IRDAI seeks to simplify motor insurance

The Insurance Regulatory and Development Authority of India (IRDAI) recently proposed changes to the structure of motor insurance policies that can make it simpler and better.

The insurance regulator stated, “Considering the various developments in technology relating to motor vehicles as well as the fast changing eco-systems, IRDAI had set up a Working Group to revisit the product structure in respect of motor own damage segment.”
Among the proposals, IRDAI is working on making depreciation and sum insured calculation simpler. “For brand new private car up to three years, the sum insured shall represent the current day on-road price of the vehicle insured including Invoice value, Road Tax & Registration charges and value of all accessories fitted thereon by the manufacturer. The value of accessories fitted by the Insured shall be separately mentioned.”

The regulator further stated: For vehicles beyond three years, the sum insured shall be as per the suggested new depreciation table. “Beyond seventh year, Sum Insured shall be arrived at a mutually agreed value between the Insured and the Insurer,” as per the draft proposal. Currently, the depreciation ranges from five percent for vehicles up to six months old to 50 percent for vehicles that are five years old.