Chennai / Mumbai: Madras Decision of the High Court Making Insurance for 5-year-old bumper-to-bumper ‘motorbike must increase vehicle acquisition costs by 8-10% of the current price.
According to the dealer and car marketers, this decision will make the car more charming between Rs 50,000 and Rs 5 Lakh.
Federation of the Car Dealer Association (Fada) President Vincesh Gullati said, “This will be a big problem for an industry that has just come out of the pandemic.
This will encourage the acquisition costs of motorcycles and scooters of Rs 5,000-6,000, entry-level cars such as Alto or Kwid is equal to rs 50,000 and middle market SUVs such as Creta more than RS 2 Lakh.
“The catch in this case is that the price is controlled by the Irdai sector regulator, which in August 2020 attracts long-term insurance for new vehicles.
“Irdai must agree to change the premium structure,” said Jato Dynamics President Ravi Bhatia.
“At present, a 1-year policy is around 3% of the value of the car.
With this decision, the dealer must sell vehicles with insurance 5 years, which is a large face cost for customers.
Given that the insurance industry globally moves towards more flexibility where customers are Paying per month depends on use, this is counter-productive and will slow down car sales, “he added.
Car marketers say this will conflict with the holistic view of the automotive industry, which balances affordability, safety and growth.
MG Motor India President & CEO Rajeev Chaba said that the automotive industry requires “holistic views” that balance consumer interests, safety and overall cost & ownership with environmental problems & emissions & employment & manufacture of employment “.
Without it, he added, There is no possibility of “extraordinary growth”.
The insurer is divided into their view on whether a comprehensive cover can be mandatory.
“The law requires that vehicle owners only buy third party insurance.
A comprehensive cover is a voluntary contract between two parties.
One can appeal, saying that they cannot be forced to buy a cover, “said an official.
However, another insurance company said that there was a scope to make mandatory protection because it was the only way to ensure insurance penetration.” If the insurance party is.
The third is not mandatory, we will not get the current coverage level, “he said.
Industrial officials felt that orders were directed at the Department of Transportation, asking them to ensure compliance.” The insurance industry has not been asked to do anything and we will continue to sell policies.
Even today, 99% of new vehicles chose for comprehensive protection, “said an official.” In a larger public interest, vehicles must have adequate coverage and the owner must be aware of the scope of coverage.
Dealers must have a board that provides customer information about accidental insurance cover, “said Head of Insurance Digit (Legal, Claim & Investigation) Ajay Jadeja.
He added that if the owner bought a personal accident policy must be independent, the owner’s risk was covered in all vehicles he had .
Orders HC read, “After September 1, 2021, it was mandatory for insurance coverage bumper-to-bumper every year, in addition to covering the driver, passengers, and the owner of the vehicle, for a period of five years.” the party is not clear whether the implementation means that premiums for Five years must be collected in advance.
Industrial officials are also surprised by the use of the term ‘bumper-to-bumper’ because it is a layman’s term for the widest cover.
This, in some cases, interpreted means comprehensive protection, while others use it to refer to policy Zero depreciation in which coverage gets a replaceable part without reducing.