Insurance regulator in India , Irda, increases third-party motor premium. Get ready to Pay more for Vehicle’s Third Party Insurance.
The Insurance Regulatory and Development Authority of India has increased the third-party premium for vehicles in India. The increase in third-party motor insurance will get implemented from April 1, 2014.
Third Party motor Insurance for Passenger Cars
For passenger cars below 1,000 cc, it has hiked the third-party (TP) premium from Rs 941 to Rs 1,129. For passenger cars with engine capacity between 1,000-1,500 cc, the Third Party premium will go up from Rs 1,110 to Rs 1,332.
For engine capacity above 1,500 cc, the premium will go up from Rs 3,424 to Rs 4,109.
Third Party motor Insurance Premium for Two-wheelers
In the case of two-wheelers, the Third Party premium on vehicles of 350 cc and above has been increased to Rs 884. Earlier it was Rs 804.
For bikes between 150-350 cc capacity, the Third party premium will be Rs 462 (Rs 420 earlier) and for 75-150 cc Rs 464 (Rs 422).
What is Third Party Motor Insurance ?
Third party motor Insurance is mandatory for all vehicles plying on Indian roads. It’s mandatory because it’s used to cover the losses incurred by any third person in the event of an accident. In simple, if the vehicle hits any person on road, then that person is compensated or is taken care of from the insurance amount. Since every motor vehicle has a likelihood of injuring any third party; hence the Third party insurance. Motor Third Party insurance pricing is still regulated by the Irda and covers liability arising from third-party claims due to accidents.
According to insurance sources, general insurers had asked Irda to consider an increase of 50-60 per cent in Third Party premium in view of the higher provisioning — currently at 210 per cent — for the declined risk pool. To understand it simply, the motor insurance business works this way — the Insuring Company collects premium from 8-10 Insurers, to compensate the liability of one policy holder.
Notably, the IRDA has recommended much higher hikes in its February 2014 Draft. But went for much lower increase in the final draft.