TAC has approved certain amendments in the own damage section of the tariff.
For making a 100 per cent claim payment the insurance company has to shell out more than Rs 350 crore every year.
"Even though the own damage motor insurance business will now be a virtually zero profit business, the step was necessary as a customer friendly measure," said Ravi. The fee for issue of duplicate certificate has been increased from Rs 20 to Rs 50.
The other measures of the TAC include the bonus content under the bonus clause applicable to various types of vehicles. This has been increased by 5 per cent at each level. The highest bonus will now be 65 per cent, increased from 60 per cent for private cars and taxies, and 55 per cent from 50 per cent for motor cycle/ scooter and commercial vehicles.
Theprovision for charging flat additional premium of Rs 750 when the manufacturers' price includes inbuilt air conditioners and/or any other electrical/electronic equipments has been deleted.
The towing charges to be borne by the company towards cost of protection and removal to the nearest repairer and for redelivering to insured stand revised from Rs 1000 to Rs 1,500 for private cars, from Rs 200 to Rs 300 for motor cycle/ scooter, from Rs 1000 to Rs 1,500 for taxies and from Rs 1000 to Rs 2,500 for other vehicles.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
