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Rating
When the proposal form is received by the company it will fix the premium rate. If
the company is a tariff office, it will consult the rating book issued by the Tariff
Association, which contains schedules of rates for different vehicles for different
policies. Each member company charges the rates according to the schedule for the
particular vehicle under a particular policy. The company will first find out the
basic premium from the schedule and then add to it the amounts for additional
risks or subtract from it the rebates allowed for excluding certain risks. The final
amount will be the premium charged from the insured.
In case of Act and Third Party Policies, it is the horsepower which determines the
premium for private cars and motor cycles, and for the comprehensive policies
horsepower and the value of the vehicle are the principal factors for fixing the
premium.
If the owner or a named person is to drive the car, a rebate of the premium is
allowed because of lower mileage. A rebate is also allowed if the insured agrees to
bear a particular first portion of each claim for damage to the insured car. Similarly
if one owner possesses more than one car and all of them are insured the company
will allow a rebate. Further, if the insured is the member of any recognized
Automobile Association, a rebate of 10 p. c. is allowed.
In rating the Commercial Vehicles, the procedure is a little complicated one. It will
depend on the type of vehicle, its carrying capacity, vehicle hauling trailor or not,
value, risks covered, etc. Different rates are charged for town and mofussil areas.
The rebates are allowed in case of commercial vehicles and motor cycles on the
same grounds as those mentioned in case of private cars.
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