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New Premium for Third Party Car Insurance

  • Author :
  • TATA AIG Team
  • Published on :
  • 06/07/2022

In India, if you own a car, then you are legally required to buy an insurance policy that offers coverage for third-party liability. Insurers offer third-party four-wheeler insurance policies for cars to help comply with this regulation. However, the third-party insurance premium for cars is not determined by individual insurers. It is controlled by the Ministry of Road Transport and Highways (MORTH) and the Insurance Regulatory Development Authority of India (IRDAI). Recently, there was an increase in the 3rd party insurance cost. Here are the details of the increase to help you understand how much you will have to pay for a third-party car insurance policy in 2022.

The premium rates for third-party car insurance policies are determined by the Insurance Regulatory and Development Authority of India (IRDAI). It is based on the engine capacity or ‘cc’ of the car. General insurers are mandated to charge the premium declared by IRDAI for a third-party four-wheeler insurance policy. Every year, the IRDAI goes through a process of revisions of the third-party insurance premium for cars. However, due to the pandemic, the regulator had put the revisions on hold. It has now decided to increase the 3rd party insurance cost.

The New Third-party Insurance Premium Rates

The annual insurance cost for a car in India for third-party car insurance plans is determined by the IRDAI. This is determined based on the engine capacity of the car. The IRDAI reviews the premium every year and changes it considering the inflation rates and other socio-economic factors. For the last two years, the regulatory body had decided not to revise the insurance premium due to Covid. They have announced a hike in third-party car insurance rates effective June 2022.

The IRDAI determines the premium for these plans based on the cubic capacity of the car. Here are the new premium rates for third-party car insurance:

What Does This Mean for Car Owners?

The new rates are applicable for people purchasing new third-party four-wheeler insurance policies or renewing them. Hence, if you plan to buy a car with an engine capacity of less than 1000cc, then you will have to pay an annual premium of ₹2094 to get third-party coverage.

This will also impact the car insurance renewal cost. If you have existing 3rd party car insurance for a <1000cc car and have paid a premium of ₹2072, then on renewing your policy after June 2022, you will have to pay a higher premium of ₹2094.

The table above specifies the insurance premium increase for different sizes of vehicles.

Understanding Third-party Car Insurance

The Motor Vehicles Act, 1988 mandates all cars to have a third-party insurance policy that offers coverage for damages caused to the life or property of a third party by the insured vehicle. A third-party car insurance claim is processed only if the damage is caused accidentally and not intentionally. Hence, if you are buying a new car, then you cannot take it out of the showroom until you have an active third-party car insurance policy.

Most insurance providers, like Tata AIG, allow car owners to purchase car insurance online. Since the third-party insurance premium for cars is fixed based on their engine capacity, car owners can buy a policy based on the reputation of the insurer. Just to mention, purchasing online motor insurance from Tata AIG is a hassle-free process. Claiming the insurance cover is also very easy with Tata AIG. We have a dedicated team of experts who will help you with your claim process.

Inclusions of a Third-party Car Insurance Policy

A third-party four-wheeler insurance policy offers protection against various damages to a third-party caused by the insured vehicle:

  • In an accident involving the insured car, if a third party gets injured, then the policy protects you against financial losses from any damages. If the third-party succumbs to the injuries, then the policy can offer legal and financial protection to the insured car and the car owner.

  • In an accident involving the insured car, if a third-party vehicle or property gets damaged, then the policy offers reimbursement for the cost of repairs to the said property/vehicle.

The government has also made it mandatory for all car owners to have a Personal Accident Cover for the owner-driver of ₹15 lakhs. This is available at an annual premium and offers coverage for medical treatment and hospitalisation costs if the owner-driver gets injured during an accident. It also offers a death claim facility in case of any eventualities.

Exclusions of a Third-party Car Insurance Policy

When you buy a third-party car insurance policy, it is important to remember that it covers damages to the life and property of a third party only. Also, there are situations where the policy does not offer coverage as listed below:

  • No coverage for any damage to the insured vehicle

  • If the owner-driver of the insured vehicle was drunk at the time of the accident, then the policy will not offer coverage

  • No coverage if the owner-driver of the insured car does not have a valid licence at the time of the accident

  • Third-party damages caused outside the geographical limit specified in the policy are not covered by it

  • If you have purchased insurance for a private car but use it for commercial purposes and meet with an accident, then the third-party car insurance policy will not offer coverage

  • No coverage if the vehicle was being driven by anyone other than the owner-driver or designated driver of the car

  • No coverage if the damage is caused directly or indirectly as a result of a war or nuclear weapons

Conclusion

While third-party car insurance is mandatory in India, it is a blessing for car owners as it protects them from financial losses due to unforeseen circumstances. While the government has announced an increase in third-party insurance premiums, the hike is nominal and offers value for money considering the coverage offered. If you are buying a new car or renewing your existing car insurance policy, then make sure that you are aware of the new rates. Remember to check with your insurance provider to get the latest third-party car insurance rates and pay accordingly.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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