The Insurance Regulatory and Development Authority (Irda) has fixed the rate of depreciation of painting on motor parts at 50 per cent for the purpose of settling partial loss claims by the non-life insurance companies.
The General Regulation (GR) 9 of the erstwhile Indian Motor Tariff (IMT), which deals with the rates of depreciation that applies for replacement of parts for partial loss claims, did not specify any rate of depreciation with regard to the paining. In the absence of a standard rate, companies charged the depreciation at their will for partial loss claims.
The insurance regulator had issued an exposure draft in October last year on this matter while proposing to include the paint in the category of rubber, nylon/plastic parts, tyres and tubes that attract 50 per cent depreciation, as the paint material is polymer-based. In a modification of the GR 9, the regulator has added to the rule stating that in case of painting, the depreciation rate of 50 per cent will be applied only on the material cost of total painting charges. In the case of consolidated bill for painting charges, the material component will be considered as 25 per cent of total painting charges for the purpose of applying depreciation.
The change is applicable to all motor packages policies whose risk inception date falls on or after February 1, 2013, Irda said in a press release.