Insurance Regulatory and Development Authority (IRDA) included vehicle paint under the purview of depreciable part and fixed rate of depreciation for the same.
As per IRDA Press Release, “Rate of Depreciation for Painting : In case of painting, the depreciation rate of 50 per cent shall be applied only on the material cost of the total painting charges. In case of a consolidated bill for painting charges, the material component shall be considered as 25 per cent of painting charges for the purpose of applying the depreciation.”
Why IRDA brought these changes?
1- IRDA have been brought in these changes as it was observed that there were no uniform practice prevailing in the market for depreciation on painting. At the moment, several companies don’t deduct the depreciation element from the painting charges, and painting-related claims are fully reimbursed.
2- IRDA is of the view that paint is manufactured from polymer, it should be included in the group of plastic parts. The regulator has fixed 50 per cent rate of depreciation on vehicle older than 10 years.
When these Changes shall be applicable?
These new change shall be applicable to all motor package policies whose risk inception date falls on or after February 1, 2013.