Motor insurance rate hike put on hold
In good news for motor insurance customers, the insurance regulator has decided to put on hold the annual premium increase for the third party segment. This will mean your motor insurance rates will remain the same as FY19 until further notice. This is for the first time that the regulator has continued with the same rates for more than a financial year. There is an annual 10-20 percent premium hike depending on the type of vehicle and engine capacity. Previous year’s claims are also taken into account to decide the premium. Consumer groups and transport lobbies had expressed concerns about the premium hike for vehicles. This was especially after the rates were increased twice in FY19, once in April and September. In August 2018, the Supreme Court had mandated sale of only sell three-year car insurance and five-year two-wheeler insurance for the third party segment from September 1 onwards. This led to a rise in premiums by 2.86-3.08 times and 2.45-5.61 times for new cars and bikes purchased after this date, respectively. Third party motor insurance products are mandatory for all vehicles running on Indian roads. Pricing of these products is fixed by IRDAI. Third party insurance protects the vehicle owner from financial liabilities incurred due to accidents. If a pedestrian or another vehicle’s passenger gets injured or dies during a mishap by vehicle X, the motor third party cover of the vehicle X owner will pay for the damages.