Friday, July 8, 2016

Insurance Board hikes accident cover for passengers

Introducing a new motor vehicle insurance tariff policy, Insurance Board (IB) has increased the premium for third party motor insurance policy as well as the minimum coverage effective from the next fiscal year.
Revising the motor insurance tariff directives, the board has hiked the insurance coverage amount by five times in the case of death of passengers in vehicle accidents, effective from the beginning of the next fiscal year.
Issuing the amended Directive on Motor Insurance Rate, the regulatory authority of the insurance sector has increased the coverage to Rs 500,000 per person from current Rs 100,000. Currently, third party – those not in the vehicles – gets a coverage of Rs 500,000.
The board said the provision is applicable to passengers in all types of public and private vehicles; four-wheeler, three-wheeler and two-wheeler.
Premium, however, differs with the capacity of motorbikes. To purchase the new insurance policies, owners of two-wheeler with engine capacity of less than 150cc will have to pay annual premium of Rs 1,500, excluding taxes. For owners of two-wheeler with engine capacity of 150-250 cc, the annual premium has been fixed at Rs 1,700 (excluding taxes), while owners of two-wheeler with engine capacity of over 250 cc have to deposit premium of Rs 1,900 (excluding taxes) per year, according to the board.
“If existing policyholders wish to upgrade to the new policy, they can do so by paying some extra fee," IB Director Shree Man Karki said, adding, "but it has to be done within the month of Shrawan (July 16 to August 16). "The insurance companies have already been notified."
The latest revision made to the premium rates, however, has not brought about changes in third-party liability coverage."
Third-party insurance enables policyholders to claim for compensation if their vehicles kill or injure people or damage properties during road accidents.
Currently, owners of two-wheeler can claim for up to Rs 5 million in compensation from insurance companies under third-party liability. This includes compensation of up to Rs 2.5 million to cover losses of human lives or cover medical expenses of people injured in the accident.
Compensation of another Rs 2.5 million is provided to restore properties damaged during accidents.
Karki said the new provision is in line with the budget announcement. "Under the vehicle insurance, a similar provision of third party insurance will be made to insure the passengers travelling in public vehicles,” the budget for 2016-17 had announced.
Likewise, the board has doubled the compensation for performing last ritual of an accident victim to Rs 50,000. Earlier the compensation amount was Rs 25,000. It has also raised the medical insurance of the injured to Rs 300,000 per person from current Rs 5,000.
A caretaker of the wounded will receive Rs 500 daily for 45 days from previous 30 days, according to the amendment.
The new provision has maintained the third-party insurance at Rs 500,000, while the insurance coverage ceiling for medical treatment has been raised to Rs 300,000 from current Rs 200,000. All types of vehicles, including ambulance, used to transport the wounded to the hospital will be provided Rs 10,000.
Karki also said that the board has introduced the 'knock for knock' system. "If two vehicles collide, insurers will have to bear the cost for maintaining the vehicles concerned,” according to the new directive.
In case of passengers’ death in such collision, compensation of crew member and riders will be drawn from the insurance coverage of the vehicles concerned. "The insurer will have to be reimbursed the amount from the insurer of the other vehicle which is found guilty for the accident.”
Third-party vehicle facing loss due an accident will be provided the repairing cost without depreciation provision.
However, the board has not made any insurance coverage provision for a third person in a two-wheeler. "Only the driver and a pillion rider of a motorbike will be provided the insurance coverage of Rs 500,000,” the directive reads, adding that a child of less than one year of age would receive 25 per cent of the insurance policy amount, while a child of 1-5 years of age would be provided 50 per cent of the policy amount.
"If the treatment of an injured person is done in foreign countries, including India, the family members concerned will have to inform the insurer in a week," Karki said, adding that the provision has been enforced to discourage the practice of producing fake bills to receive hefty sum for treatment coverage.
According to the new directives, the premium fee of motor insurance has been increased in line with the coverage amount. While owners of motorbike will have to pay additional Rs 500 per year for insurance, automobile owners will have to pay total premium of Rs 700 per seat. Compensation covering ambulance cost of Rs 10,000 to take the injured person to the hospital, and Rs 500 per day for up to 45 days for the attendant of the injured person and 25 per cent discount on premium for disabled-friendly motorbikes are some of the highlights of the new directive.
The liabilities of motorbike alone stand at Rs 1.6 million. However, the premium has been increased by only Rs 500. It means owners of two-wheeler can insulate themselves with insurance coverage of over Rs 6.6 million by paying a premium of as little as Rs 1,500 per year, according to the Motor Insurance Premium Directive.
Insurance companies can, however, deny to these payments, if policyholders were found to be driving under influence or if accidents were premeditated.

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