Third Party Vehicle Insurance To Become Costlier

The Indian government will soon discontinue the upper limit cap on third party liability of insurance companies in cases of road accidents, injuries or death. Also, the Insurance Regulatory and Development Authority of India (IRDAI) has sent a proposal to the government for hiking the premium for third party insurance by 50 per cent for all vehicle segments with the exception of small hatchbacks, vans and small trucks for the current FY.

The IRDAI updates the premium rates for insurance every year. The revision of the premium rates is based on the number of insurance claims and the loss ratio for insurance companies. The third party insurance basically is a cover for any injury or damage caused by you to another person or property. Third party insurance is a part of a comprehensive insurance policy for cars and bikes but vehicle owners can also get standalone third party insurance cover.

(Vehicles with different displacements will have different hikes in the rates of insurance premium)

It is also believed that the insurance companies will be pushing for yet another hike in the premium rates after the Motor Vehicle Bill with amendments is passed. Different segments based on the displacement will have different hikes in the premium rates. The final numbers are yet to be seen.

Last year, the third party insurance went up by 40 per cent for cars having a displacement of 1,400cc and less. For engines having a bigger displacement than 1,500cc, the rates went up by 25 per cent. Similarly, the premium rates went up by 10-12 per cent for two-wheelers with an engine of up to 150cc. For two-wheelers having 150cc-350cc, the premiums went up by 25 per cent. For bikes with an engine of 350cc and above, the rates went down by 10 per cent.