Get a third-party cover at the very least if your vehicle is uninsured

The Insurance Regulatory and Development Authority of India (IRDAI) has revised the premium rates for third-party motor insurance effective from April 1, 2018. IRDAI, has been revising the third-party premium rates every year since 2011, prior to the start of the new financial year. The yearly revised premium for third-party insurance is brought out by IRDAI based on data provided by insurers on third-party risks, claims developments and loss experiences during the year. Over the past two-three years the third-party premium rates were hiked by around 20–30 per cent. This year, however, IRDAI has proposed to lower third-party premium rates for private cars and two wheelers.

Among private cars, only small cars owners are affected. Premium rates for private cars with engine capacity of up to 1,000 cc have been bought down to Rs 1,850. Premiums for cars having engine capacity more than 1,000 cc capacity and more than 1,500 cc remain the same. Further, 50 per cent discount has been proposed on insurance premiums for certified private vintage cars.

For two wheelers of up to 75 cc, the premium rate has been brought down to Rs 427. For two wheelers exceeding 75 cc but less than 150 cc the rate remains the same. However, premiums have been hiked for two wheelers between 150–350 cc and those exceeding 350 cc. The rate has been increased from Rs 887 to Rs 985 and from Rs 1,019 to Rs 2,323 respectively. For other heavy vehicles, the premium has been increased by 10-15 per cent. “As third party premium is approximately 30 per cent of the total premium for private vehicles and 50-65 per cent for commercial vehicles, this move will increase the overall premium rates by 7-10 per cent,” says Puneet Sahni, head of product development, SBI General Insurance.

The reduced premium rates will benefit private car owners and two-wheeler owners. But insurance companies are not too happy about the development. “For insurers, in certain segments we may again see a gap develop between the premium collection against the claims being paid out,” says Anurag Rastogi, member of executive management, HDFC ERGO General Insurance. 

A report by the General Insurance Council of India says that approximately 60 per cent of automobiles in India are uninsured.

More such automobile owners should look to buy at least a third-party insurance cover. Those who can afford to should ideally buy comprehensive covers, so as to provide better protection to their vehicles. Two-wheeler owners can look at long-term covers to avoid being affected by rise in premium rates in the future. Long-term policies lock in the third-party premium for a certain number of years. Buying these long-term policies will also save them from the hassle of annual renewals. “Policyholders should renew their motor insurance policies in time, prior to their expiry,” adds Rastogi.