Motor Third Party Liability Insurance – Premium Rates Increase

Applicable for FY 2014-15

As we have seen in “Understanding Motor Insurance Premium”, Third Party Liability insurance is mandatory for all vehicles plying on public roads in India. Motor vehicles can cause bodily injury to third parties or cause damage to public or private property. To cover this risk, Liability Only Policy is compulsorily required by law. This policy covers Third Party Liability for bodily injury and/ or death and Property Damage. Personal Accident Cover for Owner-Driver is also included.

The premium cost for Third Party Risk cover is decided by the Insurance Regulatory and Development Agency (IRDA) and is the same for all companies providing car insurance in India. Every year, IRDA calculates fresh third-party motor premiums depending on parameters such as average claim amounts, frequency of claims, expenses involved in servicing the motor third-party business and cost of inflation index for the year of review. Accordingly IRDA issued a circular in last week of March 2014 to increase the third-party premium rates for motor vehicles for financial year 2014-15 with effect from 1st April 2014.

Third Party liability insurance premium rates for Private Cars before and after revision were as under:

Private Cars Third Party Liability Premium (Rs)
For 2014-15 For 2013-14 Increase (%)
Not exceeding 1000 cc 1,129 941 20%
Exceeding 1000 cc but not exceeding 1500 cc 1,332 1,110 20%
Exceeding 1500 cc 4,109 3,424 20%

Third Party liability insurance premium rates for Two Wheelers before and after revision were as under:

Two Wheelers Third Party Liability Premium (Rs)
For 2014-15 For 2013-14 Increase (%)
Not exceeding 75 cc 455 414 10%
Exceeding 75 cc but not exceeding 150 cc 464 422 10%
Exceeding 150 cc but not exceeding 350 cc 462 420 10%
Exceeding 350 cc 884 804 10%

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