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  • News From Press Getting under the hood of motor insurance

    Getting under the hood of motor insurance

    Source: Mint Apr 14, 2016

    The most frequent insurance claims in India relate to motor accidents. Over 10,000 motor insurance claims are filed every day; in larger cities there are over 1,000 claims a day. The good news, if you can think of it like that, is that a high proportion of claims get paid; over 95% for many insurers.

    The bad news is that many vehicles are not insured, people hesitate to file claims because they are unsure of the process and claims are rejected primarily because of our own administrative lapses.

    Many more vehicles would be insured if vehicle owners realised that, in accidents, they are exposed to an unlimited liability. The Motor Accident Claims Tribunal determines the compensation to accident victims or their kin. Awards are increasing in frequency and payments of over Rs.50 lakh are more common. Without third party insurance—which, incidentally, is mandatory—you will need to pay this yourself. Over 1,000 third-party claims are filed every day, so this is not a risk to be ignored. Apart from third-party liability, motor insurance can also cover the cost of damage to your own vehicle. This cover, called own damage, is not mandatory but worth buying because of rising repair costs.

    The claim process should not intimidate you because it is simple and efficient. Take a picture of the accident if possible. This establishes how the damage was caused. Inform the insurance company on its customer service number. Have the car towed to the nearest workshop. Use your insurer’s tow service if it has one. It’s okay if you inform the insurer when your vehicle reaches the workshop. These repair workshops take complete ownership of the claims process, from having the vehicle inspected to managing paperwork and follow-up. Increasingly, workshops offer cashless repairs where the insurer pays the workshop directly.

    Most claims are rejected for five reasons that are well within our control. First, the driver does not have a valid licence. It may have expired or be for a different vehicle category or be fake. Second, a personal vehicle was used as a taxi. This issue is gaining focus across the world as car-pooling becomes commonplace. Third, the insurance and vehicle are owned by different people. This means, from an insurance perspective, the policyholder has no insurable interest in the car. It is a common issue when vehicles are resold. Sometimes the vehicle is transferred but the insurance is not, or vice versa. Fourth, owners install LPG in their cars but do not register that with the regional transport office (RTO) or the insurer. Fifth, owners are negligent. They start the engine in a water-logged car (unsafe because the engine can seize) or leave the car unattended. If these five issues are addressed, it is fairly certain that your motor claim will be paid.

    A frequent complaint is that the final settled amount is less than the claim. The disagreements are most on vehicles that are badly damaged. Vehicle owner prefers to write off the vehicle as a total loss whereas the insurer will try to repair because that is cheaper. This issue has to be resolved through discussion and by depending upon the external survey reports. Another common reason for lower settlement amount is that the vehicle owner tries to get damages not caused by the accident repaired. Insurers are easily able to identify such misuse.

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