Previously, the premium of your purchased vehicle needed to be calculated based on the purchase tax payment. Perhaps soon after, you can calculate the premium based on the net vehicle price. At the end of October, the China Insurance Association released the "Model Clauses for Motor Vehicle Insurance (Draft for Soliciting Opinions)" and solicited opinions from the public. The time period was from October 19 to November 5. These model clauses cover a wide range of content, mainly targeting previously controversial clauses such as "vehicle damage insurance amount includes purchase tax," "high insurance but low compensation," "no liability no compensation," etc. Some existing additional insurances have been included in the main insurance coverage, and 14 consumer-opinionated liability exclusion clauses have been deleted. Multiple controversial clauses have been adjusted. Some insurance companies previously stated in their car insurance clauses that the new car purchase price in the insurance contract includes the vehicle purchase tax. This means: new car purchase price = net car price + purchase tax, meaning that the owner would need to insure the purchase tax. Now in the model clauses, the insurance amount is determined according to the actual value of the motor vehicle, meaning there's no need to insure the purchase tax. "Additionally, vehicle loss insurance is generally calculated based on the car purchase invoice price. For the first year, clients can accept it for new cars, but still calculating based on this price in the second year makes clients feel it's unfair because vehicles do depreciate." Yesterday, relevant staff members of the Xinjiang branch of Pacific Insurance Company said, "When insurance companies underwrite old vehicles, they generally calculate the vehicle damage insurance premium based on the new car purchase price, but when a total loss occurs, they compensate based on the actual value of the vehicle. This is what is known as 'high insurance but low compensation.'" The draft for soliciting opinions requires that at the time of underwriting, the insured amount for vehicle damage insurance is determined based on the actual value of the vehicle at the time of insurance. The actual value is determined by negotiation between the insured and the insurance company based on the new car purchase price minus the depreciation amount, or other market fair values can also be used for negotiation. Additionally, regarding the issue of "no liability no compensation," the draft of the model clauses has specific provisions for "subrogation compensation." In cases where an insurance accident is caused by a third party, the insurance company will pay the insured within the insurance amount first, and then exercise the right to claim compensation from the third party on behalf of the insured within the compensation amount. In this way, consumers can claim compensation directly from the insurance company regardless of whether they are responsible or not after a vehicle loss insurance accident occurs. "Currently, whether subrogation compensation is carried out depends on the insurance company's own decision. If the insurance company believes that the funds can be recovered, they agree to subrogate compensation and charge 30% of the compensation fees. However, most insurance companies are unwilling to carry out subrogation compensation." A staff member of Pacific Insurance Company said. It is understood that these two new regulations have the greatest impact on consumers. Correcting "high insurance but low compensation" reflects the principle of fairness and equivalence among car prices, premiums, and insured amounts; fully implementing "subrogation compensation" helps consumers avoid the cumbersome communication and claims process with third parties, which is conducive to improving the efficiency of claims processing. Expanded coverage The draft of the model clauses also has a change in increased insurance responsibility. It incorporates some additional insurance responsibilities of the current clauses into the main insurance coverage, such as special agreements for driving schools, disappearance of rental vehicles and drivers, legal fees, separate damages to rearview mirrors and headlights, falling off of cargo on the vehicle, etc. The current clauses have certain controversies in practice regarding 14 liability exemptions, which have been deleted in the new clauses, such as invalid driver's licenses or unqualified reviews, lack of valid driving licenses and license plates, changes in use nature without truthful notification, towing uninsured vehicles, etc. The new clauses have partially reduced the absolute deductible rate of the current clauses. For example, the current "theft insurance" clause has a certain deductible rate for non-designated drivers and lost keys. The new clause deletes this provision and reduces the deductible rate for inability to provide certificates, basically canceling the theft insurance deductible rate. Only in cases where the vehicle indeed lacks proof of origin can the insurance company refuse compensation. Premiums may increase "Insurance premiums are calculated using the law of large numbers, based on the compensation ratio, vehicle accident ratio, etc., to determine the premium." A staff member of Pacific Insurance Company said that the new clauses might lead to an increase in rates. It is understood that the compensation ratio for car insurance has remained high, with some reaching 90%, and even some insurance companies experiencing losses in car insurance. If the premiums received by insurance companies cannot even support basic compensation, increasing insurance responsibilities will inevitably increase the cost of insurance companies. Therefore, many insurance companies believe that "it is possible that the premium will increase." "The new clauses include some contents that belong to additional insurance responsibilities into the main insurance. Some car owners may be unwilling to purchase additional insurance. If premiums are still charged according to previous standards, it would be unreasonable." A relevant staff member of PICC Property Urumqi branch said. It is understood that currently, CIAC is calculating the car insurance rates. Whether the rates will rise remains speculative in the industry. "Any change in clauses is the result of joint evaluations by various insurance companies. The new clauses emphasize more on protecting consumer rights and weaken the liability exemptions of insurance companies. From the trend of development, it can only tilt towards consumers. What we need to do now is to wait for the new clauses to be issued." A relevant staff member of PICC Property Urumqi branch said. Actually, this might also be a good thing for insurance companies, promoting business development and increasing customer trust in insurance companies.