A motor insurance policy is legally mandatory if you wish to drive on Indian roads and not face penalties. The Motor Vehicles Act, 1988 mandates every vehicle plying on Indian roads to possess a valid 3rd party liability policy. The insurance policy covers your financial liability if you're involved in a vehicular accident and harm any third party or property. Here is a brief look at what the 3rd party policy covers –
- Bodily injury or death of the third party arising from an accident involving your vehicle
- Damage caused to any third party property because of your vehicle
In these two instances, you might be financially held responsible for compensating the aggrieved 3rd party for the damages caused. A third party liability policy covers this financial obligation and settles the compensation payable to third parties in case of any injury or damage.
Given the nature from the 3rd party policy, the insurance policy was made mandatory. Because the policy is required anyway, the fees are fixed by the Insurance Regulatory and Development Authority of India . IRDA may be the apex governing body of the insurance sector and it is entrusted with the task of fixing third party policy premiums. 3rd party premium rates depend on the cubic capacity of the motor vehicle. Ever since 2011, IRDA continues to be formulating and notifying the third party premium rates to general insurers offering car insurance policy policies. These premium minute rates are, usually, modified each year and the changed rates are communicated towards the concerned insurance companies. This season too, IRDA has made some changes in the third party premium rate and has issued new rates which are applicable from 1st April, 2021. Here are the new rates –
For private cars
For privately operated two-wheelers
If you compare the older rates that have been applicable around 2021-18, you would discover that there have been some reductions within the new premium. Web hosting cars and two-wheelers with a small engine capacity, the new fees are lower. However, for higher engine capacities in two-wheelers, the new premium has grown. Here is a comparative analysis of the old v/s the new –
Small cars as much as 1000 cc have seen reasonably limited loss of about 11%. Apart from that, there has been no change in third party premiums for higher engine capacities.
For two-wheelers, there has been an only decrease in two-wheelers with limited engine capacities. No changes happen to be designed to two-wheelers with engine capacity of 151 cc to 350 cc. Premium and luxury two-wheelers have seen an increase in premium. While vehicles with engine capacities of 151 cc to 350 cc have experienced an increase of 11%, premium for luxury two-wheelers have been increased by more than 127%.
In case of business vehicles, taxi owners have a reason to rejoice. Third party premiums for taxis came down by 15%. In case of three-wheeled autos the premiums have raised. Goods carrying vehicles like trucks and dumpsters have experienced a premium increase of 10% to 25% while for smaller vehicles the premium rates happen to be kept same.
Though the premium for third party policy is different, the modification could be applicable in the coming financial year. Policies bought or renewed on or after 1st April, 2021 would reflect the changed premium rates. Existing policies wouldn't be cancelled and reissued for affecting the modification in premium.
The third party premium minute rates are changed every year. You should know about these changes regardless if you are buying a 3rd party policy or a comprehensive one. After all, you should know just how much premium are you currently paying for your motor insurance policy, should you not?
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