CHENNAI: The Madras High Court on Wednesday kept in abeyance its order which mandated bumper-to-bumper insurance cover for new vehicles sold from September 1. It has adjourned the matter to September 13 when it will hear the General Insurance Council (GIC), a statutory body constituted under the Insurance Act which represents the collective interests of non-life insurance companies in India.
The GIC had moved the court last week asking it to grant the insurance companies 90 days’ time to introduce the new breed of five-year insurance policies after due approval from the insurance regulator.
The court on August 4, had ordered that a five-year bumper-to-bumper insurance is a must for all new vehicles. The State transport department also on Tuesday issued a circular to all Regional Transport Offices to verify the policy when registering new vehicles starting Wednesday. At present, no company offers a five-year bumper-to-bumper insurance leading to much ambiguity on the issue.
Justice S Vaidyanathan, who had also passed the original order, issued an interim order on Wednesday keeping the previous order in abeyance. The court also appreciated the government for acting quickly and issuing a circular.
Meanwhile, new vehicle registration was disrupted across the State on Wednesday and ambiguity prevailed in vehicle showrooms over the insurance coverage. The dealers informed vehicle buyers that they may have to shell out more if the bumper-to-bumper insurance is implemented in the coming days.
‘Will have 100% coverage for vehicles under insurance plan’
“So far, we have not heard anything from the insurance companies. We were told none of the insurance companies had got bumper-to-bumper plans for five years. We cautioned our customers to prepare to bear additional expenses at the time of registration,” said a dealer in Ambattur, Chennai. At present, the city’s vehicle dealers offer a five years insurance plan for two wheelers and cars.
For the first year, it will be a comprehensive coverage and third-party coverage for the rest of the years. M otorists are charged Rs 8,000 to Rs 10,500 towards insurance premium for two-wheelers priced between Rs 80,000 and Rs 1.2 lakh, and Rs 32,000 to Rs 43,500 for cars that cost between Rs 7 and Rs 10 lakh. According to vehicle dealers’ estimation, insurance premium for two-wheelers will go up by Rs 6,000 to Rs 8,000 and cars by Rs 60,000 to Rs 85,000, if the new insurance plan is implemented. “We have given rough estimations to buyers. However, no vehicle was registered on the first day.
The Federation of Automobile Dealers Associations has taken up the issue with the Centre,” added the dealer. S Radhakrishnan, who booked a car in Anna Nagar, said, “I was told the State government is likely to increase motor vehicle tax in coming days which might escalate the car price by Rs 6,000 to Rs 7,000. I was planning to buy a car before that. But now I was told, insurance premium may get increased Rs 30,000 to Rs 35,000.” Even though comprehensive coverage provides protection for vehicle, driver and other occupants, insurance companies will only provide coverage for a maximum of 75 per cent of vehicle value that too for a limited period owing to depreciation of vehicle.
“However, under bumper-to-bumper insurance plan 100 per cent coverage is given for the vehicle irrespective of its depreciating parts,” said Advocate Suresh Souli. Souli said insurance against third-party provides protection against damages to the third person who is involved in the accident by the insured vehicle. “The court order may increase the cost of the vehicle. However, it will benefit the vehicle owners during accidents and also reduce litigations seeking compensations from insurance companies.”