Kamiya Jani, Moneycontrol.com
After working hard and
saving up, Pradeep Vazirani bought his dream SUV, last year. He says
after his wife, his only love is his car. To be on a safer side, he got
his car fully insured.
Unfortunately, his car was smashed in an
accident and the back door was completely damaged. But he was quite
confident since he remembered his insurance agent's words, "Now your
car is 100% insured."
So after a week, he went to the insurance
company to make a claim for the loss incurred. However, to his utter
dismay, he found out that only 60% of the loss amount would be borne by
the company. Whatever happened to the remaining 40%?
What
Vazirani was not aware of were the various terms and the hidden clauses
mentioned in his insurance papers. He assumed that since his car was
fully insured, he would get the full amount of loss.
Moneycontrol spoke to experts to understand what exactly was the issue.
Policy coverage
For
motor insurance, either there is third party policy or package policy.
In case of third party insurance, the policy covers the vehicle owner's
legal liability to pay compensation for the third party. Damage to you
or your car will not be borne by the company. Third party insurance is
mandatory for all vehicles.
If your car is fully insured, then,
along with the damage to third party, the package policy would cover
loss or damage to the insured vehicle and its accessories as well. The
loss may be due to any accident like fire, explosion, self-ignition or
lightning, burglary, theft, riot and strike, etc. This package policy
is not mandatory, though experts recommend it strongly.
Exclusions
All of us know what the insurance policy covers but not many of us know about its exclusions.
Firstly,
there is a compulsory deduction that is made when you claim the loss
amount. For example, Iffco Tokio deducts Rs 500 when a claim is made.
This amount differs from company to company and is meant to protect
against petty claims. Other exclusions under the package policies
include wear and tear, breakdowns, consequential loss and many more.
However,
the most important exclusion, and the one that affected Vazirani's
claim, is the damage to tyres, tubes and other nylon, glass and plastic
accessories. Damage to tyres and tubes is not paid for unless the
entire vehicle is damaged at the same time of accident. Liability is
limited to 50% of the cost of replacement.
"Same is the case with
any nylon, plastic parts, battery and air bags. For fibre glass
components, the company pays only 30% of the cost," says the
spokesperson of Bajaj Allianz General Insurance. Vazirani had to pay
for the plastic door handle, tail lights that include the break lights
as well as indicator. He did not know that the company does not pay for
all the parts made of glass and he had to pay for that too.
Also,
15% was deducted on all the steel parts. This, in itself, was a big
cost that he had to shell out, in spite of getting his car fully
insured. Plus, there was a 10% rate of depreciation for all the other
parts including wooden parts, since his car was more than a year old.
Insurance companies attribute this deduction to the rules and regulations that have been laid down by the Motor Tariff.
Officials
from Bajaj Allianz say that the motor tariff was made after a lot of
research on the kind of claims the companies were getting. Products
like tyres, batteries and so on are used everyday and a depreciation
value is attached to it.
Therefore, it is extremely important
that you read your offer document carefully and be aware of all the
hidden clauses like this one.
Along with all these, there are
also few details given by V Ramakrishna, managing director, India
Insure Risk Management Services Pvt. Ltd., which the owner of the
vehicle must take care of:
- If an insurance company decides
to take a spot survey then do not move your vehicle from accident spot
till survey gets completed.
- All replaced parts should be kept
for inspection by surveyor and should not be disposed of till the
surveyor gives approval for the same.
- Do not take any action
for damaged vehicle before prior-approval of insurance company /
surveyor like repairs, movement of vehicle, etc.
- Never enter
into a compromise or make an out-of-court settlement with the injured
or legal heirs of the deceased without the consent of the insurers.
These compromises or out of court settlements are not payable in terms
of insurance policy.
- Documents to be deposited with insurers
include original bill of repairs / replacements, cash memo, payment
proof, etc., for finalisation / disposal of claim by the insurance
company.
- Submission of xerox copies of bills / invoices paid is
not accepted. Original bills are required to be submitted to insurance
company.
- On approval of claim, arrange to deposit / salvage the
damaged parts with the insurers failing which they may deduct the
salvage value from the claim amount.
- Provide co-operation to the advocate deputed by the insurance company.
To sum up
One
has to be very careful while making a claim and should also be prepared
to shell out a good amount from his pocket as well. The owner of the
vehicle should be aware of all the terms and hidden costs, which
Vazirani did not know that led to nothing but disappointment.
Links: Rediff, Moneycontrol