If you are paying higher premiums, find out how to avoid and pay less premium for your car.
The Insurance Regulatory and Development Authority of India (Irdai) has notified in a circular, dated 04th June 2019, the new premium rates for Motor Third Party liability insurance for the current financial year, 2019-20. The order to revise premium rates comes into effect from 16th June 2019. An exposure draft was released on May 20, 2019, seeking comments on the proposed rates. Now, the final cost of the premium is out, which is lower than the proposed rates in the draft exposure. These rates are applicable for both Comprehensive and Stand Alone Third Party policies.
Commenting on the same, Rakesh Goyal, Director, Probus Insurance, says, “Increase in third party premium rates has affected the industry in multiple ways. The insurers are happy with the move as underwriting losses in motor segments were more than 100 per cent and the increase in rates might give them some relief. But for policyholders, they need to pay more for their premiums.”
Starting June 16, for two-wheelers, there will be an increase in the premiums ranging between 4 and 21 per cent. For two-wheelers with engine capacity above 350 cc, there will be no changes in the premium rate. For private cars up to 1000 cc, the premium for mandatory third-party liability insurance will increase by 12 per cent from Rs 1,850 to Rs 2,072. For cars above 1000 cc but less than 1500 cc, the premium will rise by 2.5 per cent to Rs 3,221. However, the premium of long-term cover will remain unchanged. There will also be no change in the third-party premium rate for private cars above 1500 cc.
The exposure draft had also had a 15 per cent discount on the premiums for electric vehicles, proposed by the regulator. For electric private cars, with a one-year policy, the premium has been fixed at Rs. 1,761 for cars not exceeding 30 kilowatts, for cars between 30 and 65 kilowatts (kW), the premium is set at Rs. 2,738, and for electric cars exceeding 65 kW the premium is Rs. 6,707. In case of a long-term cover, for electric private cars not exceeding 30 kilowatts, the premium will be Rs. 4,493, for those between 30 and 65 kW Rs 8,104, and for those exceeding 65 kW, the premium will be Rs 20,659. Experts suggest long-term covers will be cost-effective in the long run.
The rates for third-party insurance have been fixed every year since 2011, by Irdai. The rates are notified at the end of March and become effective from the 1st of April. However, this year in the circular issued in March, Irdai had not revised the rates. But now, the regulator has revised the rates for the current financial year.
Hence, people paying the premium on and after June 16, 2019, will have to pay their premiums according to the increased revised rates. However, if you pay your premiums before June 16, 2019, you will not have to pay the excess revised premium. Industry experts suggest if the premium is deposited before June 16, 2019, the current premium rates will be applicable.
Goyal says, “For a policyholder, if his/her policy is getting expired this month or early next month, it is suggested to buy or renew the policy before the new premium rate kicks in from 16th June.” He further adds, “Another important aspect of premium increase is on goods and heavy vehicles. If they pass on the prices to end customers, there are chances the inflation might further shoot up going forward.