The Insurance Regulatory and Development Authority (Irda) today included vehicle paint under the purview of depreciable part and fixed rate of depreciation for the same.
"In case of painting, the depreciation rate of 50% shall be applied only on the material cost of the total painting charges," the insurance sector regulator said in a statement.
In case of a consolidated bill for painting charges, the material component shall be considered as 25% of painting charges for the purpose of applying the depreciation, it said.
The changes have been brought in as it was observed that there were no uniform practice prevailing in the market for depreciation on painting, it said.
The change shall be applicable to all motor package policies whose risk inception date falls on or after February 1, 2013, it said.
To this effect, Irda has advised all the insurers writing motor insurance policies to make the proposed changes so that policyholders are made aware and there are minimal grievances/complaints.
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At the moment, several companies don't deduct the depreciation element from the painting charges, and painting-related claims are fully reimbursed.
Irda is of the view that paint is manufactured from polymer, it should be included in the group of plastic parts. The regulator has fixed 50% rate of depreciation on vehicle older than 10 years.