The Insurance Regulatory and Development Authority has proposed nearly a 50% hike for several categories of cars and bikes for 2017-18, after the government decided to remove the limitation on third party liability of insurance companies in case of death or serious injury in accidents. Third party insurance, is a mandatory requirement for all vehicles under the Motor Vehicles Act, but only covers the legal liability for damage caused to a third party by one's vehicle. It does not cover damages to own vehicle or injuries to self. The proposed hike in insurance premium will be brought into effect starting April 1.
The proposal, however, does not include entry-level cars (under 1000cc). It will remain at the current premium of Rs 2,055.
For mid-segment cars (1,000-1,500cc) and SUVs, customers will have to pay a premium about 50% costlier. Premium for cars upto 1000cc will rise to Rs 3,355 and Rs 9,246 for over 1000cc.
Two-wheelers with upto 75cc will be exempt from IRDAI's proposal. The hike will effect entry level bikes upto 150cc and performance motorcycles upto 350cc. For motorcycles over 350cc, the premium would increase from the current Rs 796 to Rs 1,194.
Classic car owners would avail a discount of 25%, however the car should be certified vintage by the Vintage and Classic Car Club of India.
Rates for third party insurance are revised every financial year. The regulatory body says the proposed hike in premiums was decided upon post analysis of accident related data from 2011-12 to 2015-16 provided by the Insurance Information Bureau of India (IIBI).