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Soon, vehicle owners renewing their auto insurance policies will no longer need to ascertain which insurer offers the highest insured value for their set of wheels.
From October 1, all non-life insurers will assess the worth of vehicles using the same parameters, and offer a uniform insured value — so customers just have to compare insurer quotes on the basis of premium payable.
In effect, this would mean that a car of a particular make and model would have a standard sum assured, or current market price across insurers. The premium is based on this value and is used to compensate vehicle owners in case of theft, accident or loss. “We are standardising insured declared values across the industry for motor insurance. All insurers would give the same value for any particular car,” said R Chandrasekaran, Secretary-General, General Insurance Council, adding that some insurers had already done it, while others were expected to do so by September-end. At best, there could be a five per cent variation in the insured declared value of vehicles between insurers, he said. However, the premium could differ based on accessories and add-ons that a vehicle owner may choose to include as part of the policy.
According to Chandrasekaran, the move would not only help customers but also benefit the industry. “Often, people do not realise the importance of the insured value until they file a claim. They may choose an insurance policy as the premium is low, not understanding that the value of the car has also been kept lower,” he said.
At the same time, the industry also loses premium. “We don’t want the sum insured to become a competitive element in the industry,” he contended.
Third-party motor insurance is a compulsory requirement for all vehicle-owners. Often, people also opt for their own damage insurance. Motor insurance is a key business for general insurers, accounting for over 40 per cent of their revenues.
According to industry data, ₹15,074 crore of gross direct premium income underwritten by non-life insurers came from this segment in the first quarter of this fiscal.
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