Insurer interests need to be protected

Someone hits your car from the back, damaging the boot badly. You get into an argument with the person whose vehicle has hit your car, call the police who come and advise you to settle the issue or bring both the cars to the local police station. You seek damages from the person who hit from behind, he shows his inability to pay or offers a petty amount barely enough to cover the cost of repairs of your car. What do you do? Left with no alternative you fall back on your own car insurance policy seeking cost of repairs which they offer you partially citing various clauses like 50 per cent for plastic and rubbers parts. On top of it, the following year the premium of insurance on your car goes up where the insurance does away with the no claim bonus (NCB) which could have been 20 per cent of the basic premium.  

Incredible ! You lose money even when it is not your fault. You pay 50 per cent and sundry charges and taxes on the repairs plus lose the coveted NCB whereas the person at fault goes home without losing a penny from his pocket. Is the law right?

This does not happen in Europe. An example is Germany where when two vehicles when they are involved in an accident, the one who is hit makes a picture of the accident site (every motorist is supposed to carry a Polaroid camera in the car as per law). He asks the person who has hit his car to hand over a signed proforma of claim for repairs. Done. He gets the repair cost from the insurance of the person who had caused the accident.  

This procedure is not followed in India where accidents occur every minute. Though comprehensive insurance has been made compulsory for every motorist in a metro like Delhi, there is no law which binds the motorists to pay compensation to the other whom they have hit. Instead tempers run high and, at times, they come to blows.  

Why is the motor insurance so basic in nature in India that it does not have similar provisions? THE BLUE MOON asked this question from some insurance companies.

R. Chandrasekaran, secretary general, General Insurance Council, holds the opinion that “third party damage is a long queue for deciding who will pay for whose car if there are more than two cars involved in an accident.” He skirted questions on what happens when only two cars are involved. 

“We do have this procedure of third party insurance but it depends on the court to decide whose fault. In short we have knock-for-knock agreement which implies that if your car is damaged you get the claim from your own insurance. Plus in comprehensive insurance we have added a clause of third party accident if the victim is injured or dead your insurance pays. We follow UK system,” added Chandrasekaran.  

But UK does not have this system. In UK, if the accident wasn’t your fault, you can use a credit hire company instead of making a claim through your insurance company. A credit hire company pays for the cost of you hiring a replacement vehicle while yours is being fixed and pays for the cost of repairs. The company then claims back these costs from the insurance company of the other driver who is at fault in the accident. 

ICICI Lombard thought it fit to remain out of such controversial issue.  Siddharth Ananth, media incharge, took ten days to give a reply on the issue finally saying, “We do not want to get involved in this subject. We stay away as we follow IRDA rules. This is a sensitive subject.”

True the subject is sensitive as it affects the consumer and not the insurance companies which make money on denying the rightly earned NCB to the affected party.  

Imagine you losing NCB and spending extra on repairs for no fault of yours, while your insurance company makes money on it. The onus for correction of this anomaly lies on the government agency Insurance Regulatory and Development Authority (IRDA) which ought to rectify it.

Instead of giving a free run to insurance companies, a growing sector, consumer protection must be given attention.

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