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Hike in 3rd party motor insurance premium for FY2020-21 put on hold

Good news for private vehicle owners, both 4- and 2-wheelers, as IRDAI, the insurance regulator, has said that the existing third-party insurance premium rates for the year 2019-20 stand extended beyond March 31, 2020 till further notice. This means that the third-party motor insurance premiums will not be increased for the next financial year i.e FY2020-21 as proposed earlier, until the regulator notifies the same.

This move may well be due to the lockdown in the country due to the coronavirus infection spread and the situation arising from it. The government has already postponed several deadlines and announced relief for the common man in various areas due to the lockdown.

The Insurance Regulatory and Development Authority of India (IRDAI), in an order dated March 27, has said that the validity of premium rates for motor third-party liability insurance cover set out for the year 2019-20 stand extended beyond March 31, 2020, until further notice. “Accordingly, all insurers shall continue to charge the rates currently being charged for Motor Third Party Liability Insurance Cover from 1st April 2020 onwards until further orders,” says the order.

This means that insurers will have to continue to charge the existing rates currently being charged for motor third-party liability insurance cover from April 1, 2020, onwards until the regulator notifies any change in the rates.

Earlier, in a exposure draft issued by IRDAI on March 5, 2020, the regulator had proposed a substantial increase in the third party motor insurance premium rates for the financial year 2020-21. The proposed rates were as follows:

Proposed private car third-party premium rates
It was proposed to increase the motor third-party premium rates for cars with engines below 1000 cc to Rs 2,182 for fiscal 2020-21 from the existing Rs 2,072.

Similarly, for cars between 1,000 cc and 1,500 cc, the third-party premium was proposed to be increased to Rs 3,383 from the existing Rs 3,221. However, for luxury cars (with engine capacity of over 1,500 cc) there was no hike in premium rates proposed (at present it is Rs 7,890).

Proposed two-wheeler third-party premium rates
IRDAI had proposed to increase the third-party premium rates for two-wheelers with engines below 75 cc to Rs 506 for fiscal 2020-21 from the existing Rs 482.

Similarly, for two-wheelers between 75 cc and 150 cc, the premium was proposed to be increased to Rs 769 from the existing Rs 752. For two-wheelers between 150 cc and 350 cc the premium is being proposed to be increased to Rs 1,301 from the existing Rs 1,193. For two-wheelers with engines above 350 cc, the premium was proposed to be increased to Rs 2,571 from the existing Rs 2, 323 for fiscal 2020-21.

The details of the existing and proposed motor third party premium rates for private cars and two-wheelers are given below:

Description of vehicle Existing Rates (FY 2019-20) Rs. Proposed Rates* (FY 2020-21) Rs.
Private cars with engine capacity
Not exceeding 1000 cc 2,072 2,182
Exceeding 1000 cc but not exceeding 1500 cc 3,221 3,383
Exceeding 1500 cc 7,890 7,890
Two Wheelers with engine capacity
Not exceeding 75 cc 482 506
Exceeding 75 cc but not exceeding 150 cc 752 769
Exceeding 150 cc but not exceeding 350 cc 1,193 1,301
Exceeding 350 cc 2,323 2,571

Source IRDAI
* The proposed rate will now not come into effect from April 1, 2020. The validity of premium rates for Motor Third Party Liability Insurance Cover set out for the year 2019-20 stands extended beyond March 31, 2020, until further notice.

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