The insurance cost of car or bikes has spiked as The Insurance Regulatory and Development Authority of India (IRDAI) introduced two new set of rules recently. Because of the new motor rules, the total outflow towards insurance has gone up. The first-year insurance cost of a car with a capacity of over 1500cc now costs over Rs 24,000.
Third party insurance covers liabilities if the insured’s vehicle is responsible for an accident which results in injury to or death of a third party. In this case, the insurance company pays the third party on behalf of the insured. Own damage insurance cover is meant for the protection of the vehicle in case of accidents.
In an order dated July 20, 2018, the Supreme Court had asked insurers to offer long-term third party insurance cover. Earlier, insurance companies were offering one-year insurance cover under the third party segment along with multi-year policies, but consumers’ interest in the latter remained lukewarm in absence of a regulation making them mandatory. As a result, many vehicles plying the streets ended without insurance cover one year after their purchase.
The new rates for third-party insurance will be applicable for vehicles purchased between September 1, 2018, and March 31, 2019. Insurers are supposed to submit a Letter of Intent, signed by the CMD or CEO of the company, before August 30 for offering such packages or bundled covers. The IRDAI will allot a UIN to each insurer on receiving the aforementioned Letter of Intent.
It may be noted that only the third-party premium is to be paid as a lump sum, the own-damage premium, on the other hand, can be paid either annually or as a lump-sum. For cars under 1000cc capacity, the premium will be Rs 17,132 (own damage 1 year) as opposed to Rs 10,541 earlier, said a report.
IRDAI has also hiked personal accident cover (PAC) for owner driver from Rs 2 lakh to 15 lakh under motor insurance policies. PAC is mandatory for vehicle owners. Personal accident cover was capped at Rs 1 lakh for two-wheelers and Rs 2 lakh for cars earlier (commercial/private), the premium for which was Rs 50 and Rs 100 respectively.
IRDAI has now capped the personal insurance cover at Rs 15 lakh for both two-wheelers as well as four-wheelers and the premium rate of Rs 750 per annum is set for the annual policy.
Worth mentioning here is that car insurance in India offers third-party insurance which covers any damage caused to a third-party by the insured vehicle. This coverage pays for any financial liability and also takes care of any legal complications caused by the accident. A comprehensive insurance cover includes own damage as well. It covers any damage caused to the insured vehicle.
Here’s what you can do to lighten the burden
1. Since the third-party premium is made mandatory to be paid as a lump sum, you do not have any choice in the matter but, you can choose to pay own-damage either as a lump sum or in instalments annually.
2. If you choose the long-term policy, you can enjoy some discounts on the PAC. So, consider the discount offered before buying a policy.