July 22, 2021
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Premium for third-party motor insurance cover that provides protection against damage, injury, death of a third person and/or damage to his/her property caused by your vehicle has recently got a steep jump. The effective rate announced by the Insurance Regulatory and Development Authority of India (IRDAI,) has been effective from 1st April this year.

A typical motor insurance policy has two types

Damage to Own Vehicle

This is, of course, provide cover for damage to your vehicle. According to the current law, the insurance companies have the freedom to determine the premium for the same. However, the insurance regulator has not made this ‘own-damage cover’ a compulsory cover.

Third Party Cover

This type of your vehicle insurance policy covers injury/death of a third person and/or damage to his/her property caused by your vehicle. The premium for this cover is decided by IRDAI making third party cover mandatory.

The regulator takes into account various factors to arrive at a suitable third-party insurance premium for variety of vehicles. It includes frequency of claims you made during previous year, average claim amount, expenditure involved in servicing the policy and cost inflation index etc.

In accordance with that, the regulator has announced the new premium rates with effect from 1st April, 2015. For the third-party insurance cover, premium rates will apply as follows:

Engine Capacity Previous Premium Revised Premium
Private vehicle with engine capacity up to 1000Cc Rs.1129 Rs.1468
Private vehicle with engine capacity from 1000Cc to 1500Cc Rs. 1332 Rs. 1598
Private vehicle with engine capacity above 1500Cc: Rs. 4109 Rs. 4931
For two-wheeler with engine capacity up to 75Cc Rs. 455 Rs.519
For two-wheeler with engine capacity from 75Cc to 150Cc Rs. 464 Rs. 538
For two-wheeler with engine capacity from 150Cc to 350Cc Rs. 554 Rs. 462
For two-wheeler with engine capacity above 350Cc No change Rs.884

This increment reflects an overall increase of 30% for small cars and 20% for medium to large cars. Previous year, the increment in premium rates of car insurance was about 20 per cent across the all engine types.

While for two-wheelers insurance this raise in premium rates ranges from 14% to 20%. For previous year, this was around 10 per cent.

The logic behind such huge raise in the third-party premium rates year after year, is the huge losses that the insurers suffer on account of third party insurance claims.

Article Categories:
Insurance

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