The Insurance Regulatory and Development Authority (IRDAI) has released premium rates for third party insurance for FY 19. These rates will be applicable from 1st April 2018. Major cuts have been made in several segments.
Third Party Insurance is the insurance you take for the damage you may cause to someone else or their vehicle in a road accident. This is different from being insured for the damage your own vehicle might suffer. You are legally required to take third party insurance under the Motor Vehicles Act, 1988 and the premiums are set by the sector regulator, IRDAI every year. Note that in practice, however, auto insurance is bought as a package including both your own car and third party insurance together.
In the table below we give you the rates for FY 19 for cars and two-wheelers. We also look at the rate on commercial cars (think Uber/Ola) because these will also impact you as a commuter/traveller (by affecting your ride costs). The rate cuts have been made in the smaller vehicle segments from 10% to 25%. Larger vehicle segments have seen no change and in some cases, increases in insurance premiums.
|Capacity||FY 2017||FY 2018||Change %|
|Below 1000 cc||2055||1850||-10%|
|1000cc to 1500 cc||2863||2863||None|
|1500cc and above||7890||7890||None|
|Below 75 cc||569||427||-25%|
|75 – 150 cc||720||720||None|
|150 – 350 cc||887||985||11%|
|Above 350 cc||1019||2323||128%|
|Four wheelers used for hire with a capacity less than 6|
|Below 1000 cc||6,396 base + 1230 per passenger||5437 base + 1046 per passenger||-25%|
|1000cc to 1500 cc||8,408 base + 1035 per passenger||7147 base + 880 per passenger||-25%|
|1500cc and above||11,144 base +1183 per passenger||9472 base + 1006 per passenger||-25%|
Reacting to the cuts, MD and CEO of Universal Sompo General Insurance Rajiv Kumar told RupeeIQ, “By reducing the third-party premium of a certain segment of vehicles, especially in the category of four-wheeler vehicles below 1000 CC, the insurance industry is hoping that it might bring a number of uninsured vehicles under the pool of third-party cover.”
He further added, “Although stringent traffic laws for driving offences should also be put in force, a mandatory third-party insurance cover acts as a substitute for financial compensation in case of road mishaps.”
The lack of long-term insurance policies on vehicles is also a major problem. Short tenures mean that people often forget to renew their cover, storing up both financial and legal problems for themselves. A few companies including Universal Sompo are providing long-term insurance cover for two wheelers. However, according to Kumar, the industry is also advocating the launch of long term products for private four-wheel vehicles.
You can view the full list of premiums issued by the IRDA, according to vehicle segment here.