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The government has approved the new base premium rates for a third party (TP) motor vehicle insurance which will be effective from June 1. These rates were last revised for the financial year 2019-20 and were kept unchanged
“These rules may be called the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022. They shall come into force on June,” a Gazette notification on Wednesday.
The TP insurance cover is for other than own damage and is mandatory along with the own damage cover that a vehicle owner has to purchase. This cover is for any collateral damage to a third party, generally, a human being, caused due to a road accident.
The revised rates for private cars with an engine capacity of 1,000 cc will now attract rates of ₹2,094 compared to ₹2,072 in 2019-20. Two-wheelers over 150 cc but not exceeding 350 cc will cost ₹1,366 and for two-wheelers, over 350 cc the revised rate will be ₹2,804, the Ministry of Road Transport and Highways (MoRTH) notified.
Insurance regulator consultation
Earlier, TP rates were notified by the Insurance Regulatory and Development Authority of India (IRDAI). This is the first time that the MoRTH has notified the TP rates in consultation with the insurance regulator.
Meanwhile, the Ministry’s notification added that a discount of 7.5 per cent on the premium shall be allowed for hybrid electric vehicles. While electric private cars not exceeding 30 KW will attract a premium of ₹1,780, those exceeding 30 KW but not 65 KW will attract a premium of ₹2,904.
The premium for goods carrying commercial vehicles exceeding 12,000 kg, but not 20,000 kg will increase to ₹35,313 from ₹33,414 in 2019-20. Similarly, in the case of goods carrying commercial vehicles exceeding 40,000 kg, the premium will increase to ₹44,242 as against ₹41,561 in 2019-20.
The recent steep hike in third-party insurance rates may especially impact the demand of the two-wheeler segment, which is already struggling with low market demand, Rajesh Menon, Director-General, Society of Indian Automobile Manufacturers (SIAM) told BusinessLine.
Long-term (five-year) rates for two-wheelers up to 150 cc has been increased by 17 per cent, while for two-wheelers from 150 cc to 350 cc the rates have been increased by 35 per cent. Further, the long-term (three-year) rates for passenger cars up to 1,000 cc has also been increased by 23 per cent, he added.
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