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What will the new BH vehicle plate series mean for motor insurance premiums?

The all-new BH registration series is meant for those with transferable jobs. Make sure you disclose the change of registration to your insurance company

September 20, 2021 / 10:00 AM IST

A new BH series of number plates was recently launched by the government. It can be availed by employees linked to the defence ministry, banks, public sector and government departments, to avoid the cumbersome inter-state vehicle-registration transfer procedure. Even those belonging to the private sector, having footprints in four or more states, would be permitted to use the BH series of vehicles.

You can apply for such a vehicle registration and pay the requisite fee and taxes electronically. About 5-21 percent tax is collected by either the state or central government for the registration.

Aatur Thakkar, co-founder and director at Alliance Insurance Brokers, says, “Introducing new vehicle registration of Bharat series would ensure seamless transfer across states and will free vehicle owners from the re-registration process when they shift from one state/union territory to another, saving on intra-state tax.”

Will premiums be impacted?

In the short term the overall expenses would come down for vehicle owners opting for the BH series, due to tax collection only at the initial registration stage and avoidance of multiple state tax collections during transfers.

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Over the long term, shifting between cities can result in claims for minor dents or theft during shifting, too. But insurance companies and insurance brokers declined any immediate impact on the insurance premium for the BH series of vehicles.

“We do not anticipate the insurance industry to increase premium charges on the basis of the new regime announced by the Government,” says Thakkar.

Currently, insurers do not intend to add the registration number as a specific clause for assessing the risk of a vehicle. However, they would be assessing the claims incurred by such vehicles and decide in the future whether there needs to be a lower or higher premium for such BH series vehicles.

“There will be no immediate impact on the premium for such vehicles. To look at it as an underwriting parameter, we will have to assess the signification over a period and see how it adds up,” Sanjay Datta, Chief-Underwriting, Reinsurance, Claims & Actuarial at ICICI Lombard General Insurance.

So far, whether your travel in a vehicle registered in Delhi or in Pondicherry, the premium for the same model of car would be the same, irrespective of the variation in the number of accidents in these two cities.

“The Registration of a vehicle doesn’t have any impact on both the third party and own damage insurance cover,” says Kapil Mehta, Co-founder of SecureNow Insurance Brokers, adding that the insurance cover, once taken, is valid across India.

So, if you take an insurance policy for your vehicle registered in Mumbai and meet with an accident while travelling to Surat, then too your insurance claim would be valid.

What affects vehicle premium?

The geography of the vehicle hardly affects the premium. There are other factors that decide the premium. “Motor vehicle insurance is mandatory in India and the insurance for motor vehicle is largely based on the cost and age of the vehicle,” says Thakkar.

Also, a garage in, say, Ujjain would charge lower labour costs compared to one in Indore. Though this would impact your overall vehicle repair cost it doesn’t move your premium an inch.

Mehta elaborates, “Though the labour costs of repairs would be low in a smaller town compared to the tier 1 and 2 towns, the same is not priced in the motor insurance product. In a vehicle insurance, the car make, age of the car and the total cost of the vehicle including taxes would have a say in the insurance premium.”

The lower taxes, however, could give you some savings on insurance premium. Currently, tax for 15 years is collected upfront at the time of vehicle purchase. With the BH series, the tax for only two years would be collected. So, the insured declared value of the vehicle would reduce in sync with the taxes.

Inform insurer when moving cities

Even though the premium doesn’t get affected when you decide to move to a different city, you would be under obligation to inform the insurer when you change your existing vehicle’s registration to BH series or move to another state.

“When you alter the car number, it is safer to let the insurer know to avoid being accused of hiding any material fact if any claim arises,” Mehta suggests.

Such an alteration in the insured vehicle can be informed through a simple form, say insurers.

“If there is any change in the vehicle number based on inter-state registration, then the insured will have to inform the insurance company. This can be done through an endorsement for change even during an ongoing insurance period,” says Datta of ICICI Lombard General Insurance.

Insurance denied for faulty registration

If you have a transferrable job and need to move across states, it is best to get the BH series number plate for your vehicle. This is important not just to save taxes, but also to make sure your insurance claim is not declined for a reason as simple as not adhering to road rules.

So, if you move from Delhi to Mumbai, you must alter the DL number plate to MH number plate within 12 months as per the Ministry of Road Transport and Highways.

“If your vehicle registration has not been changed within the stipulated period (one year) after moving from one state to another, then the insurer would repudiate your claim as you are not following the law of the land,” Mehta says.
Khyati Dharamsi
first published: Sep 20, 2021 10:00 am

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