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Detariffing of the general insurance sector is set to bring in huge changes. The range of cover, pricing, degree of customization will change once detariffing takes place in December 2006. Premium charges will be influenced by age, experience and even educational qualification. This will help in determining how much risk an individual is willing to take. Once motor insurance gets detariffed (as well), the premium charged will vary according to the vehicles make and usage.
For example Mrs Murthy is a college professor who works for 8 hours in a day. She uses her car for an hour and uses it more often on weekends to drop and pick up her kids from drawing classes. Mr. Patil, a cab driver resides in Vashi spends more than 15 hours in a day traveling from place to place. One would expect Mrs Murthy to pay a lesser premium but in this tariffed era both would be paying the same amount of premium. Since insurers are planning to categorize automobile buyers according to risks involved, Mr. Patil will be paying more premium than Mrs Murthy because he holds a higher chance of meeting accidents. After all the driver runs more into the risk for causing accidents than the car itself.
Western countries charge premiums also on other features. For example one's lifestyle, driving experience colour of the car and even where the car is parked, is taken into account. For instance, Mercedes Benz is the safest car on road hence it is charged the lowest premium abroad but however in India the premiums of this car would increase because of its heavy engine. Cars having smaller engines, like Maruti 800, Alto etc., will have to pay lesser premiums. Also the level of risk will determine the premium to be charged. For e.g., The premium charges will reduce if the vehicle has air bags, warning mechanism on malfunctioning of the vehicle, automatic door locking system. It's no wonder therefore that more and more people are clamouring for detariffing motor insurance at the earliest.
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