Third-Party Motor Insurance – Mandatory

The Motor Vehicles Act makes Motor third-party insurance mandatory for all vehicles plying on Indian roads and has to cover liability arising from third-party claims due to accidents.  Third party motor insurance covers the liability from damage in the form of death or property damage caused to a third party from an accident. Third-party insurance claim is entirely mistake -based, as the third party requires to prove that the policyholder was responsible for the damage caused.

Car insurance has become costlier as the insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has hiked premium rates by as much as 40%. The IRDAI revises premium rates every year, taking into account the number of claims made and loss ratios for insurers.

For cars below 1000 cc  the premium has risen by 40%,for compact cars (1000 cc and 1500 cc) the increase is also by 40% while for sedans the increase is 25%.

Under, two wheeler categories, insurance for bikes below 75cc, and between 75cc to 150 cc has risen on average by 9.6% and 15% respectively. For bike between 150 cc and 350cc, the premium has been hiked by 25%.But,for bikes that are above 350cc, the IRDAI has cut premium rates by 10%.

For private autos, excluding e-carts, insurance rates have hiked only by 3.2%. IRDA has not increased the premium rates for public goods carrying vehicles below 7,500 kg and those between 7500 kg to 12,000 kg and premium remains Rs 14,390 and Rs 15,365 respectively.