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Car insurance: 4 ways to get the most out of your cover
Sept 7, 2016
Insurance companies offer two types of motor insurance cover. One is the liability-only policy, which covers third-party liability for bodily injury or death and property damage. The other is a package policy, or comprehensive cover, which covers loss or damage to the insured vehicle and the third-party liability.
Apart from these, insurers also offer a few add-on covers that provide policyholders many benefits. Such add-on covers are available for all private cars, two-wheelers and even commercial vehicles. So, before finalising on the add-on covers, one must take note of the total sum insured of the vehicle and the costs of the add-on covers.
Insured’s Declared Value
The total sum insured of a vehicle is known as the Insured’s Declared Value (IDV). In case of theft of the insured vehicle or in case of total damaged, the owner of the vehicle can claim the amount depending on the IDV. Insurers fix the IDV of the vehicle every year at the time of the renewal of the policy based on the year of manufacturing, selling price of the brand and the model and depreciation of the vehicle.
For arriving at the IDV, insurers calculate depreciation of the vehicle on a fixed formula: Vehicles up to one year is 15%, up to two years 20% of the original IDV, 30% for three years, 40% for four years and 50% for five years. For vehicles that are over five years old and of obsolete models, the IDV is determined on the basis of an understanding between the insurer and the insured.
A policyholder can opt for add-on covers to the basic vehicle insurance and the pricing is based on the IDV. However, policyholders must keep in mind that add-on covers are not applicable if the vehicle is used for motor rallying and if the vehicle is not being used or driven according to the applicable laws and regulations of the Motor Vehicles Act.
Zero depreciation
In zero or nil depreciation cover, the policyholder will get the full claim on the value of parts like plastic items, fibre, rubber, windscreen that are replaced in the event of loss due to accident. Most insurers offer zero depreciation for the first three years and some even offer for five years for higher premium.
Break-down assistance
This is a popular add-on cover at a very nominal cost, which takes care of the car in case of a breakdown or accident on the road. The policyholder will have to call up the designated helpline number of the insurer and help will reach him. It covers the replacing of flat tyres, alternate battery, alternate key, towing vehicle, and even emergency fuel and alternative vehicle.
Engine cover
It provides protection to the engine in case of flooding as hydro-static lock is a major causes of engine failure. Since damage due to hydro-static lock, which happens if one repeatedly tries to run a moist engine, is not covered under a regular motor insurance policy, an add-on engine cover can be of great help.
Additional cover
* A person whose vehicle is registered with the RTA can take add-on cover
* Add-on covers are available for private cars, two-wheelers and commercial vehicles
* The premium for add-on cover is fixed based on the IDV of the vehicle
* Zero-depreciation and engine cover are the most popular add-on covers
* Add-on covers are not applicable if the vehicle is used for motor rallying
Source: The Financial Express
Economic growth can help deepen insurance coverage: Jaitley
Sept 1, 2016
Finance Minister Arun Jaitley today expressed the hope that India will become a fully insured and socially secured nation as economic expansion gathers momentum over the years.
"As the economy grows faster, I hope we will become a fully insured and socially secured nation over the years, and I am sure LIC can play a very big role in achieving this," Jaitley said, launching the Diamond Jubilee celebrations of the nation's largest financial powerhouse here.
Taking a potshot at central trade unions that have called for a national strike tomorrow to protest against labour reforms, among other things, he rued that his Budget proposal for contributory social security net had to be withdrawn due to opposition from all around.
He also recalled that how trade unions opposed the Seventh Pay Commission proposal to have a contributory social cover.
"But I have no doubt that one day we will realise the value of social security and insurance and we will one day become a fully socially secured nation," he said.
Lauding Life Insurance Corporation of India (LIC) for remaining the market leader with over 70 per cent market even after competition was allowed 16 years ago, Jaitley said: "I am glad that very few monopolistic institutions of the state have prospered in a competitive market environment and still continues to remain the market leader as LIC has done over the years."
Normally state monopolies find it difficult to survive in a competitive environment, as the private sector devoid of bureaucratic hurdles can take market-oriented decisions faster in such climate and thus thrive, "but LIC has been able to do so even after the liberalisation", he noted.
To retain its leadership, Jaitley asked the Corporation to be more and more innovative in its product offerings as well as nation building efforts so that it can continue to serve and achieve the objectives for which it was created way back in 1956.
Recalling the contribution of the Corporation to nation- building, Jaitley noted that LIC is the largest investor in our nation's growth story with over Rs 4 trillion (Rs 4 lakh crore) in investments into key sectors of the economy.
The Finance Minister also said, his counterpart at the Health Ministry is working on a plan to offer a health cover of Rs 1 lakh to the poor who form one-third of the population.
Meanwhile, outgoing LIC chairman SK Roy handed over a cheque of Rs 2,502 crore for last fiscal year, up from Rs 1,803 crore given in the previous year, to the Finance Minister as part of sharing its surplus with its owner.
Roy also announced that as part of the Diamond Jubilee
celebrations, the Corporation will pay a one-time special bonus to policyholders over and above the annual payout of its profit sharing.
As per the LIC Act, the Corporation has to share 95 per cent of its profit, which in LIC's parlance is called 'surplus' has to be shared with the policyholders and the rest with the government as its owner.
Accordingly, in 2014-15, LIC had paid Rs 34,283 crore as regular annual bonus to the policyholders.
