Centre Proposes To Raise Third Party Motor Insurance Premium Beginning April 1

The Union Road Transport Ministry has put a proposal for increasing motor insurance premium for various vehicle categories from next fiscal. This shall hence lift insurance costs for two-wheelers as well as four-wheelers.

In consultation with the insurance regulator, the ministry has put forth the draft and prescribed base premiums in respect of third party motor insurance premium and put the same in public domain for suggestions.

Further, a discount of 7.5% on Motor TP premium rates for hybrid electric vehicles is proposed. This will be an incentive to use environment friendly vehicles, the draft report said. As per the draft, for private cars having 1,000 cubic capacity (cc), the rate shall be Rs. 2094 in comparison to Rs. ₹2,072 in 2019-20. Similarly, private cars with 1,000 cc to 1,500 cc will attract rates of ₹3,416 compared to ₹3,221, while car owners with capacity above 1,500cc will see a premium of ₹7,897 compared to ₹7,890.

Two-wheelers over 150 cc but not exceeding 350 cc will attract a premium of ₹1,366 and for two-wheelers over 350 cc the revised premium will be ₹2,804.

In order to promote electric vehicle usage, there shall be allowed a discount of 15% for all variants. As per the draft, the proposed discount will incentivise usage of environmental friendly vehicles.

Third party motor insurance is a type of insurance in which the insurer agrees to indemnify the insured i.e. in a case if he is held liable or is sued for damages to a third party. In such an insurance, the liability in case of an accident to a third party shall be covered, but you not be able to claim for the loss done to your own vehicle.