Get ready to shell out more premium for vehicle insurance. The Insurance Regulatory and Development Authority (IRDA) has proposed these hikes in an exposure draft on review of motor insurance premium rates for third party liability cover. The annual premium is set to go up as the rates for third party liability cover are to be hiked.
What is third party liability cover?
Motor third-party insurance or third-party liability cover, which is sometimes also referred to as the ‘act only’ cover, is a statutory requirement under the Motor Vehicles Act. It is referred to as a ‘third-party’ cover since the beneficiary of the policy is someone other than the two parties involved in the contract i.e. the insured and the insurance company. The policy does not provide any benefit to the insured; however it covers the insured’s legal liability for death/disability of third party loss or damage to third party property.
How much it may increase?
The proposed hikes range from 10 per cent to 80 per cent in the case of private cars and two wheelers depending on their capacities. For instance, for private cars not exceeding 1,000 cc, the existing premium of Rs 670 is proposed to be raised to Rs 740. For other high-capacity cars and two-wheelers, the rate is set to be increased by over 10 per cent.
Private Cars | Existing Premium (23.01.2007 Noun.) | Revised Premium |
Not exceeding 1000 cc |
670 |
740 |
Exceeding 1000 cc but not exceeding 1500 cc |
800 |
880 |
Exceeding 1500 cc |
2500 |
2750 |
Two Wheelers | Existing Premium (23.01.2007 Noun.) | Revised Premium |
Not Exceeding 75 cc |
300 |
330 |
Exceeding 75 cc but not exceeding 150 cc |
300 |
330 |
Exceeding 150 cc but not exceeding 350 cc |
300 |
330 |
Exceeding 350 cc |
620 |
660 |
Why is it increasing?
“Statistics compiled by the Insurance Information Bureau show that the third party insurance portfolio for commercial vehicles is consistently making loss. The Authority is of the view that the review of third party premium deserves due importance and urgency,” Mr M. Ramprasad, Member, Non-Life, IRDA, said in the draft.
The Third Party Motor Insurance premium rates are regulated by the Insurance Regulatory and Development Authority (IRDA). These rates were last fixed in the year 2007. IRDA has placed an exposure draft on its website and has called for comments in regard to the revision of premium rates. If you want to read the complete exposure draft, please download from attachment.
Source – irda.gov.in