Car, home insurance? Here's help

With detariffing (price of insurance determined in a free market) kicking in from January 1 2007, those seeking insurance need to take a close look at the offers available in the market that the new regime has brought in with it.

The New Year has brought in good news for those who own cars. Under the new regime, premiums paid on car insurance with no accident history have come down by 10-20 per cent.

Car insurance premiums would depend on several factors like the age and cubic capacity of the car and even the geographical area where it is being driven, says N Raveendran, managing director of Alegion Insurance Services.

If the car has a no-claim history, the car owner will get a discount. Installation of approved anti-theft devices can also reduce the premium paid, says Raveendran. Bajaj Allianz General Insurance, ICICI Lombard and United India Insurance are offering a discount of 10 per cent on own-damage segments.

Premiums of car insurance primarily depend on own damage (the damages to the car in event of an accident) and third-party liability (the injuries to the other person involved in the accident).

While there is reason to cheer for private car owners, detariffing has raised the hackles of truck owners. The premiums for truck insurance have gone up by 100-150 per cent, owing to the cost of third-party liability. Earlier, under the tariffed regime, truck owners paid only a fixed premium. Since insurers were not allowed to charge premiums according to claims, it was a loss-making segment.

Looking Ahead
Cars	Age of cars	Premiums before detariffinG	Premiums after detariffing
Upto 1,000 cc
Maruti 800	3 years	Rs 5,600	Rs 2,642
Maruti Alto	2 years	Rs 6,800	Rs 5,958
1000-1500 cc
Hyundai Santro	3 years	Rs 10,500	Rs 6,983
Maruti Esteem	3 years	Rs 12,000	Rs 9,139
Ford Ikon	3 years	Rs 15,000	Rs 9,139
Figures for premiums after detariffing provided by Iffco Tokio General Insurance. The above premiums are for cars with no-claims bonus. Premiums depend on the value and model of car, or engine. All rates are inclusive of tax. These rates vary from region to region. Here, we have provided rates from the Delhi region.

However, with free pricing, the insurers have started hiking the premiums that has made truck owners worried. The Insurance Regulatory Development Authority has proposed to form a third-party pool, which will underwrite such risks and, thereby, reduce the premium rates.

Though there had been reports that detariffing will bring with it a 40 per cent discount in the home insurance sector, insurance companies and brokers say there has not been any major reduction in the premiums so far.

When contacted, ICICI Lombard, Cholamandalam MS General Insurance, Tata AIG General Insurance and Royal Sundaram Alliance Insurance companies declined to provide any information in this regard.

On the other hand, fire insurance premiums, are expected to drop by 30-35 per cent, says K.G. Krishnamoorthy, head of underwriting, Bajaj Allianz General Insurance.

Although free pricing would not mean major changes for individuals buying insurance, it may make a huge difference to corporates.