Vehicles you purchased in the past needed to calculate insurance premiums on the basis of paying acquisition tax. Perhaps before long, you will be able to calculate insurance premiums at the price of a naked vehicle. At the end of October, the Insurance Association of China released the "Model Clauses for Motor Vehicle Insurance (Draft for Comments)" and solicited opinions from the public. The time was from October 19th to November 5th. These model clauses cover a wide range of content, mainly targeting previously controversial clauses, such as "vehicle damage insurance amount includes acquisition tax", "high insurance but low compensation", "no compensation if no fault", etc., and some existing additional insurances have been included in the main insurance coverage, while 14 items of responsibility exemptions that consumers had strong opinions about have been deleted. Multiple controversial clauses have been adjusted. Some insurance companies previously stated in their vehicle insurance clauses that the new car purchase price in the insurance contract contains vehicle acquisition tax. This means: new car purchase price = naked car price + acquisition tax, meaning that the car owner would need to insure the acquisition tax. In the current model clauses, the insurance amount is determined according to the actual value of the motor vehicle, meaning that there is no need to buy insurance for the acquisition tax. "In addition, vehicle loss insurance is generally calculated based on the invoice price of the car. For a new car in the first year, customers can accept it, but in the second year, calculating based on this price seems unfair to customers because vehicles do depreciate," said relevant staff members of the Xinjiang branch of Pacific Insurance Company yesterday, regarding traffic violation inquiries in Baiyin. When insurance companies underwrite old cars, they generally calculate the premium for vehicle damage insurance based on the new car purchase price, but in case of total loss, they compensate according to the actual value of the vehicle, which is known as "high insurance but low compensation." The draft for comments requires that when underwriting, the insured amount for vehicle damage insurance is determined according to the actual value of the vehicle at the time of subscription. The actual value is negotiated between the insured person and the insurance company based on the new car purchase price minus the depreciation amount, or it can also be determined based on other market fair values. In addition, regarding the issue of "no compensation if no fault," the model clauses draft clearly specifies "subrogation compensation." If an insurance accident is caused by a third party, the insurance company shall pay the insured person in advance within the insurance amount and exercise the right of subrogation against the third party on behalf of the insured person within the compensation amount. Thus, whether the consumer has responsibility or not, they can directly claim compensation from the insurance company after a vehicle loss insurance accident occurs. "Currently, whether subrogation compensation is carried out is decided by the insurance company itself. If the insurance company believes it can recover the funds, then they agree to subrogate compensation and charge 30% of the compensation fee. However, most insurance companies are unwilling to carry out subrogation compensation," said the staff member of Pacific Insurance Company. It is reported that these two new regulations have the greatest impact on consumers. Correcting "high insurance but low compensation" reflects the principle of fairness and equivalence between car price, premium, and insured amount; fully implementing "subrogation compensation" helps consumers avoid complicated communication and claims processes with the third party, which is beneficial for improving claims efficiency. Expanded coverage scope The draft of the model clauses also has changes in increased insurance liability. It incorporates part of the insurance liabilities of existing additional insurances into the main insurance coverage, such as special agreements for driving school vehicles, disappearance of rented vehicles and drivers, legal fees, separate damage to rearview mirrors and headlights, falling of cargo on board, etc. Existing clauses have certain controversies in practice regarding 14 liability exemptions, which have been deleted in the new clause, such as invalid or unqualified driver's license, lack of valid driving license and license plates, failure to inform truthfully of change in use nature, towing uninsured vehicles, etc. The new clause also partially reduces the absolute deductible rate of the current clause. For example, the current "theft insurance" has certain deductibles for non-designated drivers and lost keys. The new clause deletes this regulation and reduces the deductible rate for inability to provide certificates, thus 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, taking into account factors like payout ratio and vehicle accident frequency to determine the premium," said the staff member of Pacific Insurance Company. After the new clause is introduced, it might lead to higher rates. It is understood that the vehicle insurance payout ratio has always been high, reaching up to 90%, and even resulting in losses for some insurance companies' vehicle insurance. If the premiums collected by the insurance company cannot even support the basic payouts, increasing the insurance liability will inevitably increase the cost for the insurance company. Therefore, many insurance companies believe that "it is possible the premiums will increase." "The new clause adds some contents originally belonging to additional insurance responsibilities to the main insurance. Some car owners may not want to buy these additional insurances, so charging premiums according to the previous standard would be unreasonable," said relevant staff members of the Urumqi branch of PICC Property. It is understood that currently, the Insurance Association of China is calculating the vehicle insurance rates. As to whether the rates will rise, the industry is still speculating. "Any change in the clauses is the result of joint evaluation by various insurance companies. The new clause emphasizes more on protecting consumer rights and weakens the liability exemption of insurance companies. From the development trend, it can only tilt towards consumers. What we need to do now is wait for the new clause to be issued," said relevant staff members of the Urumqi branch of PICC Property. In fact, this might also be a good thing for insurance companies, promoting business and increasing customer trust in insurance companies.