Straight from the Specialists
It is compulsory for every vehicle in India to have a third party insurance, which covers risks involving damage or loss to others caused by the vehicle you drive.
Since it is mandatory, the pricing has traditionally been administered by the insurance regulator, IRDA. With the price controlled and risk unlimited, the portfolio is bound to look messy.
The regulator currently revisits the pricing once a year and ends up increasing the premium based on a predetermined formula. To see the current increase for two wheelers and cars, see the table below. Type of Vehicle New 3rd Party Premium (Rs) Increase (Rs) Private Cars Not exceeding 1000 cc 1129 188 1000 to 1500 cc 1332 222 Greater than 1500 cc 4109 685 Two Wheelers Not exceeding 75 cc 455 41 75 to 150 cc 464 42 150 to 350 cc 462 42 Greater than 350 cc 884 80
Premiums for all other vehicles, including commercial ones, have also been revised.
(Any opinions expressed here are those of the author and not of Reuters)
A motor insurance policy consists broadly of two parts — third-party cover, which is regulated; and an ‘own damage’ cover, the premium for which is left to market dynamics.
The premium for ‘own damage’ cover, which forms the larger chunk of the insurance premium, is based on risk and competitive pressures.
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Motor insurance is the only insurance product in India mandated by law. This means that any one owning a vehicle is bound under the Motor Vehicles Act, 1988 to have a third-party motor insurance policy.