No insurance policy to comply with Madras High Court order on 5 year bumper-to-bumper cover

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The suspense continues over whether vehicle buyers will have to shell out a huge sum for the insurance premium up front for five years from Wednesday to comply with the Madras High Court order.

As things stand, new car buyers in Tamil Nadu from Wednesday have to pay huge sums in premium for five years.

It is learned that the industry lobbying body, the General Insurance Council, is exploring various options, including legal ones, to get out of the situation.

But where is the politics is the question? “IRDAI (Insurance Regulatory and Development Authority of India) must first approve such a product. There is no five-year bumper-to-bumper car insurance policy,” said Saharsh Damani , CEO of the Federation of Automobile Dealers Associations (FADA). says IANS.

Non-insurance industry officials told IANS that none of the insurers have a five-year bumper-to-bumper insurance policy for cars and two-wheelers.

Such a product should be designed after performing actuarial calculations. Industry officials starting with industry regulator IRDAI and insurers remain silent on the issue while claiming to serve the interests of the underwriting public.

Recently, the Madras High Court, by an order, made the expensive bumper-to-bumper insurance cover compulsory for all new passenger cars sold from September 1, 2021.

The court also ordered the broadcast of the judgment by the additional chief secretary of Chennai transport department to all insurers and the said officers are to ensure that the above directive is scrupulously followed in letter and spirit without any detour.

“Why should insurers give instructions. They will be happy if the order is implemented because they will receive lump sum premium income up front,” an unwilling insurance intermediary told IANS. be quoted.

Headless IRDAI has not issued any public notice/guideline in this regard.

The Tamil Nadu government is also silent on this aspect as the court had ordered its order broadcast to the additional secretary of the transport department.

“We have not received any circular from the head office in this regard,” an official of a public sector general insurer told IANS, preferring anonymity.

The court posted the case to September 30 for compliance report. “The insurers will remain silent because the court did not order them. It is up to IRDAI to give the necessary instructions making personal accident insurance cover compulsory for the occupants of a passenger car and the passengers of two-wheelers. Now it’s optional,” Americai said. V. Narayanan, President, ICM Insurance Brokers Pvt Ltd told IANS.

Narayanan said bumper-to-bumper insurance coverage will cost more than full insurance coverage because claims under the former will be settled on a replacement cost basis, while in the case of the second, the depreciation will be applied to the cost of the components.

Car insurance policies have two components: personal damage (insurance of the vehicle against damage, theft) and civil liability (liability for third parties).

Liability insurance coverage is mandatory while vehicle damage insurance coverage is not mandatory.

Madras High Court Order makes vehicle insurance coverage mandatory.

“This is a patently untenable order (court order) and would not withstand legal scrutiny should the automakers or any other aggrieved party appeal,” D. Varadarajan, attorney at the IANS, told IANS. Supreme Court specializing in company/competition/insurance law. .

Commenting on car owners’ lack of awareness of car occupant liability, the court when hearing a case ordered: “Therefore, this court orders that whenever a new vehicle is sold after on 01.09.2021, it is mandatory for bumper-to-bumper insurance coverage every year, in addition to driver, passenger and vehicle owner coverage, for a period of five years.”

“Thereafter, the vehicle owner must be careful in safeguarding the interests of the driver, passengers, third parties and himself, in order to avoid unnecessary liability being imposed on the vehicle owner, beyond five years, from the date there is no provision to extend the bumper-to-bumper policy, due to its unavailability,” the court ordered.

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