- Date : 03/04/2019
- Read: 3 mins
IRDAI keeps third-party motor insurance premiums remain unchanged in 2019. See what it means to you.
There is good news for car owners. In what will be a huge relief, the Insurance Regulatory and Development Authority of India (IRDAI) has decided third-party motor insurance costs will maintain the status quo in the new fiscal year.
What it means?
Third-party motor insurance is compulsory by law. It comes useful in covering financial liabilities borne by the vehicle owner in case of accidental damages to a third party. IRDAI determines rates for third-party insurance, whereas personal insurance cover for cars and owners are decided by individual insurance companies.
Traditionally, insurance premiums see an increase of 10-20% every year. This increase depends on the make of the car, type of vehicle, engine capacity, etc. Premiums are increased by the regulator so that prices are actuarially at par with the loss ratio of the insurance industry.
This decision by the insurance regulator means that insurance companies will have to continue charging the same rates as per the previous fiscal year for third-party motor insurance cover from April 1, 2019, until further advised by IRDAI.
How will car owners benefit?
This development will provide respite to car owners especially as the industry expected an increase of 20-30% this year on third party car insurance. Interestingly, last year saw a cut of 10-20% on premiums for cars and bikes, as per a Times of India report.
"Insurers shall continue to charge the rates currently being charged for Motor Third Party Liability Insurance Cover from 1st April, 2019 onwards until further orders," the order said.
The last financial year saw income from comprehensive insurance to be flat. This was partly due to the ruling by the Supreme Court making long term third-party motor insurance mandatory for motor owners – three years for car and five years for bikes. This led to the premium of such insurance increasing almost two-five times from August 1, 2018.
What are the current rates?
According to a report by Business Today, the present rates for small mopeds, small capacity scooters and two-wheelers with engine capacity below 75 cc will remain at Rs 427. The rates for scooters and motorbikes with engine capacity between 75-150 cc will be Rs 720, and for high-powered bikes, it will remain Rs 985.
The premium rates for small car owners shall remain at Rs 1,850. For SUVs above 1,500 cc, it will continue to be Rs 7,890, and for Sedans between 1,000-1,500 cc the rates shall remain Rs 2,863. Rates for auto rickshaws and e-rickshaws will stay at Rs 2,595 and Rs 1,685 respectively. Before you claim, here are 6 Motor Insurance terms you must know.