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Friday, May 1, 2020

Covid 19 - lockdown - in UK Covidiots racing on road would pay more for their insurances !

For most of us who have been living simple life oriented with our families – 2020 has dawned new – teaching us fear of Corona Virus and the behaviour of Covidiots !

Every day we hear and see news of increasing no. of people affected – sadly the no. of Covid-19 cases in the country has crossed 30000 - the Union Health Ministry said that  22,982 are active cases, 7,796 people have recovered, and 1,008 people succumbed to Covid-19. As per the lastest data, Maharashtra still remains to be the worst-hit state with number of cases rising to 9,318 followed by Gujarat (3,774) and Delhi (3,314).  Chennai numbers too are frightening – as we see some idiots still loitering on road, we are worried, for these insane people are propagating virus and making life worser still for those who are obeying the instructions and chose to be at home – when will people realize.  In a City, where literacy is high, we see people casually strolling still for buying vegetables, fruits and sundry things and .. .. not observing the golden rules of ‘social distancing’ and remaining at home.

From the day Govt announced lockdown – I have ventured out only once for a few minutes for purchase of medicines.  My vehicles have not moved out of the compound for more than a month now. This is no post on Covid / medicines / precautions tobe taken /  economic ill-effects and the like but on Motor Vehicles and insurance. 

Motor Vehicles Act 1988 mandates insurance for vehicles on public road.  Sec 146 Necessity for insurance against third party risk. —
(1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter (partial reproduction of Act)
(2) Sub-section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise.
(3) The appropriate Government may, by order, exempt from the operation of sub-section (1) any vehicle owned by any of the following authorities.. …. ..

Sec 147 of the MV Act details further on the requirements of policies and limits of liability. —
(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which—
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by him in respect of the death of or bodily 27 [injury to any person, including owner of the goods or his authorised representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

~ thus vehicles should mandatorily have a Policy covering the Act liability of the owner of the vehicle.   In India, insurance can be obtained only by payment of premium.  This is essence of Insurance Act 1938.   

Section 64VB of the Act  :  No risk to be assumed unless premium is received in advance.—
(1)  No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (partial  extract of the Act)

With the onset of Covid or more to do with the lockdown measures announced by the Govt of India, there was to be some relaxation on this rule with the controlling body IRDA [Insurance Regulatory & Development Authority] announced some relaxation in the rules in premium payment  (more specifically for Motor Third Party Insurance Policies) that too falling  due during the lockdown period (25th March, 2020 to 14th April, 2020) as a result of COVID 19 situation.

To enable this the Department of Financial Services, Government of India, issued notification dated 1st April, 2020 directing that policyholders whose motor vehicle third party insurance policies fall due for renewal during the period on and from 25th March, 2020 up to 14th April, 2020 and who are unable to make payment of their renewal premium on time in view of the prevailing situation in the country as a result of COVID 19 are allowed to make premium payment for renewal of policies to their insurers on or before 21st April, 2020 to ensure continuity of the statutory motor vehicle third party insurance cover.

The condition stipulated was that the Policyholders shall be required to pay the renewal premium for the entire period of 12 months from the date it was due, on or before 21st April, 2020.  With this relaxation, a policy holder whose policy was due during Covid lockdown and paying 12 months premium before 21.4.2020 will get continuity of cover ie., if policy were to expire on say 28.3.2020 and premium is paid on 20.4.2020 – coverage (otherwise would have been from the date of payment of premium i.e., 20.4.2020 but)  would be :  -  28.3.2020 to 27.3.2021

With the extention of lockdown, came another circular amending the original order - policyholders whose motor vehicle third party insurance policies fall due for renewal during the period on and from the 25th March, 2020 up to the 3rd May, 2020 and who are unable to make payment of their renewal premium on time in view of the prevailing situation in the country as a result of Corona Virus disease (COVID 19) are allowed to make such payment for renewal of their policies to their insurers on or before 15th May, 2020 to ensure continuity of the statutory motor vehicle third party insurance cover from the date on which the policy falls due for renewal so that any valid claim triggered during the grace period can be paid.

In general, the premium income has gone down drastically for General Insurers as there is no new vehicle registration and some owners have not renewed their policies in time – there have been quite lesser no. of claims reported too, as vehicles are not plying on road.  It is feared that when the lockdown is lifted some could behave idiotically and drive rashly, road rage could result in more accidents and claims.

