New Delhi, Oct 11: Buying a car or two-wheeler has become costlier than before. Thanks to the increase in insurance cost over the past year.
The Insurance Regulatory and Development Authority of India (Irdai) has introduced two new sets of rules where the total outflow towards insurance has gone up.
That means, the first year insurance cost for a car of capacity of over 1500 cc, say a Hyundai Creta, has gone up from about Rs 23,897 to nearly Rs 45,804 or even higher - an increase of Rs 21,907. For a 150cc bike costing Rs 75,000, the insurance premium would be Rs 7,600.
Long-term third-party insurance policy
Usually, vehicle Insurance in India is issued for one-year term. 4 years back, IRDAI allowed 3-year long term policy for bikes and recently, IRDAI has opened 3-year policy for new cars and 5-year policy for new bikes. A standalone long-term third party (TP) policy is available for 3 years for Cars & 5 years for bikes of any age. This policy will cover the Third party losses like death, disability and property damage. It also covers vehicle owner's death & disability.
IRDAI ups insurance cover for owner-driver to Rs 15 lakh
Insurance Regulatory and Authority of India (Irdai) in its circular has asked insurers to enhance capital sum insured in compulsory personal accident cover for owner-driver under motor insurance policies to Rs 15 lakh.
Currently, the mandatory cover is capped at Rs 1 lakh for two-wheelers and Rs 2 lakh for private or commercial cars, respectively. The premiums for Rs 15-lakh cover have been fixed at Rs 750 per annum.
Stakeholders in the industry say even as premium rates go up, coverage will also increase, and it's a very welcome move for the policyholders. Earlier, the premiums were Rs 50 for two-wheelers and 100 for cars.
Third-party insurance is mandatory
As per the Motor Vehicles Act, third-party insurance is mandatory.
As regards the comprehensive insurance, which covers theft and damage among others, the vehicle buyer would have the option to buy it for one year or three years in case of cars and five years in case two-wheelers.
As per the court order, it is mandatory for all general insurance companies to issue a three-year third party insurance cover for new cars and five-year third party (TP) insurance cover for new two-wheelers as a separate product or as part of a comprehensive insurance product.
The Insurance Regulatory and Development Authority of India (Irdai) has issued a circular in this regard.
The circular said general insurers should "offer only three-year Motor Third Party Insurance covers for new cars and five-year motor third party insurance policies for new two-wheelers".
Currently, in the motor segment, there are two types of policies -- stand-alone Motor Third Party policy and Motor Package Insurance policy for 2-wheelers and private cars.