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Old 17th October 2012, 21:04   #1
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Default Change in insurance rules - Depreciation on Paint?

A couple of days back my 2004 Honda City met with an accident. I have my insurance policy from Bajaj Allianz. I have put up my vehicle for accidental repair at Honda ***. However i was shocked when the surveyor told me that for painting also i will have to pay depreciation. Denting full amount will be given and if lets say the painting cost of the door is Rs. 5000. Then 70% will be considered as parts (paint cost) which equals Rs. 3500 and 30% as labour. The labour part will be given full however for the paint cost i will have to shell out Rs. 1750 and rest will be covered by insurance.
He said these new norms have come in force from 1st April 2012 as per directive from IRDA. Can anybody please throw some light on these new norms. Also i have some queries

1. My policy is from November 2011 valid till 15th Nov. 2012. On the same policy i have taken a claim in March 2012 where full cost of painting was reimbursed. At that time this was not applicable. How can they say that this change will be applicable to running policies?

2. Are all other companies following the same or is it Bajaj Allianz only.

Pls help.

Thanks

Last edited by columbus : 17th October 2012 at 21:06.
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Old 18th October 2012, 12:37   #2
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Default re: Change in insurance rules - Depreciation on Paint?

Yep, it's true. Paint is now - unfortunately - counted as a depreciating item on a car. Most insurance companies have already started calculating depreciation on paint, while the others are expected to follow soon.
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Old 18th October 2012, 12:57   #3
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Default re: Change in insurance rules - Depreciation on Paint?

this is really bad news. I am amazed at how insurance companies try to rip off the consumers. Now one would go in for an insurance only when it is a very bad accident, and continue renewing insurance and never claiming - for minor ones.
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Old 18th October 2012, 13:03   #4
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Smile re: Change in insurance rules - Depreciation on Paint?

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Originally Posted by GTO View Post
Yep, it's true. Paint is now - unfortunately - counted as a depreciating item on a car. Most insurance companies have already started calculating depreciation on paint, while the others are expected to follow soon.
I checked up with the present Insurer (Future generali) for my Fiesta as the renewal is due shortly and they confirmed that depreciation will be applicable for painting and depends upon what need to be painted, accordingly the depreciation rates will be applicable like 100% for metal painting, 50% for fiber etc. Surprisingly the Policy wording dont say anything about the painting.
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Old 18th October 2012, 14:38   #5
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Default re: Change in insurance rules - Depreciation on Paint?

@columbus; Since you got a full repaint on insurance in 2011, should not the depreciation be from that date only?
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Old 18th October 2012, 15:51   #6
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Default Re: Change in insurance rules - Depreciation on Paint?

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Originally Posted by GTO View Post
Yep, it's true. Paint is now - unfortunately - counted as a depreciating item on a car. Most insurance companies have already started calculating depreciation on paint, while the others are expected to follow soon.
Thanks GTO for clarifying. But is this applicable for policies purchased before April 1 2012. My policy date is from Nov 11 to Nov 12.

Quote:
Originally Posted by ghodlur View Post
I checked up with the present Insurer (Future generali) for my Fiesta as the renewal is due shortly and they confirmed that depreciation will be applicable for painting and depends upon what need to be painted, accordingly the depreciation rates will be applicable like 100% for metal painting, 50% for fiber etc. Surprisingly the Policy wording dont say anything about the painting.
Does this mean that if a door is being repainted then i'll get 100 % of painting and if a plastic bumper is being painted then i'll get 50% of paint material cost ?

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@columbus; Since you got a full repaint on insurance in 2011, should not the depreciation be from that date only?
Thanks sgiitk for pointing this out. I'll have to dig out which panels were painted in march 12. But this is definitely a good point. Thanks.
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Old 18th October 2012, 15:59   #7
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Smile Re: Change in insurance rules - Depreciation on Paint?

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Originally Posted by columbus View Post
Does this mean that if a door is being repainted then i'll get 100 % of painting and if a plastic bumper is being painted then i'll get 50% of paint material cost ?
Yes, based on what the Insurer's rep had to say. Have asked the Insurer to provide me with the documentation which says so, will share if I get it. But will suggest you to reconfirm again with your Insurer again reg the same. Also can you ask your Insurer which IRDA directive are they referring to in case of painting claims?
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Old 19th October 2012, 08:22   #8
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Red face Re: Change in insurance rules - Depreciation on Paint?

