[Mafia]

I am sure the 2-wheelers in Bangalore are all up to date on the insurance, considering how aggressive the traffic police are with 2-wheeler checking.

With the police armed with smartphones for issuing challans, your entire history is at their fingertips.

On the flip side, they are quite lax with 4-wheelers as long as you follow the rules.

That is the only way it will work in India. Strict enforcement!

[Gansan]

Originally Posted by mvadg

I'm not sure what kind of damage a 100 cc 2-wheeler can cause to justify such high premiums.

It can cause quite a bit of damage. An object weighing around 220 kg including rider plus pillion and moving at 60+ kmph hitting something can cause a fair bit of damage. It can kill a pedestrian. I rear ended a Matiz with my Splendor once in Bangalore, causing the rear tyre of the car to burst and tear. I bought him a new tyre. I have read a case of Splendor colliding with Harley and severely damaging it in this forum.

Third party cover is compulsory even for two wheelers, not only for cars. That is what cops check for whenever they pull up anyone.

[Voodooblaster]

Every vehicle should run only with a valid insurance policy. The policy has 2 parts: liability (compulsory) and own damage (optional). The General Insurance Companies are licensed to issue policies by GOI

Govt is concerned only about vehicles not having Liability insurance ( popularly known as Third Party Insurance).

Whenever a road accident occurs, and there is injury, death , or property damage to a third party, the police have to register an FIR. The injured person, or their nominees can then apply for compensation in Motor Accident Claims Tribunal { A special court that deals exclusively with such cases}

In a private car and two wheeler, the term third party, refers to any person not driving or travelling in the vehicle. For a commercial vehicle, anyone other than the registered owner and his salaried crew { driver, conductor, etc}. Ie passengers in case of Bus, Taxi, Auto Rickshaw etc is a THIRD PARTY.

The Third Party (victim/legal heirs of victim) is compensated based on their income, productive years left, liabilities, and dependents.

When a person dies, or has a permanent injury due to road accident, the compensation ranges from a few lac rupees to Crores. There is no upper limit on the compensation that can be awarded by the MACT court.

The RC owner is liable to pay the compensation. Since, not everyone can afford to pay such huge sums, Govt made liability insurance mandatory. So, effectively insurance companies pay the compensation.

The only case where an insurance company can deny compensation is when the offending vehicle was driven without satisfying legal requirements (No license, Fitness, etc). See experience of a fellow BHPian: https://www.team-bhp.com/forum/stree...dent-case.html (Need some expert opinion in accident case)

Now coming to another part of the mandatory Liability insurance. All Registered owners are covered for up to 15 lacs for permanent disability or death in a road accident. The yearly premium starts from 275 (based on ins co) as per Madras HC order. https://www.thehindubusinessline.com...le25009432.ece

Supreme Court had made it mandatory for new vehicles to have insurance for 5 years {2 wheelers} and 3 years {pvt cars} in 2018. https://www.team-bhp.com/news/sc-lon...ikes-time-sale

Hence the sudden increase in insurance premium for new vehicles.


At the end of every Financial Year, the IRDAI (Regulator of Insurance Companies) takes into account the total amount paid as compensation and the premium amount received under the liability head. Almost every year, the compensation exceeds the premium and hence an increase always happens.

Reasons for year on year rise in compensation:

1. Income level rises with inflation, and hence quantum of compensation keeps rising.

2. Insurance company has to pay interest on compensation if MACT awards are contested in civil courts and lost.

3. Many times, insurance company has to pay compensation even when the offending vehicle has no valid documents. Courts award recovery rights against such RC Owners. Often the person may not have enough assets to cover such huge liabilities, in which case the insurance company takes a haircut.

4. There is no statute of limitation. Ie a road accident victim can file for compensation for an accident that occurred in 1995, even in 2020.

Since insurance works on the principle of risk pooling, premiums will go down, or at least have negligible hikes if a higher percentage of vehicles are insured.

This is not to say that the system is foolproof. There is a lot of corruption and malpractices as in any other sector, but they are coming down due to technology, judiciary and internal vigilance of insurance companies.

I am of the humble opinion that simply bashing insurance companies without understanding the scenes behind the stage is wrong.


Disclaimer: I am working in the General Insurance Industry for the past 6 years

[Voodooblaster]

Originally Posted by Voodooblaster

Every vehicle should run only with a valid insurance policy. The policy has 2 parts: liability (compulsory) and own damage (optional). The General Insurance Companies are licensed to issue policies by GOI

Now let's come to the own damage section.

