Madras highcourt insurance rule is wrong on many fronts

Madras highcourt insurance rule is wrong on many fronts

1. There is already 3 year and 5 year 3rd party liability insurance made mandatory. This covers any damage a vehicle can cause to others. This is the mandatory component of insurance.

2. Own Damage or 1st party insurance component covers damage that may happen to the vehicle and covers repair expense. But this is optional because if owner decides not to have it, it is at his own risk and liability should anything major happen. Govt or court has no business dictating that this own damage insurance is mandatory.

3. Within own damage there are many aspects- IDV or insurance declared value- which can vary, there is Zero depreciation insurance, there is bumper to bumper insurance. It is not clear on what basis Madras High COurst said "Bumper to Bumber" insurance is mandatory.

4. Insurance premium is already going through the roof. We pay 1 lakh in insurance on a 15 lakh car. In about 10 years, owner pays entire amount of the car as insurance premium, which is a total loss if he takes great care of the car and doesn't face any major issues.

5. Court and Govt should ask insurance companies to reduce premium by as much as 50%. But they are hand in glove with corporates and don't want to take any decision not favorable to companies.

Reason for reducing insurance premium is as below

1. Union Govt has reduced road accidents y 25% by June this year (refer news report). So number of claims have gone down and premium should be reduced by 25% at least.

2. Vehicle usage has gone down- every year 2-3 month goes in lockdown, vehicle usage is further reduced due to weekend curfew, night curfew, work from home etc. 

3. Vehicle sales has increased. While risk has reduced revenue is increasing for insurance companies. Definitely they should reconsider the premium and reduce it by 33-50% at least

4. Govt aiming to reduce accidents by 50% by 2024 [News]

Forcing 5 year bumper to bumper throws even more questions

- If there is total loss within first year will insurance company refund remaining 4 year premium?

- Other than insurance companies making more money, what is the benefit of this scheme?

- Insurance companies still reject claim citing a dozen different excuses- anything done to control this?

Madras highcourt should stop giving executive decisions and focus on clearing pending cases. At this trend tomorrow some  other highcourt will say pay insurance for entire 15 year. Already vehicle cost has increased 2x over past 5 years due to various factors. Fuel price is out of control, people don't have money and courts are determined to increase consumer spending many fold just to satisfy some corporate lobbies.