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Motor insurance may cost more from 2009
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Motor insurance may cost more from 2009
Although you may still get to buy cars at cheaper prices in 2009, the cash savings might see another use: motor insurance. Costs of insuring vehicles are expected to increase from January, as the guidelines issued by the Insurance Regulatory and Development Authority (IRDA) allows insurers to change or charge deductibles, and also charge customers extra for providing them with add-ons.
Deductible is the amount you must pay toward a claim before your motor insurance begins to pay. For example, if you have a Rs 50,000 claim and your policy has a Rs 2,000 deductible, you will pay Rs 2,000 and your insurance company will pay the rest. "The deductibles are low when compared with the international market. After January 1, 2009, we expect that insurers will have the freedom to charge a higher deductible," Gaurav Garg, managing director, Tata AIG General Insurance, said.
But while higher deductibles mean lower premiums, that may not turn out to be the case. Why? Because a section of the industry feels that prices prevailing in the market are not enough. So, premium rates may also go up. "The regulator has allowed companies to hike deductibles. But do not rule out a hike in premium also. The consumer may have to pay higher deductibles as well as a higher premium, "an official, who did not wish to be quoted, at a general insurer said.
The insurance regulator has also allowed insurers the freedom to give add-on covers (at an extra cost) which could be in form of `loss of use`, `replacement car` and `extended warranty`. With the easing of regulations, the insurer will be able to offer add-on covers along with the basic motor insurance product. This will lead to customisation that will further lead to the customers getting more from their motor insurance cover. Keeping an eye on the leeway to get the `additional premium` for add-on products, companies such as ICICI Lombard are looking at inclusion of add-on covers offering value propositions to the customers.
"We are evaluating various product options that can be offered as add-ons. Zero depreciation products have been well accepted internationally. Others that could be introduced could be loss of use, replacement car and extended warranty," Eswaranatarajan N, head-Motor Insurance of ICICI Lombard, said.
For instance, customers could be asked to shell out more for availing `Loss of Use` cover. This would essentially mean that the customer will be compensated for the inability to use a commercial automobile due to accident/damage to the vehicle caused and the same leading to the loss of money which is derived from the damaged vehicle under normal circumstances.
For example, an individual owns a taxi by which he earns Rs 500 a day. The taxi meets with an accident and is under repair for a week. In such a situation the loss of use would be Rs 3,500. The insurer would compensate this loss for a fee. And what would be the additional cost? Insurers are tight-lipped. "In a detariffed scenario, insurers would continue to adopt a risk based pricing approach for the own damage premium as well as add-on products," Eswaranatarajan said.
Source:
http://timesofindia.indiatimes.com/Business/Motor_insurance_may_cost_more_from_2
Deductible is the amount you must pay toward a claim before your motor insurance begins to pay. For example, if you have a Rs 50,000 claim and your policy has a Rs 2,000 deductible, you will pay Rs 2,000 and your insurance company will pay the rest. "The deductibles are low when compared with the international market. After January 1, 2009, we expect that insurers will have the freedom to charge a higher deductible," Gaurav Garg, managing director, Tata AIG General Insurance, said.
But while higher deductibles mean lower premiums, that may not turn out to be the case. Why? Because a section of the industry feels that prices prevailing in the market are not enough. So, premium rates may also go up. "The regulator has allowed companies to hike deductibles. But do not rule out a hike in premium also. The consumer may have to pay higher deductibles as well as a higher premium, "an official, who did not wish to be quoted, at a general insurer said.
The insurance regulator has also allowed insurers the freedom to give add-on covers (at an extra cost) which could be in form of `loss of use`, `replacement car` and `extended warranty`. With the easing of regulations, the insurer will be able to offer add-on covers along with the basic motor insurance product. This will lead to customisation that will further lead to the customers getting more from their motor insurance cover. Keeping an eye on the leeway to get the `additional premium` for add-on products, companies such as ICICI Lombard are looking at inclusion of add-on covers offering value propositions to the customers.
"We are evaluating various product options that can be offered as add-ons. Zero depreciation products have been well accepted internationally. Others that could be introduced could be loss of use, replacement car and extended warranty," Eswaranatarajan N, head-Motor Insurance of ICICI Lombard, said.
For instance, customers could be asked to shell out more for availing `Loss of Use` cover. This would essentially mean that the customer will be compensated for the inability to use a commercial automobile due to accident/damage to the vehicle caused and the same leading to the loss of money which is derived from the damaged vehicle under normal circumstances.
For example, an individual owns a taxi by which he earns Rs 500 a day. The taxi meets with an accident and is under repair for a week. In such a situation the loss of use would be Rs 3,500. The insurer would compensate this loss for a fee. And what would be the additional cost? Insurers are tight-lipped. "In a detariffed scenario, insurers would continue to adopt a risk based pricing approach for the own damage premium as well as add-on products," Eswaranatarajan said.
Source:
http://timesofindia.indiatimes.com/Business/Motor_insurance_may_cost_more_from_2
