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Motor Insurance Costs for New Vehicle Purchases to Increase – What This Means for You

IRDAI has decreed that, starting Sept 1, 2018, third-party liability (TP) motor insurance premium for both personal cars as well as two-wheelers will have to be paid upfront during purchase for three years and five years respectively. Note that this is for new purchases only and policy renewal rates are not affected. Due to this, first-year costs will see an upward spike and new vehicle owners will have to shell out more upfront.

Additionally, new vehicle owners should note that this applies only to TP motor insurance and not OD (own-damage) insurance. This point is also relevant for those who may have queries regarding how NCB will be treated due to this change. Since NCB is only applicable on the OD part and not on the TP part of the policy, it will remain unaffected.

Likewise, there is no impact on IDV (insured’s declared value) either.

So, what exactly has changed? Let’s have a look at a table to illustrate:

Sr. No.

Category

Vehicle Class

Premium before Sept 1, 2018

Premium w.e.f Sept 1, 2018, for 3 and 5 years

% Increase

1

Private Car

Not exceeding 1000 cc

1,850

5,286

285.73%

Between 1000 cc and 1499 cc

2,863

9,534

333.01%

1500 cc or more

7,890

24,305

308.05%

 

 

 

 

 

 

2

Two-wheeler

Not exceeding 75 cc

427

1,045

244.73%

Between 75 cc and 149 cc

720

3,285

456.25%

Between 150 cc and 349 cc

985

5,453

553.60%

350 cc or more

2,323

13,034

561.08%

The amounts in the 5th column are payable upfront on the purchase of a new motor vehicle. As can be seen from column 6, the tariffs have risen for certain categories, for example, private cars between 1000 cc and 1499 cc and also two-wheelers with engines above 350 cc.

These added costs will reflect in the buying costs of private vehicles throughout the country.

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