The biggest news of the day comes from the insurance sector of the automobile industry. Insurance companies have declared a ‘nil depreciation’ policy. Under this policy the repair and replacement for metallic and non-metallic parts will be covered, at no cost to the customer. This will be available as add on cover for private car package policies but will not cover commercial vehicles. At present, for the first year the depreciation is calculated at 15%-20% and after five years it goes up to 50%, depending on insurance companies, based on the tenure of the ‘no depreciation' policy.
This policy will cost approximately 0.40%- 0.60% extra of the Insured’s Declared Value, depending on the age of the vehicles. The premium load for vehicles that have a displacement of above 1500cc will be 0.45%-0.70%. This in turn means that new vehicles which have an IDV (Insured’s Declared Value) of Rs. 3 Lakhs will have an additional premium of Rs. 1200 in the first year and in the third year of the car, the premium will go up to Rs. 1950. An official from the New India Assurance Company Ltd stated that under the enhanced cover, any claim after the two permissible claims will be settled as per the provisions of normal private car package policy. He further added that a claim that occurs after three years from the date when the vehicle was purchased will be settled according to the provisions of normal car package policy.
Courtesy - The Times of India