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IRDAI on Monday proposed vehicle new age-based depreciation formula for computing sum insured for motor vehicles, including private cars and two-wheelers.
A working group on 'Product Structure for Motor Own Damage cover' set up by the regulator has recommended two options for calculating the sum insured for private cars.
For brand new private cars up to 3 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 exposure draft based on the recommendations of the working group said.
For vehicles older than three years, depreciation would gradually increase from 40 percent to 60 percent up to 7 years. Beyond seven years, the sum insured could be negotiated with the insurer.
Currently, insurers follow a complex process for arriving at the value of the car. "The depreciation and sum insured calculation has been made simple," the draft said.
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A working group on 'Product Structure for Motor Own Damage cover' set up by the regulator has recommended two options for calculating the sum insured for private cars.
For brand new private cars up to 3 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 exposure draft based on the recommendations of the working group said.
For vehicles older than three years, depreciation would gradually increase from 40 percent to 60 percent up to 7 years. Beyond seven years, the sum insured could be negotiated with the insurer.
Currently, insurers follow a complex process for arriving at the value of the car. "The depreciation and sum insured calculation has been made simple," the draft said.
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