Depending on the engine size, the premium will vary. For instance, the initial cover for a three-year period on a new private car exceeding 1,500 cc will be about Rs 20,000, up from Rs 7,900 now for a one-year period. For motorcycles with an engine capacity beyond 350cc, the buyer will have to pay Rs 9,000-10,000 for a five-year cover, as against Rs 2,300 currently for a one-year period, say automobile dealers.
Car makers say the move will disrupt sales only temporarily. “Doubtless, there will be short-term pain for consumers and for us as manufacturers. Consumers will tend to postpone purchase but we expect the situation to settle soon,” said an official at one company, declining to be identified.
“There are discussions regarding giving insurance companies
a breather for a month or so,” said an executive at another car company.
“There could be some impact in the short term, as the initial outgo for buyers will go up,” said Sugato Sen, deputy director general at the Society of Indian Automobile Manufacturers.
Under the new regulation, buyers have an option. Either to choose a one-year policy that includes premium payment for own damage (OD) plus three-year mandatory third-party (TP) premium or a comprehensive cover for both OD and TP for three years each. The increase in premium will be sharper if a buyer goes with the second measure.
There are some ambiguities, said an official at a car company cited earlier. For instance, it does not clarify the provision if a buyer is looking to switch his insurance provider before three years. While the OD can be managed by the new company, what happens to the lumpsum deposit the buyer has already made?
Also, unlike the current scenario when one gets the no-claim bonus’ in the second year if the vehicle hasn’t met with an accident, one will have to wait three years for this. One does not know how the insurance regulator will address it, said the official.
are also bracing. To tide over the impact of a possible slowing in sales, Bajaj Auto on Wednesday announced free insurance for select models till Friday. Its rivals have refrained. A Hero MotoCorp spokesperson said it had no such plan, while adding the new regulation would translate into an increase in the on-road price of motorcycles and scooters, affecting retail sales in the short term. “However, the demand remains robust and we expect this to continue in the long term,” he said.