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ICICI Lombard General Insurance, which offers motor insurance to vehicles, has announced that it will charge 15% more premium to cover diesel cars over petrol cars.
Amitabh Jain, Vice President (motor), ICICI Lombard, told reporters that diesel cars are mostly used for commercial purposes and the exposure to risk is higher for these vehicles. He added that 15% additional amount will be charged over the basic premium so as to cover the expenses of maintaining and securing the business.
Other general insurance companies are also considering increasing the premium rates on diesel cars as they feel that the maintenance and risks involved are higher. Sanjay Dutta, Head of Customer Service, ICICI Lombard justifies the hike in premiums by stating that diesel cars run more than petrol cars and hence are exposed to higher risks.
Nilesh Garg , Executive Director, ICICI Lombard said that companies consider the vehicles age, location and model and are now looking to factor the demographic behaviour of the driver and the miles driven. For this, the company is creating a database and will soon implement it. He added that the loading is not same for all model instead it will depend on the age of the model.
Insurance companies have incurred huge losses in the motor insurance segment. To combat these losses, IRDA recently hiked the premium rates on third party motor insurance cover for all vehicles that hit the road. For goods carrying or commercial vehicles the rise in premiums was almost 68%. This increase was made effective on April 25, 2011.
An increasing number of people are more inclined towards buying diesel cars or CNG cars over petrol cars. The government recently increased diesel prices by Rs 3 on June 24. Now, with an increase in the insurance premium rates on diesel vehicles, it is apparent that vehicle owners will have to shell out more money to run their cars.