This covers vehicle against:

1) Accidental Damage
2) Fire
3) Natural Calamities
4) Theft
5) Damage during authorised means of transit


Pricing in this section is decided by insurance company. For every claim free year, insurance company offers an increasing discount called as no claim bonus.

The premium ranges from 3.10% to 3.75% of the Insured Declared Value depending on the cubic capacity, and age of vehicle. Most insurers offer discount on this rate. Public sector insurers offer discounts in the range of 60 to 80% depending on the make , model , age and claim history.

When the repair Cost exceeds 75% of the IDV, it's considered as a total loss and the full IDV is paid. Normally the RC has to be cancelled in such cases. These kind of damages occur due to major accidents, natural calamities or Fire. Theft claims are also paid the full amt.

The basic comprehensive policy pays repair cost after factoring in depreciation of the vehicle. Plastic, rubber and fiber parts attract 50% depreciation. Metal parts attract depreciation based on age of vehicle. Glass parts attract 0 depreciation.

In addition Insurance companies offer various add on covers (name and benefits may differ from company to company). The below mentioned list is by no means comprehensive :

1. Nil Depreciation/Enhancement Covrt - Popularly known as bumper to bumper (B2B) Insurance. In this, no part attracts depreciation.

2. Return to Invoice - in case of a total loss, the insurance company pays the ex showroom price of the company as on date of accident. Also road tax, first year insurance are paid.

3. Consequential Losses : These are losses that occur due to negligence of the owner after an accident.

Hydrostatic Lock - Insurance company doesn't pay if vehicle is damaged while driven through a water logged area, or if we crank a vehicle that is flooded. If we opt for this add on, such claims are also payable

Engine Protect - If the low oil warning lamp comes on due to an accident and we keep driving, the engine goes kaput. These damages are not payable. However, if we opt for this add on, then these claims are payable.

4. Consumable Items Cover - Consumables include engine/ transmission oil , brake fluid, Coolant, Lubricants, Grease, Nuts and Bolts etc. These items may necessitate replacement during an accidental repair and are not payable. This add on covers such costs.

5. Loss of key - Keys of many modern cars are reasonably expensive. Loss of them is payable with this add on

6. Inconvenience cover - Extra cost incurred for transport due to non availability of vehicle during repair period is covered under this subject to a limit.


Many of us might have experience with the Own Damage portion of insurance. Dents and Minor accidents are unavoidable in Indian roads.

Many have bashed insurance companies , and some of them are undoubtedly well deserved by the insurance companies, i would like to highlight some +ve experiences of Bhpians. https://www.team-bhp.com/forum/india...worked-me.html (0% Depreciation Insurance - It really worked for me!)

Also not all customers are saints. https://www.team-bhp.com/forum/india...ce-claims.html (Indian car owners damage their cars for bogus insurance claims)

Since insurance works on the principle of risk pooling, bogus claims push up insurance cost for everyone.

Now, as with any other product/service, the devil lies in the fine print. Read the terms and conditions offered by insurance company carefully before paying them. If you have any doubt, never hesitate to ask or get the clarifications in writing/ e mail.

Since Most of us purchase insurance only once a year,purchase from a trusted agent/consultant. Or visit any insurance company directly and get your doubts and queries clarified before taking the policy.

While online policies are cheaper, the plethora of options may confuse us and result in being stuck with sub optimal protection. Always remember that the cheapest is not necessarily the best.

Buying from dealers through their co branded insurance will be costly. However the claim Services will be assisted by the dealer , who enjoys significant clout with the insurance company and will result in a quicker Turn Around Time.

Once a claim is intimated , insurance company deputes an independent licensed surveyor/loss assessor. This person will asess damage to the vehicle and assist the insurance company in quantifying quantum of loss.

Generally pvt insurance companies Settle small value claims (upto 1 lac ) faster than the Public Sector General Insurance Companies. However for higher amounts and total loss claims the PSU General Insurance companies are better.

Needless to say, select insurance company based in the settlement ratio. Higher the ratio, fewer the repudiations.

Disclaimer: I am working in the General Insurance Industry for the past 6 years.

[rajendra2278]

Originally Posted by ruzbehxyz

Weak enforcement by traffic police in states, lack of follow-up by insurers and rising cost of third-party covers has resulted in a larger number of vehicle owners not renewing their motor insurance policy.

I wouldn't say lack of follow-up from insurers. Why would they loose a probable customer. Their call centres will be on the job till they renew the insurance, or we say that it is already renewed with other insurer.

Example is my case only.
My car insurance was about to expire at the start of this Dec.
My previous insurer has sent me like 100+ messages with the same quote, to renew my insurance (when I didn't pick up their calls). So, you can understand.