Insurance renewal : IDV confusion and more ...

[meerkat]

Hi guys,

My Baleno's insurance is due for renewal on 30/3/06.
I'm confused about the IDV that gets declared (among
other things). Apparently insurance dept. of various
dealerships as well as agents of insurace companies
themselves play around with the IDV, and most consumers
(including myself) are barely aware of this. Here is
what is happening in my case:

1) Bimal Auto (I bought the car from them):

IDV for the second year (Baleno LXI) : 458947/-

I don't know the origin of this number. I thought first
year's IDV is just the ex-showroom price (which would be
about 586k). Then the second year IDV is 20% less due to
depreciation (i.e. IDV would be about 469k, not 459k).

Then there is more confusion, -- my 1st year IDV was
555287/-, and not the ex-showroom price! I was told that
for the new car itself the IDV is usually 5% depreciated from
the ex-showroom price! Why should this be so ? Bimal had
done this when they offered the 1-rupee insurance deal !
I haven't noticed this until today !

Bimal told me that after a 20% NCB, my 2nd yr. premium would be 14828/-.
And to sweeten the deal, they offered free wheel alignment/ balancing,
but only if I gave them the cheque (even post-dated) by 28/2/06.

2) A TATA-AIG agent (somehow they came to know that my car ins.
is up for renewal) called me up, and offered to give a 1000/-
discount on the 2nd yr. premium of 14830/-. I didn't know
enough yet to ask about the IDV they'd based their calc. on.

3) Pratham : 15128/- less 400/- discount on an IDV of 469k (which
would be right). However, when told about the original IDV of
455k, they recalculated depreciation of 20% on this, and offered
me a lower premium. Also, "TATA-AIG and other private cos. would
add some loading later (after any claim) to recover any discount
given now. We at Maruti ins. don't do that. However, if you want
we too can offer a lower premium, with a loading clause added" !

Now I'm confused about the real IDV that should be declared for the
second year (469k ?). And where should I go for renewal ? Also any
more tips ? Thanks a bunch in anticipation.

[suman]

Originally Posted by meerkat

Now I'm confused about the real IDV that should be declared for the
second year (469k ?). And where should I go for renewal ? Also any
more tips ? Thanks a bunch in anticipation.

Check with the workshop you take your car to as to who they have cashless facility with and go with that insurer. That saves you the trouble of coughing out from your pocket each time you have a claim. Almost all insurers would give you the same discounts etc so negotiate accordingly.

All insurers would also have a standard chart that would show how much lower each subsequent year's IDV would be. Use this chart to determine what your second year IDV should be. This standardisation has taken place in order to prevent misuse by way of inflating the IDV.

For new cars, insured value is 5% lower than the ex-showroom price; I suppose the logic is that there is some reduction in value the minute you take it out of the showroom.

[meerkat]

Thanks suman, for your help. However, the confusion about IDV still persists,
-- especially since various sources don't agree. I'll elaborate ...

The question is, what is the base price for IDV calculation ? Is it the
original ex-showroom price ? Or is it the *current* ex-showroom
price ? What about IDV calculation in subsequent years ?

* Indiacar indicates the base for current IDV is the previous year's
IDV (and not the ex-showroom price always) !

* The insurance agents would say whatever they think you'd be happy
with (the problem would come at the payout time, not their concern)!

* The ICICI site says the base is always the current ex-showroom price.
Then what happens for a discontinued, or even a substantially
upgraded/modified model (like the City) ? I would still tend to trust
the ICICI definition (they are good for something after all!).

There is confusion about the depreciation table too ! e.g. most of
the agents say it is 5% for a new car, 20% for the 2nd yr., 30% for
the third, and so on. However, carstreet.com (sify) points to a March
2003 article about insurance law changes which says that this table
is for obsolete models! For current models rates should be 5% less at
each stage (i.e. 0% for a new car, 15% for the 2nd yr., 25% for the
third, etc.). Bimal had used a 5% depreciation for my new Baleno !
Should I now renew the policy at 15% depreciation, rather than at 20% ?

Moreover, the depreciation chart is supposed to be only indicative,
the actual rate should depend on the condition/ market value of the
car concerned. e.g. my car has seen very little use the first year
(~2000km, since I was away much of the time), should the depreciation
still be the same as for another Baleno which has run 20000 km ?

Many of you have a lot of experience about car insurance issues in
India, while I'm sure, many more are likely to be as confused as I am.
That's why I'm inviting a good discussion to clear this confusion once
for all, for the benefit of the second group of members. Thanks.

[Zappo]

A couple of things. First of all most of the insurance cos. are true blue thugs. They just are out there to dupe you. This site has N no. of posts which illustrates the fact. Even ICICI, for that matter. Rtech will vouch for that. So what they tell you is never the gospel truth.

Bimal I guess does not have a very good reputation. We have had a few cases here when our fellow members had to suffer for their ineptitude. Also, most of the agents are just running for the business. They always try to bend the rules so that it suits you at that particular moment. Long term issues be damned.

