Auto insurance is the only cover that is legally required, and therefore every individual perforce makes sure that his vehicle is insured. But there are many interesting facets to motor insurance about which the layman is clueless and it is the duty of the insurer or the dealer to educate him about the nuances of motor insurance which would be of great benefit to the customer in the long run.
For instance, our motor insurance team came across a very high net worth individual who was accustomed to regularly upgrading his very high end cars. They were amazed to discover that this customer was completely unaware about the “No claim bonus” benefit. This incident is symptomatic of the general ignorance of the average customer about the myriad benefits offered by insurers. The customer must also grill his insurer with a lot of questions and not simply take motor insurance as a necessary hassle to be gotten over with.
No claim Bonus
Premium due for renewal is discounted if there was no claim during the existing policy period which is due to expire. This discount is allowed as a percentage on the Own damage premium and the same is increased every year to the next slab if there is no claim. This discount is known as ‘no claim bonus(discount)’. This discount can go upto 50% and the discount earned stays with policy holder even if the vehicle is sold or transported. If a new or a old car is freshly purchased, the discount earned can be availed while purchasing insurance for that car.
Voluntary Deductibles
Each policy has a compulsory excess and such an amount is deducted in any claim paid. In addition to the above, the customer can opt for ‘voluntary deductibles’ based on the self confidence level towards safe motoring and not envisaging a situation for making a claim.
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Under voluntary deductibles, the amount opted also gets deducted for any claim amount. For this selection, the customer gets a discount in his “Own Damage”(OD) premium.
Voluntary deductibles for private cars
Customer may opt for higher deductible over and above the compulsory deductible in which case discount will be allowed as per the following:-
| VOLUNTARY DEDUCTIBLE | DISCOUNT |
| Rs 2,500 | 20% on OD premium of vehicle, max Rs 750 |
| Rs 5,000 | 25% on OD premium of vehicle, max Rs 1,500 |
| Rs 7,500 | 30% on OD premium of vehicle, max Rs 2,000 |
| Rs 15,000 | 35% on OD premium of vehicle, max Rs 2,500 |
Anti Theft device
Installing an anti – theft device reduces the risk perception of the vehicle in the eyes of the insurer and therefore attracts a discount. It is essential to fit an approved make to claim the discount.
Automobile Association member
If the customer is an automobile association member, then he would be able to avail a discount on his “Own Damage” premium (applicable for Private car and Motorized two wheeler policies)
Concession for laid-up vehicles
If the vehicle is garaged or out of use for some period ( minimum of two months), the existing policy scope can be restricted for parking risks and the customer can avail a concession during renewal of the policy either by way of extending the period after expiry or a credit to the renewal premium. However, intimation to the insurance company is essential.
Physically / mentally handicapped customers
Concession can be availed for specially designed / modified vehicles for use of physically / mentally challenged persons.
Vehicle value for insurance
Year on year insurance value of the vehicle need not be for the original purchase price. The vehicle value for insurance known as “Insured declared value”(IDV) must be arrived at as per the table given in the policy.
SCHEDULE OF DEPRECIATION FOR ARRIVING AT IDV (Insured's declared value)
| AGE OF THE VEHICLE | % OF DEPRECIATION FOR FIXING IDV |
| Not exceeding 6 months | 5% |
| Exceeding 6 months but not exceeding 1 year | 15% |
| Exceeding 1 year but not exceeding 2 years | 20% |
| Exceeding 2 years but not exceeding 3 years | 30% |
| Exceeding 3 years but not exceeding 4 years | 40% |
| Exceeding 4 years but not exceeding 5 years | 50% |
| NOTE: IDV of vehicles beyond 5 years of age and of obsolete models of the vehicles ( i.e. models which the manufacturers have discontinued to manufacture) is to be determined on the basis of an understanding between the insurer and the insured | |
The author is Managing Director, Royal Sundaram Alliance Insurance Co Ltd