@columbus

To substantiate the discussion there was an article in DNA yesterday which talks about the new rules for the painting depreciation. As per the article, paint depreciation will be considered at the same rates as plastic which is at 50% the logic used is that paint material is polymer based. This is something which goes against what my Insurance rep told me, will be confirming the same with him again.

Pls see the article for more details.
http://www.dnaindia.com/money/report...-paint_1753584
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Old 19th October 2012, 09:29   #9
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Default

Six months back, I had to repaint RH door of my car, and Tata aig charged 50% depreciation of the cost of paint. The sales manager conveyed that its the new rule.
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Old 19th October 2012, 11:50   #10
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Default Re: Change in insurance rules - Depreciation on Paint?

This is ridiculous. Because of the frivolous claims by few, everyone is having to take the brunt.
OR
Insurance companies are try to rob us. Way to go !

Are the international insurance norms same ?
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Old 19th October 2012, 12:04   #11
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Default Re: Change in insurance rules - Depreciation on Paint?

So basically, authorized **** body (and surely paint) shops will now close as their profitability will go into the toilet. They make so much money by changing body panels even when not required, and advising paint jobs on every little scratch.

Are there any A.S.S shares I can short?

That said, 50% dep is quite serious - it should be more like 0% for 2/3 years, then 50%, etc. Because honestly, for the first couple of years, paint looks just like new.
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Old 19th October 2012, 13:24   #12
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Question Re: Change in insurance rules - Depreciation on Paint?

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Originally Posted by phamilyman View Post
That said, 50% dep is quite serious - it should be more like 0% for 2/3 years, then 50%, etc. Because honestly, for the first couple of years, paint looks just like new.
If you see the DNA article, it says 50% depreciation is applicable only on the 35% of total painting material cost. The labour charges for the painting will still be reimbursed by Insurance companies.

One thing that confuses me is how can the paint material cost always be 35% of the total painting cost, cant it vary? Am I missing something here?
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Old 20th October 2012, 20:49   #13
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Default IRDA subjects car painting charges to depreciation

The Insurance Regulatory and Development Authority (IRDA) in a modification in its exposure draft on depreciation on parts for partial loss on motor parts has introduced a uniform principle for paint. In case of a motor own damage claim, most non-life insurance companies do not apply depreciation charges for repairs or replacement of motor parts involving painting. As per the proposed draft norms, on every Rs 100 as total painting charges, a depreciation rate of 17.5 per cent would be applied by insurers.

So what does it mean to us ? :-

1) Next time your car bumps into something and you make a claim, chances are the insurer will deduct a higher amount.Currently, insurers bear the entire cost of painting a car in case of a claim. Should the regulator’s proposal become the rule, you would need to bear a good part of the cost.

2) However it may not be all bad for us. If this rule is implemented insurers have to bear less cost meaning insurance premium may come down.

Insurers may still provide the option of no depreciation on paint job but at a higher premium.
Considering the conditions in India where body repairs are a major source of revenue for dealerships/workshops , this may have a major impact.

Links to the news article :-

http://wrd.mydigitalfc.com/insurance...preciation-332

http://www.dnaindia.com/money/report...-paint_1753584

Last edited by coolabhi : 20th October 2012 at 20:51. Reason: added links of news article
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Old 20th October 2012, 22:52   #14
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Default Re: Change in insurance rules - Depreciation on Paint?

In my opinion this is just a way to rob. I don't know why we are paying for insurance now.
This is a bigger problem for those who are going for pre-owned cars (say 4-5 year old ones). The depreciation on metal parts was high and now on the paint too.

So, drive safe and pray.
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Old 7th December 2012, 23:27   #15
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Default Re: Change in insurance rules - Depreciation on Paint?

I was just looking up at GIC (General Insurance Council) regulations and they seem to have come up with only the Exposure Draft for amendment to the GR 9 which states various applicable depreciation. The draft can be looked up at the link below.

http://www.gicouncil.in/ClientData/ExposureDraft.pdf

What is still not clear is whether it is adopted by GIC and IRDA as the final amendment into the GR9. The new policy I got for renewal still doesn't carry this depreciation mandate. So even if the claims people at workshops/dealerships are claiming this depreciation in effect since 1 Apr 2012, there is no clear mandate and should be first verified with the insurer on what basis they are charging depreciation if any dispute arises in any case. Also, Oiriental Insurance Co. in its circular dated 2 Jul 2012 has asked to hold from implementing this mandate as yet until further notifications. So there is still room to believe that this is not affirmed law and can be disputed until GIC and IRDA bring out notifications on confirmation of GR 9 modification for the same.

Anybody had to bear this depreciation yet?
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