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Third Party Motor Insurance Premium Rates Hiked

The insurance cover for your cars, two-wheelers and other vehicles comprise of two parts.

Briefly,
- Any damage to your vehicle is insured under what is termed as Own Damage Cover.
- Whereas insurance for damage or injury to a third person is known as Third Party Cover.

Interestingly,
- Own Damage cover is 'optional'
- But, Third Party insurance is 'compulsory'.

In other words, the Third Party motor insurance policy covers any 
(a) injury or death of a third person and/or 
(b) damage to his / her property, 
caused by your vehicle.

By the way, it also includes personal accident cover — both death and disability — for the owner/driver.

Since this is mandatory, you are not supposed to drive your vehicle, if it is uninsured against third-party injury and/or damage.

The additional insurance cover for the Own Damage being optional, you are free not to buy such a cover. If you think you can manage to pay for any damage to your vehicle out of your own pocket, you can skip buying Own Damage insurance.

When you take both the covers together, it becomes a Comprehensive Motor Insurance Policy.

Here, it may be noted that the Third Party premium rates are still regulated and decided by the IRDAI. Whereas, the Own Damage premium rates have been de-regulated. So, the insurance companies can fix the premium rates as per their business fundamentals.

third-party-motor-insurance
Image by Tumisu from Pixabay
After a repeated hike in the Third Party premiums, year after year since last 4-5 years, last year IRDAI had surprisingly cut / maintained the rates on the small/medium sized vehicles.

But this year IRDAI has — vide its Order IRDAINL/NL/NTFN/MOTP//91/06/2018 dated June 4, 2019, on Premium Rates for Motor Third Party Liability Insurance Cover for the FY 2019-20 — gone back to increasing the premiums for small/medium sized vehicles.

Accordingly, the revised premiums rates for cars and two-wheelers are as under:

Cars
- Pvt. Cars (less than 1000 cc): 12% increase from Rs.1850 to Rs.2072
- Pvt. Cars (1000 cc to 1500 cc): 12.5% increase from Rs.2863 to Rs.3221
- Pvt. Cars (more than 1500 cc): No change at Rs.7890

2-wheelers
- 2-wheelers (up to 75 cc): 12.88% increase from Rs.427 to Rs.482
- 2-wheelers (75 cc to 150 cc): 4.44% increase from Rs.720 to Rs.752
- 2-wheelers (150 cc to 350 cc): 21.12% increase from Rs.985 to Rs.1193
- 2-wheelers (more than 350 cc): No change at Rs.2323

(Note: A discount of 50% shall be allowed for private cars certified as Vintage cars by Vintage & Classic Car Club of India.)

The revised Third Party Motor Insurance premium rates are effective from June 16, 2019.

In addition, IRDAI has announced the long-term premium rates and the same are as under:

Cars - 3 Year Single Premium
- Pvt. Cars (less than 1000 cc): Rs.5286
- Pvt. Cars (1000 cc to 1500 cc): Rs.9534
- Pvt. Cars (more than 1500 cc): Rs.24,305

2-wheelers - 5 Year Single Premium
- 2-wheelers (up to 75 cc): Rs.1045
- 2-wheelers (75 cc to 150 cc): Rs.3285
- 2-wheelers (150 cc to 350 cc): Rs.5453
- 2-wheelers (more than 350 cc): Rs.13,034

Important 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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