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Surprise! IRDAI Cuts Third Party Insurance Premium Rates

As you would be aware, Insurance Regulatory and Development Authority of India (IRDAI) has been repeatedly increasing the premium rates on the Third Party Liability Insurance for the last 4-5 years.

Not only that, on each occasion the increase has been quite sharp and steep.

Thankfully, and quite surprisingly, for the year 2018-19 IRDAI has announced a cut in the premium rates for certain categories of vehicles. And, for other categories too the increase is mainly nil to moderate.

There is a drop in the Third Party Liability premium rates for the small cars and small two-wheelers. Whereas, there is a nil to marginal increase in the rates for the bigger capacity cars and bikes... the only exception being the two-wheelers of capacity 350+ cc.

The third-party liability premiums rates for cars and two-wheelers for previous four years, and for the current FY 2018-19 — along with the % change in the rate over the previous year — are given in the table below.

As you will observe, IRDAI has taken a (welcome) u-turn this year, after announcing substantial hikes in the third-party liability premium rates in the previous years.


- Premium for small cars less than 1000 cc is 10% lower
- There is no change in the premium for bigger cars

- Premium for small two wheelers up to 75 cc is 25% lower
- There is no change in the premium for 75-150 cc capacity two-wheelers
- Premium has been marginally hiked by 11% for the 150-350 cc capacity two-wheelers
- Of course, the big bikes of 350+ cc capacity see a big hike of 128% in the premium

For those unaware about motor insurance, here's a recap of what is third-party liability cover on our cars, two-wheelers and other vehicles.

Any (a) injury or death of a third person and / or (b) damage to his / her property, caused by your vehicle is insured through what is known as a third-party cover. It also includes personal accident cover — both death and disability — for the owner / driver.

This type of cover is mandatory. You are not supposed to drive your vehicle, if it is uninsured against third-party damage.

Apart from this third-party insurance, there is another aspect to motor insurance... damage to your vehicle!

Well, you have to take additional insurance cover for that. This is known as Own-damage Cover which, by the way, is completely optional. If you think you can manage to pay for any damage to your vehicle out of your own pocket, you are most welcome to skip buying own-damage insurance.

An interesting aspect of vehicle insurance is that the third-party premium rates are still regulated and decided by the IRDAI. Whereas, the own-damage premium rates have been de-regulated for the insurance companies to decide as per their business fundamentals.

Both covers taken together is known as Comprehensive Motor Insurance Cover.

Points to Note
1. The revised premium rates will apply only to the new policies issued and the old policies renewed during the year. Insurers cannot cancel the existing policies already in-force and issue new policies at the revised rates.

2. Since third-party insurance is mandatory, insurance companies have been advised by IRDAI to make such policies readily available at all their underwriting offices and also through all available channels of distribution.

3. Complaints about non-availability, delay or denial of third-party insurance cover would be taken seriously by the IRDAI.

4. While you have no option but to pay the third-party liability motor insurance premium as fixed by IRDAI, you can slash the own-damage premium through various (legal) ways and means. 

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