Achhe Din? Now 3rd party motor insurance to cost up to 50% more

By: | Updated: March 6, 2017 11:44 AM

After a hefty increase in cash transaction and some other charges as well as a hike in your cooking gas bill, now be prepared to shell out more for your car insurance cover.

Similarly, in case of heavy vehicles, some categories of goods carrying vehicles have been spared from the hike, but for other vehicles a hefty hike in premium rates have been proposed by IRDA.

After a hefty increase in cash transaction and some other charges as well as a hike in your cooking gas bill, now be prepared to shell out more for your car insurance cover. For, the premium for third party motor vehicle insurance is all set to go up significantly as the Insurance Regulatory and Development Authority (IRDA) has proposed up to 50% hike in the premium rates for third party insurance covers for the financial year 2017-18.

It may be noted that unlike the other types of insurance, auto insurance is a mandatory legal requirement, particularly third-party insurance which is compulsory for all vehicle owners as per the Motor Vehicles Act, while insurance for own damage is optional. However, third-party insurance covers only your legal liability for the damage you may cause to a third party while using your vehicle and does not pay for repair of damage to your car or if you suffer any car-related injuries.

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IRDA has been notifying the premium rates applicable to motor third party liability insurance covers every year starting from 15.04.2011, and insurers have to fix their rates accordingly. Since then third party premium rates have been going up in the range of 15-20 per cent from time to time, but it is for the first time that such a hefty hike in premium rates has been proposed by IRDA.

Proposed rates for the various classes of vehicles:

(Source: IRDA)

From the above chart, it is clear that although private cars with engine capacity not exceeding 1000cc and two wheelers with engine capacity not exceeding 75cc have been spared from the proposed hike in premium rates, for other private vehicles up to 50 per cent hike in premium rates have been proposed.

Similarly, in case of heavy vehicles, some categories of goods carrying vehicles have been spared from the hike, but for other vehicles a hefty hike in premium rates have been proposed by IRDA. For instance, in case of public carriers weighing more than 40,000 kg, a premium of Rs 38,700 has been proposed as against the existing Rs 25,800, while in case of private carriers weighing more than 40,000 kg, a premium of Rs 24,982 has been proposed as against the existing Rs 16,655.

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