Road Transport Ministry Revises Third Party Motor Insurance Premium; New Rates Will Come Into Effect From 1 April
The ministry has proposed a lower rate of third party premium for electric and hybrid electric vehicles for the next financial year, while proposing marginal increase in the premium for all other categories of vehicles.
After two years’ moratorium due to Covid-19 pandemic, the revised third party (TP) insurance premium will come into effect from 1 April.
This is also for the first time that the Road Transport Ministry will notify the TP rates in consultation with the Insurance Regulatory and Development Authority (IRDA). Earlier, this was done by the regulator.
The Road Transport Ministry has proposed a lower rate of third party premium for electric and hybrid electric vehicles for the next financial year while proposing marginal increase in the premium for all other categories of vehicles.
The only exception is for the multi-axle trailers where the premium may increase by nearly 6 per cent.
According to the proposed revised rates, private 1,000 CC cars such as Alto, Wagon R would attract rates of Rs 2,094 compared to Rs 2,072 in 2019-20. Similarly, the medium range cars would attract rates of Rs 3,416 compared to Rs 3,221 and owners of cars above 1,500 CC would need to pay a premium of Rs 7,897 against Rs 7,890.
The ministry has invited suggestions and objections from all stakeholders by 14 March before notifying the final rates.
The draft notification has proposed a 15 per cent discount for all types of electric vehicles in its bid to incentivise the penetration of environment-friendly vehicles. Electric private cars will attract a premium of Rs 1,780 to Rs 6,712 depending on their capacity.
Similarly, it has proposed a 7.5 per cent discount on TP for hybrid electric vehicles. It has also proposed to reduce the premium of school buses marginally, which did not get any business due to the pandemic.
As per the draft notification, the TP premium for medium size trucks would increase to Rs 35,313 in 2022-23 compared to Rs 33,418 in 2029-20. Similarly, in the case of 40 tonne-plus multi axle trailers the proposed premium is Rs 44,242 compared to Rs 41,561 in 2019-20.
According to the ministry, the increase won’t hurt the vehicle owners considering that there has been no revision of rates during the past two financial years.
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