Source: Business Standard
3rd-party insurance premium may go up after new MV Act
Aug 9, 2016
The premium for third party insurance for motor vehicles or this component in the comprehensive insurance that you take could increase by at least 10-15% once amendments to the Motor Vehicles Act are passed by both Houses of Parliament.
Third party insurance accounts for about 30% of the premium of comprehensive insurance. Only third party insurance is mandatory.
The primary reason for this is the substantial increase in compensation proposed in the amendments for accident victims. From the present Rs 25,000 compensation, it will be increased to Rs 2 lakh in case of death in hit and run cases.
For grievous injuries, the compensation proposed is Rs 50,000 against the present Rs 12,500. Similarly, there is a provision for payment of compensation up to Rs 10 lakh in road fatalities where the offending vehicle and the owner are identified. In case of grievous injuries, the compensation would be up to Rs 5 lakh.
As per the proposed amendments, insurance companies will pay the compensation amount within 30 days. "This is the minimum compensation we have proposed and people must get the compensation quickly. But if the family members are not satisfied with this amount, they can approach the tribunal for higher compensation," road transport minister Nitin Gadkari told TOI . He added that the main reason behind coming out with such a proposal was to provide quick relief to the families of those killed or grievously injured in road crashes.
However, experts in the road transport sector are not impressed. "Why should government get into the business of capping compensation? In the present law, police refer every case to the Motor Accidents Claims Tribunal and the compensation is calculated based on a set formula. The government should only bring reforms to ensure that people get justice quickly from the tribunal," said S P Singh of IFTRT, a Delhi-based think tank on transport-related issues.
He added that there were several cases in the past where victims' families got higher compensation. Singh said the government seemed to be playing into the hands of insurance companies and the transporters' lobby. "Let them make it public what consultations they did with road users before proposing such an amendment," Singh said.
But ministry sources said they had only put the best possible proposal and all aspects of the bill would be discussed in both Houses of Parliament. They added the penalty for driving a vehicle without insurance would be doubled from the present Rs 1,000 to Rs 2,000 to ensure that every vehicle on the road had insurance. "It's a deterrent fine," said a government official.
Source: The Times of India
13 firms violated health insurance norms: FinMin
Aug 9, 2016
The government said 13 insurance companies had violated health insurance regulations and action was being taken on the complaints received.
In the written response during Question Hour in the Lok Sabha on Friday, Finance Minister Arun Jaitley said these companies had violated health insurance regulations, circulars and file-and-use guidelines.
These include New India Assurance, Bharati AXA General Insurance, Bajaj Allianz General Insurance, Future Generali Insurance, L&T General Insurance, Shriram General Insurance, Max Bupa Health Insurance, United India Insurance, Cholamandalam M S General Insurance, ICICI Lombard and Reliance General Insurance
Responding to a supplementary by Rahul Shewale (Shiv Sena) on an alleged health insurance scam worth Rs.500 crore under Rajiv Arogya Yojana in Maharashtra, the Minister of State for Finance, Santosh Gangwar, said the government was vigilant towards such acts by certain companies and investigations were on in some cases.
“We take steps to ensure that complaints are disposed of within 15 days. So far, the biggest complaint has been against Reliance General Insurance, which has been fined Rs.20 lakh,” he said.
Earlier, Udit Raj of BJP wanted to know whether any probe had been ordered against alleged irregularities by private and public insurance firms, such as the one estimated at Rs.1,000 crore by Lombard General Insurance (on which he had written to the Finance Minister in 2013).
In response to Raj’s allegations that under the Rajiv Gandhi Shilpi Swasthya Yojana for artisans, 11,455 claims out of 30,000 were found to be bogus, Gangwar said a probe was under way.
The Minister informed the House that now people were availing insurance schemes such as Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jeevan Jyoti Bima Yojana which provide insurance cover at very low premiums.
So far, 9.6 crore people had enrolled themselves under the Prime Minister’s Rs.12 per annum accident insurance scheme, and 4,711 claims had been settled, he added.
Source: The Hindu Business Line
Pay Re. 1, get insurance cover for train travel
Jul 28, 2016
Train passengers booking their tickets online through the IRCTC website will be able to opt for travel insurance cover from September for a premium of just one rupee. The scheme offers travellers or their families compensation of up to Rs. 10 lakh in the event of death or permanent total disability, Rs. 7.5 lakh for permanent partial disability, up to Rs. 2 lakh for hospitalisation expenses, said a senior IRCTC official.
The new facility will be available for all passengers of Railways who book the e-ticket, excluding suburban trains, through its website, irrespective of the class of the ticket, on a trial basis.
The scheme is being implemented by IRCTC in partnership with ICICI Lombard General Insurance, Royal Sundaram and Shriram General. A total of 19 companies participated in the bidding process out of which these three were selected, he said.
The three companies selected will get the insurance policy on a rotation basis from an automated system. IRCTC has engaged the providers for a period of one year, with the provision of extending the contract on a performance basis.
Train accident and untoward incident cases will be as per definition under Sections 123 read with Sections 124 and 124A of the Railways Act, 1989.The insurance cover is uniform for all classes and the option available through a checkbox at the time of e-ticket booking. The premium amount will be automatically added to the ticket fare if the passenger opts for insurance. After the ticket booking and payment of premium, a message shall be displayed to complete the nomination details, which are necessary to settle the claims on timely basis.
Checking the option will make the coverage mandatory for all passengers booked under that PNR number and the premium charged accordingly. Users wanting coverage for children below five years of age will need to furnish details of the child at the time of booking and accordingly travel insurance premium will be added to the total amount payable.
Source: The Hindu
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