While there is always a debate on which fuel type is best for a vehicle in the long run as per personal needs and driving requirements; what you may not be aware of is that the kind of fuel used in a vehicle does have an impact on the premium of your vehicle along with the Insured Declared Value, cubic capacity and other factors. If you dig a little deeper, you will realise that the insurance premium for a petrol car is less than that for a diesel car or a CNG/LPG fitted car. The reason is that diesel cars are expensive and are driven for longer distances and CNG fitted vehicles need higher maintenance along with a high installation cost.
If you are planning to get a CNG kit installed, you ought to be conscious of the regulations that are required to be followed in order to upgrade your motor insurance policy. Here are two probable scenarios in which you may wish to opt for CNG coverage:
CNG kit installation in old car
In such a case, your car must already be covered by a motor insurance policy, be it a comprehensive car insurance or just third party insurance. If you are planning to get a CNG kit installed in your old car, you must inform your insurance company to insure the CNG kit separately. Upgradation of the same on the Registration Certificate (RC) is necessary. Secondly, you must make sure that the kit you are getting installed is through an authorised workshop. Your insurer may call for an inspection before upgrading your insurance policy.
If you fail to follow the procedure, you may have to suffer the consequences. Your insurance company will not entertain any claim in future because risk adhered to a CNG vehicle is higher than cars running on petrol or diesel.
Buying new pre-fitted CNG vehicle
Insuring your new pre-fitted CNG vehicle is similar to insuring a car with petrol/diesel vehicle because the CNG kit is installed by the manufacturer himself. You just need to make sure that CNG fuel type is mentioned in your RC book.
Impact on insurance premium
Motor insurance premium is derived majorly from factors such as Insured Declared Value (IDV), cubic capacity of vehicle’s engine, fuel type and various other add-ons that you may opt for while buying insurance for your car. Here, talking particularly about the difference in fuel type, insurance premium for a new pre-fitted CNG vehicle is maximum as compared to the insurance premium of the same car running on either petrol or diesel. However, if you have got a CNG kit installed in your old car, the premium difference will be substantial. You will have to pay an additional Rs 60 to insure third-party liabilities as per Indian Motor Tariff, whereas the increase in own damage premium varies from insurer to insurer and this could be 4% of the value of your CNG kit.
For example, a good quality CNG kit can cost around Rs 50,000. Now, assuming your insurer asks for a 4% of the kit value as premium increase,you will have to shell out an additional Rs 2,000. Buying a CNG vehicle or getting a CNG kit installed at a later stage is a wise thought, as it will not only be easy on your pocket in the long run but is environment friendly too.
By: Tarun Mathur
The writer is director, Policybazaar.com