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MOTOR insurance-3

MOTOR insurance-3

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Published by: m_dattaias on Aug 04, 2010
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10/19/2012

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MOTOR INSURANCE Day 3

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Classes of Vehicles

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Definition of Private Vehicle: A vehicle used for private purpose i.e. used for personal, social & domestic purpose and also professional / personal business purpose (excluding carriage of goods)

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Limitations to use
If the vehicle is used for any of the purposes mentioned below, it is not covered under a Private Vehicle motor policy: 
  

Hire and Reward Carriage of goods Organized racing Speed Testing etc
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Definition of Commercial Vehicle: Any vehicle which is used for hire & reward (other than for private hire) is termed as a commercial vehicle

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PREMIUM CALCULATION
In this module, we will look at how motor insurance premium is calculated. We will examine the various parameters that need to be taken into account while computing the premium.
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RATING FACTORS

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Rating Factors (Pvt Cars & Two Wheelers)  

  

Insured's Declared Value (IDV = Showroom Price - Depreciation) Cubic Capacity (CC) of the Vehicle Geographical Zone Age of the Vehicle (Year of mnfg) Claims Experience
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1) Insured Declared value 

IDV is to be fixed on the basis of manufacturer¶s listed selling price of the brand and the model, less depreciation (as per the schedule) and is fixed at the commencement of each policy period for the each insured vehicle IDV = Present Invoice Value (-) Depreciation based on the age of the vehicle. (Invoice Value = Vehicle Cost + Sales Tax)
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SCHEDULE OF DEPRECIATION FOR ARRIVING AT IDV
AGE OF THE VEHICLE Not exceeding 6 months Exceeding 1 year but not exceeding 2 years Exceeding 2 years but not exceeding 3 years Exceeding 3 years but not exceeding 4 years Exceeding 4 years but not exceeding 5 years % OF DEPRECIATION FOR FIXING IDV 5% 20% 30% 40% 50%

IDV for vehicle above 5 years & obsolete models will be mutually agreed upon by the company and insured as per market value

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Example for IDV Calculation 
   

Make ± Maruti Model ± Alto Sub model ± LXI YOM ± 2009 Showroom Price ± Rs. 3,06,022/What is the IDV?
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Example for IDV Calculation 
   

Make ± Maruti Model ± Alto Sub model ± LXI YOM ± 2007 Showroom Price ± Rs. 3,06,022/What is the IDV?
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2. Cubic Capacity 

The size of an engine is referred to as its cubic capacity

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3.Geographical Zones 

Private Cars/ Motorized Two Wheelers / Commercial Vehicles rateable under Section 4.C.1 and C.4 

Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad , Kolkata, Mumbai, New Delhi and Pune. Zone B: Rest of India
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Commercial Vehicles excluding vehicles rateable under Section 4. C.1 and C.4. Zone A Chennai, Delhi / New Delhi, Kolkata, Mumbai Zone B All other State Capitals Zone C Rest of India  



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4. Age of the vehicle 

Refers to the year of manufacture of the vehicle

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5. Claims Experience
No Claim Bonus

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PREMIUM RATES

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Own Damage Premium Rates ± Private Car

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Own Damage Premium Rates ± 2 Wheeler

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Premium Rates for Liability Only Cover

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Premium rates for Additional Covers 

Optional Personal Accident Cover for persons other than OwnerOwnerDriver, in Pvt Cars is limited to maximum of Rs. 2 lacs. per person. (Premium payable Rs.50 per lac per person)
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Steps in Premium Calculation
Step I : Find out the IDV (IDV = Invoice price ± depreciation) Step II : Find out the Basic OD, i.e., IDV * OD Rates
(OD Rates are based on CC & YOM)

Step III : Deduct NCB from the Basic OD Step IV : Less Commercial Discount, if any Step V : Add TP Premium
(TP Premium is based on the CC of the vehicle)

Step VI: Add PA premium for Owner Driver Rs.100 & Legal Liability premium ± Rs.25 Step VII : Add Service Tax @ 10.3% to the Net Premium

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PREMIUM CALCULATION Step I : Find out the IDV
IDV = Invoice price ± depreciation For E.g.: Honda City 1.5 GXI, 2007 Model, Invoice Price is 6,90,000 IDV = (6,90,000 ± 30%) I.e., 4,83,000
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Step II : Find out the Basic OD Premium
I.e., IDV * OD Rates (OD Rates are based on CC & YOM) 

For E.g.: Honda City 1.5 GXI, 2007 Model, IDV taken is 4,83,000 Basic OD Premium = IDV * OD Rate I.e., 4,83,000 * 3.191% = 15,412

