Perils of hiding facts from the insurer

Do you habitually cringe when asked to provide more information at the time of your car insurance policy renewal? If your answer is yes,then its time you realise you are not helping yourself

Do you habitually cringe when asked to provide more information at the time of your car insurance policy renewal? If your answer is yes,then its time you realise you are not helping yourself.

The news is,insurers are increasingly restoring to what is called as profile based or risk based pricing. What the insurers actually do is to ask you a series of questions relating to your vehicle usage,information about the distance you travel on an average,type of parking space you use regularly etc. All this is to develop a deeper understanding of your overall profile and come with an appropriate pricing.

Motor owners/ drivers have to understand that their lifestyle,vehicle usage pattern,the way they pay attention to their vehicle and other activities that they perform to mitigate the risk like fitting anti-theft device etc,influence their motor premium. What it means is that if you happen to be a responsible vehicle owner who takes utmost care of the vehicle,drive it safely,park the vehicle in safer places etc,you are more likely to get a favourable pricing from your insurer as compared to someone with an adverse profile. In fact,the premium payable should not be high if the risk attached is low.

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Risk is just the probability of an uncertain future event and as you are aware,any probability can be reduced in a scientific fashion. In case of motor insurance,this probability is the claim frequency which is derived from historic data on factors influencing the level of risk. The challenge is to comprehend from the insurance proposal all these probable factors influencing the magnitude of risk. The supplementary information which is made available about the insured and the vehicle,makes the evaluation of risk logical. It is advantageous to make available additional information about yourself and your vehicle to the insurance company. This can be done directly and/ or through an insurance advisor to enable the insurer to correctly assess the extent of risk.

As the owner of the vehicle,you can make an improvement to your vehicles risk profile if you can take the necessary mitigation measures like adjusting your average daily usage of the vehicle,ensuring vehicle check-up/ inspection is carried out regularly and parking the vehicle in safer covered parking space.

The other challenge is to deal with the theft peril. Insurers examine the degree of theft risk and highly value the usage of GPS tracking or other anti-theft gadget fixed in the vehicle as it assists in minimising the theft risk to a larger level. This emerges as the finest approach to get motor premium computed fairly and favourable for you.

So next time when your insurance agent asks those additional questions,please do not cringe. Do remember that it is in your interest that you provide complete and true information.

 Author is VP & Head Retail,SBI General Insurance

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