TNN | Apr 2, 2015, 05.29AM IST | Times of India
Motor third-party liability insurance with the cost of the mandatory cover set to rise by 30% for cars with an engine capacity of less than a 1,000 cubic centimeters (cc).
MUMBAI: Small car owners will bear the brunt of the increase in motor third-party liability insurance with the cost of the mandatory cover set to rise by 30% for cars with an engine capacity of less than a 1,000 cubic centimeters (cc). Owners of heavy commercial vehicles and two-wheelers will also see an increase in their premium payments.
The Insurance Regulatory and Development Authority (IRDA) on Wednesday issued a circular stating that general insurance companies are not finding the current premium rates adequate to pay for the claims. General insurers also reminded the regulator of its directive asking insurance companies to provide 175% of the premium collected under declined insurance premium from the declined pool towards possible claims. The declined pool is a concept where claims in respect of vehicles which no company is prepared to insure are covered under a policy.
The vehicles which will not see any change in premium rates are goods carriers with capacity of up to 12,000 kg. Two-wheelers see increases ranging from 14% to 20% while for goods carrying vehicles, the increase ranges between 19-20%.
For hatchbacks and other cars with capacity of below 1,000 cc, the increase in premium will range from 20% to 30%. For larger cars, the increase is only around 20%
“Unlike in comprehensive cover where the claim depends on the value of the vehicle, in third-party insurance the claim depends on the income of the victim of an accident. The higher the income of the victim, the higher the third-party claim,” said an official from an insurance company.
“It is observed that there is a wide variation in the premium charges among various sub-classes of a given vehicle. It is observed that the estimated premium rate increase over the previous year in some of the vehicle classes is much higher. At the same time, some vehicle classes are shown as having negative change,” IRDA said in its circular.
Source : http://goo.gl/JtnfsA