Dossa flays hike in car premium

MUMBAI, Aug 1: Motorists are up in arms over a recent decision by insurance companies to hike the `Own Damage Insurance Premium' (ODIP) f...

MUMBAI, Aug 1: Motorists are up in arms over a recent decision by insurance companies to hike the `Own Damage Insurance Premium’ (ODIP) from 2.98 per cent to 3.25 per cent. The decision, effective July 1, has increased the cost of operating a vehicle all over the country by almost Rs 2,000 depending on the age of the vehicle.

The Western India Automobile Association has already written to the Tariff Advisory Committee to review the hike. Nitin Dossa, president of the WIAA says the increase in the Own Damage Insurance Premium is unfair as the insurance companies have recently hiked the `third party’ insurance premium by over three and a half times.

"Although the percentage of the no-claim bonus has been slightly increased with effect from July 1, the net amount which a motorist has to pay still remains much higher that what was paid till June this year," Dossa said.

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When contacted, insurance officials said, as they were incurring massive losses in the motor premium business they had to increase thepremium. "Due to a depreciation clause, the car owners were getting claims based on the depreciated prices of the cars. In order to avoid this rule, vehicle owners were inflating their bills. Thus, we were paying higher claims as compared to premium earned," officials add.

"Now, in order to help the vehicle owners, we have decided to do away with the depreciation clause and the car owners can claim `own damage’ at the market rates. This move will help the vehicle owners immensely," they add.

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