Third party insurance provides financial support against liabilities to third parties. Which can bankrupt you. These schemes offer financial assistance to policyholders by helping them pay third-party liabilities due to their car accidents. Read on to learn about the new rates announced by IRDAI for third-party car insurance.
IRDAI announces new rates for third-party car insurance
The Insurance Regulatory and Development Authority of India (IRDAI) has announced new third party car insurance rates for private vehicles with effect from June 1. The new rates will be called the Motor Vehicle (Three Party Insurance Base Premium and Liability Rules) 2022. Earlier, IRDAI had maintained the third-party premium rate for private cars at current levels for FY21 and FY22.
The new rates will increase the premium for private four-wheelers below 1000 cc and luxury cars with engine capacity above 1500 cc. Two-wheelers with engine capacity below 75 cc will not see any change. The new rates include a maximum of Rs. 1,000 will increase. As per the new rates, a private four-wheeler will cost a luxury car Rs. 7,890 as against Rs. will be 2,094.
In India, third-party car insurance is mandatory and regulated by the Motor Vehicles Act, of 1988. IRDAI reviews the premium rate every year. However third-party liability insurance has not increased in the last two years. Third party liability insurance accounts for 25 percent of the non-life insurance business. Last year, the industry collected third-party car insurance premiums of Rs. 40,000 crore had been collected. While the increase will be welcome news for insurance companies, it will be burdensome for the common man. If he has to buy a new car, the increased premium will be a heavy burden.
Cost of third-party car insurance policy
It’s been a while since we last saw an increase in third party car insurance policy premiums. After the last two years, we are seeing a slight rise in rates. The increase is expected to be around 21%. The increase was proposed by the government, which froze premium rates for two years. The Kovid-19 pandemic is expected to start in the year 2019-20.
Third party car insurance policy is mandatory in India as per Motor Vehicle Act. This insurance policy covers your legal liabilities if you damage another person’s car or property. If you damage someone else’s property, you may have to pay a fine, but your insurance policy will compensate you for the damage caused. And since the insurance policy covers both your liability and the third-party, it is the best option for you.
It is important to consider the types of coverage before you purchase your third-party car insurance policy. For instance, you can choose between a split-limit or a single-limit policy. You’ll find that the split-limit policy is often expressed as 25/50/15 or some other number. Which shows that you have chosen a higher limit than you need. Those higher limits are usually a better deal.
Add-ons to third-party car insurance plan
There are many add-ons you can add to your third-party car insurance policy. These add-ons include gap insurance, personal belongings insurance and first-time registration assistance. Gap insurance helps you get compensation for the difference between the insured’s declared value and the invoice value of your car. The purpose of this type of insurance is not to cover minor damages but to compensate you for the financial loss of a stolen or damaged car.
Another type of add-on is engine protection. This covers damage to your vehicle’s engine. Most comprehensive policies do not cover engine damage, but an engine protection add-on will. This add-on also protects you against uninsured repairs if you have an accident that damages the engine. Its price depends on the engine type, but it’s an essential part of your car and worth paying a bit more for the peace of mind.
If you are concerned about the cost, you can also get bumper coverage. This add-on reduces the cost of replacing damaged parts and eliminates the depreciation factor. These add-ons can be up to 15% of your standard premium. This is especially beneficial for expensive vehicles with expensive spare parts. Additionally, you can choose a voluntary deductible.
Coverage limits
A car insurance policy with property damage coverage will cover the cost of any damage caused by a third-party vehicle in an accident. Typically, this limit is $15000, which covers the cost of repairs if you are at fault in an accident. This limit may vary depending on your policy. If your vehicle is older, you may want to forego collision and comprehensive coverage. In such cases, you can opt for uninsured motorist property damage coverage.
