Car insurance sans tariff?

Source: Aapka Paisa

 

If you have been paying a premium of Rs 7,000 or 8,000 for a car worth Rs 2.5 lakh, now you 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.

 

All the benefits of the tariff-free regime are yet to reach customers, however. At present, most companies do not take into account the driver's experience at the time of fixing the premium. After January, there has been a change in the insurance premiums of cars depending on the location, model and year of manufacture.

 

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.

 

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.

 

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