5 Things You Must Know About Madras High Court Order on Motor Insurance

In its recent judgement, the High Court of Madras, made it necessary for all vehicles sold after September 1, 2021 to have a bumper-to-bumper motor insurance policy cover.

Hence, now it is essential to have a cover through the bumper-to-bumper insurance policy every year, additionally, covering the owner of the vehicle, the passengers & the driver, at least for five years. In the opinion of many experts, this might be a great move to protect the car owner, driver and passenger. This will greatly benefit the motor insurance companies too. Below, you can discover some answers to 5 most important questions like;

5 Important Questions About Madras High Court Order on Motor Insurance

• What information you need to have for understanding what is Bumper to Bumper insurance?
• What’s included in the current car insurance policy & what would change after this judgement?
• Would this increase premium costs?
• After the policy, in the unfortunate event of an accident, who will be eligible to make claims and what will be covered?
• Does this judgement only cover the state of Tamil Nadu or entire India?

What information you need to have for understanding what is Bumper to Bumper insurance?

Bumper-to-bumper insurance policy provides the automobile owner with a wide-ranging coverage. But, this type of motor insurance also comes with relatively higher premiums.

Bumper-to-bumper insurance policy asks for 20-30% higher premium in comparison to the simple all-inclusive motor insurance policy.

There’s a specific reason because of which the bumper to bumper insurance policy cost or premium is a little higher, in comparison to the usual car insurance. This is because it covers each and every part of your automobile & doesn’t reduce the value of your vehicle parts, which are being replaced while the claim amount is being calculated.

You get complete coverage & the insurance company pays 100% when the claim is raised. Therefore, the price is minimal in comparison to the money you might have to pay under the terms and conditions of the comprehensive insurance policy in the case of repairs.

What’s included in the current car insurance policy & what would change after this judgement?

Current car insurance policies only cover the risk to the automobile or the vehicle through a third party. It doesn't cover the risks posed by the occupants.

If anyone wishes to have cover for the occupant, they may get it by paying an additional premium. A Third party insurance policy only provides protection against harms to the third party individual or people, who are a part of the accident caused by the insured car or vehicle. It can cover damaged vehicles, physical injuries & damages caused to the property & in certain cases, even death.

On the other hand, the bumper-to-bumper insurance policy provides complete cover for the vehicle regardless of the vehicle’s depreciating parts.

What this means is that the insurer would not deduct the value of downgrading or depreciation while offering cover. The insurance company or the insurer would pay the complete cost of substituting the vehicle body parts which are impaired or damaged in the accident.

What does Depreciation exactly mean?

Depreciation is the decline in the price of your vehicle, because of its natural deterioration due to the vehicle’s age. The older your car or vehicle becomes, the higher its depreciation.

How Depreciation is exactly calculated?

According to the IRDAI, following are the depreciation rates, based on which your vehicle’s total depreciation is calculated:

Would this increase premium costs?

Zero Depreciation is an Add-on and this will increase the premium costs.

After the policy, in the unfortunate event of an accident, who will be eligible to make claims and what will be covered?

In case of an unfortunate event such as Act of god, earth quake, floods or in case of a normal accident, the customer will get the amount equal to total Insured Declared value in case of total damage and repair cost in case of partial damage to the vehicle, subject to examination and policy by the insurer

Does this judgement only cover Tamil Nadu or pan India?

Currently as per the ruling, bumper to bumper car insurance is compulsory in Tamil Nadu, but having said that, it will have an impact on other states too.

Passing of this HC order indicates that many accident victims in the state of Tamil Nadu will enjoy greater cover on their side.

Justice Vaidyanathan also clarified that this order shall not stop the claim applicants or claimants from requesting reimbursement for the death of the deceased from the car owner.