Consumers will pay more to buy vehicles from June as higher third party insurance rates have been notified
Consumers feeling price pressure due to rising inflation will be further shocked as buying vehicles will now become more expensive from June 1 as the government raises car insurance premium rates to the third.
In a notification issued on Wednesday, the Ministry of Road Transport and Highways (MoRTH) has increased third party premium rates for all classes of vehicles which are put in place to add to the overall cost of purchasing a vehicle .
Unlike other insurance products, the purchase of liability insurance is compulsory under motor vehicle legislation. The insurance is taken out for This insurance cover covers collateral damage to a person (third party) in the event of a traffic accident.
According to the revised tariffs notified by the MoRTH as Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022., passenger cars with an engine capacity of 1000 cc will be subject to tariffs of ₹2,094 vs. ₹2,072 in 2019-20. Similarly, passenger cars with engine sizes between 1000cc and 1500cc will attract rates of ₹3,416 compared to ₹3,221, while owners of cars over 1,500cc will see a premium drop of ₹7,897 to ₹7,890.
Two-wheelers over 150 cc but not exceeding 350 cc will benefit from a bonus of ₹1,366 and for two-wheelers over 350cc, the revised premium will be ₹2,804. Similarly, the rates of the basic premium for utility vehicles whose gross vehicle weight does not exceed 7,500 kg have been maintained at ₹16,049. The third-party premium for agricultural tractors up to 6 HP has been maintained at ₹910.
Pricing has also been revised for the three-year single premium four-wheeler plan and the five-year single premium two-wheeler plan. In addition, green, battery-operated electric vehicles will also have to pay more for the liability insurance premium from next month.
Insurance premium rates have been frozen for the past two years due to the Covid-19 pandemic. Previously, TP rates were notified by the Insurance Regulatory and Development Authority of India (IRDAI). This is the first time that MoRTH has notified TP rates in consultation with the insurance regulator.
Even with a higher liability insurance premium, MoRTH gave a 15% premium discount for educational institution buses. A reduced price of 50% of the premium was also allowed for a private car registered as a classic car and a reduction of around 15% and 7.5% on the premium was allowed for electric and hybrid vehicles, respectively. .
With late notification of new rates, insurance companies would have less than a week to update their systems with the changes. Premiums were previously reviewed annually taking into account inflation and loss ratios.