Miles away, in UK, Covidiots caught speeding on quieter roads during lockdown can expect to see their premium rise by at least a third, insurance insiders warn.  GoCompare said a speeding offence will result in increased premiums.  In Britain, cases being reported during lockdown are the most extreme types of speeding.  This includes one motorist clocked at 151mph on the M1 and another driving at 134mph in a 40mph zone.  These fall into 'Category C' offences, which result in 6 points or a driving ban
vehicles impounded for speed offence reports that Motorists using quieter roads as their personal race track have been warned the financial implications of being caught go further than just fines. Police forces across the country have reported many cases of dangerous driving in the last six weeks, with some cases of individuals being clocked at speeds in excess of 150mph due to there being far less traffic than usual. While most covidiot speeders will receive fines of £100 or more and points on their licence, they should also expect to see their insurance premiums typically soar by a third, comparison site GoCompare has warned.   Deserted roads during the lockdown has seen a spike in dangerous driving. Insurance experts have warned motorists about the financial implications of speeding - and not just when it comes to the size of fines. 

In a recent poll of almost 20,000 motorists, almost half claim they had witnessed more speeding on the road since the lockdown was implemented on 23 March. Home Secretary Priti Patel recently slammed the volume of instances of 'extraordinary dangerous driving' during the pandemic restrictions. Ms Patel addressed the daily Downing Street press conference on Saturday to explain what the police is doing to maintain law and order during the lockdown., stating: 'Burglary, car crime and shop lifting are all lower than for the same period this time last year.' However, she also raised that there's been a worryingly high level of law breaking on the roads during the same period. 'That includes some extraordinary dangerous driving, with a minority of drivers using quieter roads as their own personal race track and endangering peoples lives.' 

While such behaviour poses a serious risk to other road users and could in turn increase the pressure on emergency services, drivers are being warned that being caught speeding could see motorists face much higher insurance premiums or a driving ban. Speeding offences are divided into three main categories (bands A to C) based on seriousness, with penalties of increasing severity to reflect the seriousness of the offence. Penalties depend on several factors including by how much the speed limit was exceeded by and, the type of road. The most common speeding offences falls into the lowest category, these generally lead to a speeding ticket issued via a Fixed Penalty Notice (FPN). Provided the driver accepts responsibility, they will be fined a minimum of £100 and receive three points on their licence - unless they have been given the option of attending a speed awareness course instead of prosecution.

However, with roads being much quieter in recent weeks, police have reported more extreme cases that result in higher penalties.  In addition to larger fines, drivers committing a Category B speeding violation face between four and six penalty points.  Category C offences result in six penalty points or a driving ban. Penalty points remain on driving licences for four years from the date of the offence. The Home Secretary revealed one covidiot motorist was clocked during the lockdown at 151mph on the M1 while another whizzed through a 40mph zone at 134mph in London - both easily deemed category C speeding crimes.

Having any form of speeding offence on your record will increase your premiums, GoCompare Car said. 'Motorists convicted of speeding will typically pay more for their insurance because insurers deem them to be a higher risk,' it explained. 'The size of the increase will depend on the driver's individual circumstances (age, experience, vehicle, etc.) and the severity of the offence.'  GoCompare says a 30-year-old female, driving an Audi A3, living in London would pay £1,084 for cover if they had no driving convictions. The cost would increase by 34 per cent to £1,450 if they were convicted of speeding with three points on their licence. A 50-year-old male in Norwich driving a BMW 535 DGT M Sport, convicted of a category B speeding offence, could see their premium rise 35 per cent from £712 to £961.  However, if it was deemed to be dangerous driving, his existing insurer could charge far more, and many other insurers might decline to offer a price.

'Insurers take differing views on motoring convictions and price accordingly. Some insurers will swerve speeders altogether, while there are others that will provide cover, at a price.'  Even drivers who opt to attend a speed awareness course might not escape unpunished by their policy provider. While they will not have their speeding recorded as a conviction they may still be required to disclose their attendance to one an awareness course to their insurer if asked to do so. Drivers failing to tell their insurer about any speeding convictions they hold risk invalidating their cover.

Hope that in India too such measures are introduced – rewarding the safe drivers and penalizing the wrong-doers.

With regards – S. Sampathkumar

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