Third party motor insurance is all set to get more expensive soon with the Insurance Regulatory and Development Authority (IRDA) proposing an increase in the premium payable. The revision will hit the entry-level segment (engines below 1000cc) the hardest as the increase in the cover here has been proposed as 85 percent. The 1,000-1,500cc segment will see the minimum increase, only 1.4 percent while the over-1,500cc segment will see a 43 percent increase in premium.
Sources said the maximum increase has been suggested for the entry-level segment as the incidence of accidents is quite high in this space with the maximum number of first-time car owners. The third party cover for commercial vehicles will also go up by around 30 percent.
Third party motor insurance, unlike own damage insurance, is mandatory for all vehicles – be it private or commercial – and covers the claims of victims other than the car owners.
According to reports, this hike was proposed mainly because the losses insurance companies sustain in this area are rather high owing to outrageous claims, which can be sometimes as high as 200 percent of actuals. Higher premiums would go towards minimising these losses.
Some sources say that very soon, an increase in own damage insurance is very likely as well.