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Step III : Deduct NCB from the Basic OD 

For E.g.: Honda City 1.5 GXI, 2007 Model, No Claims, IDV :4,83,000,Basic OD = 15,412 OD after deducting NCB = 15,412 ± 25% I.e., 11,559

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Step IV: Less Commercial Discount, if any

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Step V : Add TP Premium (TP Premium is based on the CC of the vehicle) For E.g.: Honda City 1.5 GXI, 2007 Model, No Claims, IDV :4,83,000,Basic OD = 15,412, OD after deducting NCB = 11,559 Add TP Premium = 11,559 + 800 = 12,359
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Step VI : Add premium for Compulsory PA Cover for Owner Driver Rs.100 & Legal Liability premium ± Rs.25 

In the earlier E.g., 12,359 + 100 + 25 = 12,484 ± This the net premium before service tax

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Step VII: Net Premium + Serv. Tax @ VII: 10.3%

In the earlier E.g., 12,484 + 10.3% = 13,769 This the Final premium payable

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Check your understanding 
  

Toyota Innova 2.5 V Showroom Price : 10 Lacs Year : 2007 No claims till date What is the Premium payable?

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Check your understanding 
  

Maruti 800 YOM: 2008 Showroom Price: 1.6 Lacs NCB: There was a claim recently What is the premium payable?

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Check your understanding 
   

Maruti 800 YOM: 2008 Showroom Price: 1.6 Lacs NCB: No Claims till date The underwriter has agreed for 20% commercial discount apart from the NCB What is the premium payable?
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Check your understanding 
   

Toyota Innova 2.5 V Showroom Price : 10 Lacs Year : 2007 No claims till date There was ownership transfer a month back What is the Premium payable?

34

Check your understanding 
   

Maruti 800 YOM: 2007 Showroom Price: 1.6 Lacs NCB: No Claims till date The insured could not renew the policy in 2008. Hence there is a break in insurance(1year) What is the premium payable?
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Please Note:    

Electrical Accessories : 4% of the value of the accessories should be added in the OD Part CNG/LPG fuel : 4% of the value of the kit should be added in the OD and Rs. 60 under liability section Inbuilt accessories : No additional premium charged for inbuilt accessories. The cost of the accessories are taken into account while calculating the IDV Optional PA Cover for passengers: Max up to Rs. 2,00,000/- SI per passenger, Addnl premium payable ± Rs.50 per lac
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Special Risks Motor Trade Road Transit Risks, Motor Trade Road Risks & Motor Trade Internal Risks

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Motor Trade Road Transit Risk 

To cover the transit of newly manufactured vehicles to the automobile dealer¶s outlets located in various parts of the country

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Motor Trade Road Risk   

This is designed for a Motor ± Trader (an Automobile dealer, Garage Proprietor or Repairer) Provides cover during inspection & testing of the vehicles on the road before and after repair (When the vehicles are handed over for repairs) Provides cover during demonstration & trial run (new vehicles)
39

Motor Trade Internal Risk 


To cover the garage risks in the Motor Trader¶s premises and the work carried on there in. The risk exposure can be;   

Accidental Physical damage to the vehicle while stored in the garage premises Negligence of the Motor trader or his employees resulting in damage to the vehicle Accidental Death or Bodily injury to others due to the motor vehicle accident in the premises
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When does the insurance company ask for proposal form from customer?
Proposal forms are required in the all the following situations New Business Other Company renewal On Transfer of Interest On conversion of Liability Only cover to Package Policy Change / Substitution of the vehicle On alteration / improvement of vehicle either during the currency of the policy or during the renewal 

    

41

When do pre acceptance inspections have to be carried out?
Customer has to produce the vehicle for inspection under the following circumstances: 
  

In case of break in insurance In case of conversion of TP cover to OD cover In case of covering Imported vehicles In case of fresh payment received after cheque bounce The authorized person from the insurance company will inspect the vehicle.
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What are the documents required for issuing the policy?
For Fresh & Roll over cases 
  

Proposal form Previous Policy Copy RC Copy Payment Renewal Reply Form (Changes in the coverages if any, can be incorporated in the renewal reply form) Payment

For own renewals  

43

Premium computation-Egs computation    

Maruti Alto Showroom price ± 2,35,000 2005 model (cc ± less than 1000) No claims till date What is the premium payable?

44 

   

Maruti Alto Showroom price ± 2,35,000 2005 model (cc ± less than 1000) No claims till date What is the premium payable with 25% commercial discount?

45 

    

Maruti Alto Showroom price ± 2,35,000 2005 model (cc ± less than 1000) No claims till date There was ownership transfer recently What is the premium payable with 25% commercial discount?
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