Motor insurance policy expiring soon? You might have to pay a higher premium

People whose motor insurance policy is expected to expire soon – maybe this month or in June – are suggested to renew their policy at the earliest.

Is your motor insurance due for renewal in the next few days, or are you planning to buy a new vehicle anytime soon? If yes, get ready to spend more money on your vehicle’s insurance premium thanks to the IRDAI’s (Insurance Regulatory and Development Authority of India) new exposure draft. As per the latest circular, the regulatory body is soon expected to revise the Motor Third Party insurance premiums for the current financial year i.e. 2019-20. However, in its last circular, issued in the month of April, IRDAI had put the increase in annual premium for Third Party (TP) policies on hold. Now, with the new circular being released, all insurers will charge the new premiums for Motor Third Party Liability Insurance once revised premiums are implemented.

In line with the IRDAI’s exposure draft, the annual TP insurance premium for private cars up to 1000 cc might be raised from Rs 1,850 to Rs 2120. The premium for those exceeding 1000 cc, but not 1500 cc, might be raised from Rs 2,863 to Rs 3,300. However, the TP insurance premium for private cars exceeding 1500 cc, which is currently priced at Rs 7890, is expected to remain unchanged. The average increase in the TP insurance premium of private cars after a detailed analysis is around 15 percent.

In the two-wheeler segment, TP insurance premium for vehicles not exceeding 75 cc might be raised from Rs 427 to Rs 482. For vehicles exceeding 75 cc, but not exceeding 150 cc, the rise might be from Rs 720 to Rs 752, and for vehicles exceeding 150 cc but not exceeding 350 cc, the amount might change from Rs 985 to Rs 1,193. In the two-wheeler segment as well, high end vehicles i.e. vehicles over 350 cc, the premium is expected to remain unchanged. Overall, the expected average increase in the two-wheeler TP insurance premium is 20 per cent.

As per market experts, the increments in TP motor insurance premiums between 2012 and 2017 showed it increased by 29 per cent for private cars, and 23 per cent for two-wheelers. In the last financial year, i.e. 2018-19, while the TP premium for cars mostly remained unchanged, while the premiums were reduced for two-wheelers.

As per IRDAI, the introduced exposure draft is open for comments till May 29 to allow insurers to give their feedback on the proposed changes. Once the draft is finalised, the proposed TP premium changes would be implemented, after which all the insurers will start charging the same TP premium as decided by IRDAI.

People whose motor insurance policy is expected to expire soon – maybe this month or in June – are suggested to renew their policy at the earliest as they may have to spend more, once the proposed changes are implemented. So if your motor insurance policy is going to expire in the next 45 days, it is highly recommended to renew it now.

The author is the Chief Business Officer- General Insurance, Policybazaar.com.

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