Now, I feel that what carstreet says is correct to a large extent. I think so because my car also had its first year IDV declared as the the ex-showroom price. I am not hundred percent sure but I feel it is so. Moreover I read it elsewhere but the rate that carstreet mentioned (15% for the first year and then 10% for the subsequent years) is the same as what I know of. Also that first year depreciation is supposed to set in only after the 1st 6 months. Till then no deprecitions are calculated.

Bimal did a "chori-chakaari" with your IDV because they had to pay the insurance premium from their pocket. Now the premium is calculated based on the IDV. So you see... lower the IDV, lower is your premium. Bimal saved some money for themselves.

Now how do you go about it henceforth? Well, I do not think that the IDV should be a problem as long the premium is matched. I say so because Bajaj Alliance did so with my bike. The bugger sitting there calculated the 3rd year's premium which was looking pretty stiff to me. I tried to show him through calculation that it could not be that high. He gave me an adamant look (as if saying 'boss i do this everyday'). Later when I issued the check and it went in for processing (I went physically to their office to pay and take the insurance then and there) some number crunchers figured out the same fact. So this guy later returned with a sheepish glance saying that they have given me a higher IDV to match the higher premium charged. So the fact is that IDV can not be something etched in stone. So if you feel that your car's IDV should be higher talk to the agent. If required go to their office and talk to someone senior (not those agent or supervisor types). Tell them the facts and see what he suggests. At most you will have to sheel out a little higher premium. But things will accordingly get settled as well.

[suman]

Meerkat, let me fish around for my Ikon papers and I can tell you what the depreciation rate has been over the past few years.

The only thing I can tell you with certainty is that - new car premium is calculated on ex-showroom less 5% (just got our Fiesta last month and that's what it was) and, for your 2nd year, why don't you try with a 15% only? If they say thats not permissible (that its higher than permissible), ask them to show you the tables.

[supremeBaleno]

Would like to help answer your question. But I am sorry to say that I cannot make out what you are trying to say ? Could you please re-phrase your query in understandable English ? Also, try sending a PM to Ajmat about this - he is sort of the Insurance guru around here.

[meerkat]

Thanks, zappo, for taking time to respond. I was away for a while, so couldn't
update sooner. Anyway, I've learnt some more about this insurance stuff:

Apparently, the table showing 20% depreciation in IDV after 1st year is
correct. The 15%, 25%, ... table is for depreciation of some parts, and not
for the car as a whole. This is explained in the policy booklet -- I was never
given one by Bimal with my new car ! I couldn't make time to go over to
the dealer and talk face-to-face with someone sensible. So couldn't argue
much over phone about the possibility of a lower depreciation for my
very-low-mileage car. I'd accepted the standard table 20% and renewed the
insurance. Anyway the IDV would be an issue only in case of a total loss, and
in such a case, who knows if I'd still be there to rue my decision of having
acceped the standard 20% depreciation :-). Thanks again guys for your help.

[supremeBaleno]

Originally Posted by sushrutha

Well... I'm the second owner of the car which i brought recently. As i had been to united india insurance company, to change the Insurance's Ownership to my name ( from first owner to second owner). Insurance guy told me that I need to pay 800-1000rs as my previous owner had not claimed NCB (Din't understand).... Y do i need to pay this amount .... details My vehicles IDV is 1,65,000 Rs and previous insurance premium(valid till june 06) is 2,778rs...

Well, NCB is No Claim Bonus. If we do not make any insurance claims during the year, the insurance company gives us a discount (NCB) on next year's insurance, which is usually 20% of the insurance amount.
Since the current insurance premium amount is Rs2778, it is surely comprehensive (bcos 3rd party insurance would be only like 500-600Rs for cars).
If the previous owner did not claim NCB, I guess its a good thing for you and so I do not understand why you should pay to just change the insurance to your name. As I mentioned earlier, you could send a Private Message to AJMAT of this forum, for a clearer response.

[Wheeliej]

Originally Posted by sushrutha

Hi can someone explain me more about NCB ? coz as i wanted to change my car's insurance (insurance from united India .....) to my name , I mean from the first owner to my name. (In RC book i got it changed to my name).. when i had been to the insurance company.. they told me that i need to pay something around 800-1000rs.... as my previous owner had not claimed any insurance ( vehicles IDV is 1,65,000). The insurance of the car is valid till june 06.... I think the insurance premium paid previously is something around ~2500Rs (Don't know whether it's comprehensive or T.party insurance).... my question is why do i need to pay the extra money?.........

Sushrutha, you have to pay some transfer fees and some insurance companies (i know oriental does) have a rule that transfer of insurance should be done within 14 days of R/c book transfer. Be careful of that. Other than that i have always just relied on the IDV stated by the insurance agent. Only ever claimed insurance once (even there they deducted some depreciation), so i feel that insurance is a waste of money and if it wasnt compulsory, then most people would not opt for it. Normally NCB is not transferred by car (thats what Oriental told me last year when i transferred my car) but for the owner. Oriental has offered to hold my NCB for 3 years in case i buy another car.