Getting your insurer to pay up for minor repairs of your car may not be as simple henceforth due to changes in norms brought about by the Insurance Regulatory Development Authority (Irda).
As per an order posted on the Irda website, car paint has been brought under the purview of depreciable parts.
What the regulator says: The order says: ?Rate of depreciation for painting: In the case of painting, the deprecation rate of 50 percent shall be applied only on the material cost of the total painting charges. In case of a consolidated bill for painting charges, the material component shall be considered as 25 percent of total painting charges for the purpose of applying deprecation.? Read more here.
?Why this move: The paint of your car as a material has a limited lifetime, and thus it is subject to depreciation, thanks to the various weather conditions our cars are exposed to. But the problem was that, there was no uniform practice as far as deprecation of paint goes, among the insurers. With this order, there is now some method to the madness.
What it means for you: ?There is no deduction for painting charges by insurer now. But with this order, you will have to bear a part of the cost,? says Pankaj Mathpal, Certified Financial Planner, Optima Money Managers.
Before this circular came into effect, you would have got Rs 10, 000 as settlement amount for the paint job, going forward, you will get Rs 8,750.
Keep in mind that painting charges include labour charge as well as material cost. ?Let?s assume that your consolidated bill for painting charges cost was Rs 10,000. The material cost will be Rs 2,500, and 50% of that amount, that is Rs 1,250, will be the deduction,? says Mathpal. So, while before this circular came into effect, you would have got Rs 10, 000 as settlement amount for the paint job, going forward, you will get Rs 8,750.
In action: Keep in mind that this change will be applicable to all motor package policies whose risk inception date falls on or after 1 February. May be it?s about time, you drive better to avoid scratches and park the car in place where the weather won?t be so harsh.
Source: http://www.firstpost.com/investing/new-insurance-norm-of-car-paint-and-auto-insurance-583658.html
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