Insurance of vehicles, including cars and bikes, will become costlier from April 1 as insurance regulator Irdai has decided to increase premiums by up to 40 per cent from the next fiscal.
Third party motor insurance premium for small cars (up to 1,000 cc) will now be up 39.9 per cent to Rs 2,055 from Rs 1,468 being currently charged. The hike in mid-segment cars (1,000 - 1,500 cc) too is about 40 per cent.
Premium hike in case of bigger cars and SUVs (above 1,500 cc) is 25 per cent. It will now cost Rs 6,164 from April as against the current Rs 4,931.
"It is observed that the cost inflation index (CII) has increased by 5.57 per cent over the previous year, i.e. from 1024 in FY 2014-15 to 1081 in FY 2015-16," Insurance Regulatory and Development Authority of India (Irdai) said while notifying the rates of third party insurance premium from April 1, 2016.
Similarly, premiums have gone up in case of bikes and scooters. The new premium rate for two-wheelers up to 75 cc is Rs 569 as against Rs 519. Two-wheelers falling in the category of 75 cc - 150 cc is up 15 per cent to Rs 619 while there is increase of 25 per cent for bikes in the category of 150 cc - 350 cc. However, premium has been reduced in case of motor-bikes which are about 350 cc to Rs 884.
Basic third party (TP) premium for three-wheelers too has been increased. A new category 'e-rickshaw' (capacity of up to 6 passengers) has been introduced and the basic TP premium has been fixed at Rs 1,125.
The premium increase in case of public carriers is in the range of 15-30 per cent. However, there is no change in case of goods carrying vehicles having capacity up to 12 tonnes.
Motor third party insurance is mandatory for vehicles. Irdai has asked insurers to ensure that motor third party insurance is made available at their underwriting offices and through all available channels of distribution.
Earlier, the regulator had published an exposure draft which included number of policies, number of claims paid and amount of claims outstanding as on March 2015 for each underwriting year and for each class of vehicle.