Third party insurance provides financial assistance against liabilities to third parties, which could bankrupt you. These plans offer financial assistance to policyholders, helping them pay off third-party liabilities that have been caused by their car accidents. Read on to learn about the new rates announced by the IRDAI for third-party car insurance. You’ll also discover how third-party insurance works and how much you should pay for it.
IRDAI announces new rates for third-party car insurance
The Insurance Regulatory and Development Authority of India (IRDAI) has announced the new rates of third-party car insurance for private vehicles, with effect from 1 June. The new rates will be called the Motor Vehicles (Threer Party Insurance Base Premium and Liability Rules) 2022. Earlier, the IRDAI had maintained the third-party premium rate for private cars at the current level for FY21 and FY22.
The new rates will increase the premium for private four-wheelers below 1000 cc and the premium for luxury cars with engine capacity of over 1500 CC. Two-wheelers with less than 75 cc engine capacity will not see a change. The new rates will go up by a maximum of Rs 1,000. As per the new rates, private four-wheelers will cost around Rs 2,094 compared to Rs 7,890 for luxury cars.
In India, third-party car insurance is mandatory and is regulated by the Motor Vehicles Act, 1988. The IRDAI reviews the premium rate every year, but third-party liability insurance has not increased in the past two years. Third-party liability insurance accounts for 25 per cent of non-life insurance business. Last year, the industry collected Rs 40,000 cr in third-party car insurance premiums. While the hike will be welcome news for insurance companies, it will be burdensome for the common man. If he has to purchase a new car, the increased premium will be a heavy burden.
In 2021, the mandatory third-party car insurance rate for all two and four-wheelers will increase by an average of 4%. This is due to a new IRDAI ruling on the issue of mandatory third-party liability insurance in the country. The revised rate will be applicable to all existing policies. The government decision is welcomed by the general insurance industry. HDFC ERGO General Insurance is one of the companies that welcomed this news and will continue to offer a convenient insurance purchasing experience.
In addition to making third-party liability insurance mandatory, the IRDAI is also looking to introduce telematics into motor insurance policies. The new rates will be based on telematics technology and the driver’s driving style. The IRDAI is using this technology and will use it to dynamically price the policy. The IRDAI has already begun testing this technology on drivers and will continue to do so until a final decision is made on the new rates.
Cost of third-party car insurance policy
It has been a while since we last saw an increase in the premiums for third-party car insurance policy. After the last two years, we are seeing a slight increase in the rates. The increase is expected to be about 21%. The increase was proposed by the government, which frozen the premium rates for two years. The COVID-19 pandemic is expected to start in the year 2019-20.
Third-party car insurance policy is compulsory in India as per the Motor Vehicles Act. This insurance policy covers your legal liabilities if you cause damage to another person’s car or property. You may have to pay a fine if you cause damage to another person’s property, but your insurance policy will compensate you for the losses caused to them. And because the insurance policy covers both your liability and the third-party’s, it is a great option for you.
It’s important to consider the types of coverage before you purchase your third-party car insurance policy. For instance, you may want to choose between a split-limit or a single limit policy. You’ll notice the split-limit policy is often expressed as 25/50/15 or some other number, indicating that you have chosen a higher limit than you actually need. Those higher limits are typically a better deal.
A poor credit score can cause your insurance costs to be significantly higher than those of an average driver. In fact, drivers with poor credit tend to be more likely to file insurance claims. However, the cost of car insurance differs from state to state. In four states, average rates for drivers with bad credit double, while State Farm’s premiums quadruple. In North Carolina, Nationwide’s rates are only $25 higher than those of drivers with average credit.
Add-ons to third-party car insurance plan
There are several add-ons you can add on 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 recompensed for the difference between the insured declared value and the invoice value of your car. This type of insurance is not intended 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 damages to your vehicle’s engine. Most comprehensive policies don’t cover engine damages, but the Engine Protection Add-on will. This add-on also protects you against uninsured repairs if you cause an accident that causes engine damage. Its cost depends on the engine type, but it is an essential part of your car and is worth paying a bit more for peace of mind.
If you’re worried about cost, you can also get bumper coverage. This add-on reduces the costs of replacing damaged parts and removes the depreciation factor. These add-ons can be up to 15% of your standard premium. These are especially beneficial for expensive vehicles with expensive spare parts. In addition, you can choose voluntary deductibles. By doing so, you’ll be sharing some of the costs of repairing your car, which is beneficial when it comes to repairs.
There are various add-ons for third-party car insurance plans, and it’s important to understand which ones are right for you. Some people want to take a financial risk to protect themselves, while others want peace of mind and to save money. In general, a well-chosen add-on will enhance the coverage of your third-party car insurance plan and minimize your out-of-pocket costs. However, you shouldn’t buy every add-on that’s offered. Instead, choose your coverage based on your vehicle and driving habits.
Coverage limits
A car insurance policy with property damage coverage will cover the cost of any damages caused by a third-party vehicle in an accident. Generally, this limit is $15000, which covers the cost of repairs if you are at fault in an accident. This limit can vary based on your policy. If your vehicle is older, you might want to forgo collision and comprehensive coverage. In such cases, you can opt for uninsured motorist property damage coverage.
