Car Insurance: New motor rules hike insurance cost of a new car substantially

The Insurance Regulatory and Development Authority of India (

“The cost will definitely be impacted as customers will now have to buy the (third-party) policy for a longer term, i.e., 3 years in case of a car and 5 years in case of a two-wheeler. Along with this they will also have to get a mandatory PA (

Rule 1: Pay motor third-party insurance upfront
The first reason is because Irdai has asked the insurers to offer only 3-year

To whom it applies: The upfront payment rule will apply only for cars and two-wheelers if it is purchased after September 1, 2018. On older vehicles, the option to pay annual premium continues.

Impact: As can be seen in the table below, for car models such as ALTO 800 (Not exceeding 1000 cc), the buyer now has to pay Rs 17,132 (own damage 1 year) or Rs 30,142 (own damage 3 years), instead of Rs 10,541 annually earlier. It may also be noticed that instead of paying Rs 31,623 (Rs 10541 for 3 years) the upfront payment is now Rs 30,142, a savings of almost Rs 1,400. However, this advantage is not available for higher capacity car models.

Impact of new motor insurance rules : How insurance cost has gone up
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Remember, based on the capacity of the car or two-wheeler, the third-party premium rate is fixed and notified by Irdai at the start of a financial year. Post the new rule introduced mid-year, the tariff has been revised (till March 31, 2019) for purchases made after September 1, 2018.

Rule 2: Premium, coverage hiked for compulsory personal accident cover for owner driver
The second hit was the decision announced by Irdai it increased the compulsory personal accident cover for owner driver under motor insurance policies from Rs 2 lakh to Rs 15 lakh. Earlier, personal accident cover (PAC) was capped at Rs 1 lakh for two-wheelers and Rs 2 lakh for private or commercial cars. The premium charged for two-wheelers and cars was Rs 50 and Rs 100 excluding the taxes, respectively.

Now, Irdai has asked insurers to provide a minimum cover of Rs 15 lakh under PAC for owner-drivers for both two-wheelers and cars each at the premium rate of Rs 750 per annum for annual policy.

To whom it applies: This rule applies even on the existing policyholders.

Impact: It is the choice of the owner-driver to opt for a one-year PAC or long-term PAC and insurers cannot compel owner-drivers to go in for long-term package policy or long-term PAC policy. IRDAI has directed insurers to ensure that they necessarily offer the choice of one-year PAC to an owner-driver.

Also Read:
Car insurance premium up sharply: Compulsory personal accident cover hiked to Rs 15 lakh

The variants
Among the two types of

What you should do
On new purchases, there’s no escape but to pay the TP premium as a lump sum, but you do have the the option to pay the OD premium either as a lump sum for three years or annually. Competition among players may keep the OD rates at bay, hence choosing to pay annually may help. However, consider the discounts offered to evaluate the buying decision.

The discount on the PAC may also work in your favour if the long term policy is chosen. So, unlike in the past, buying car insurance has become more evolved and you will have to get the quotes from various insures and portals to compare them before taking a decision.

Owning a cable car or motorcycle has become costlier than earlier. This is thanks to the increase in indemnity cost over the past year.The Insurance Regulatory and Development Authority of India ( Irdai ) has introduced two new sets of rules where the total escape towards policy has gone up. sample this : The first gear year insurance cost for a car of capacity of over 1500 milliliter, say a Hyundai Creta, has gone up from about Rs 23,897 to closely Rs 45,804 or even higher – an increase of Rs 21,907. “ The cost will decidedly be impacted as customers will now have to buy the ( third-party ) policy for a longer term, i.e., 3 years in case of a car and 5 years in character of a two-wheel. Along with this they will besides have to get a mandate PA ( personal accident ) cover for the owner-driver worth Rs 750. This will give a press to the overall cost of premiums, ” says Tarun Mathur, Chief Business Officer- General Insurance, Policybazaar.com.The first gear reason is because Irdai has asked the insurers to offer alone 3-year Motor Third Party insurance cover for cars and 5-year covers for two-wheelers. The premium has to be collected for the entire term ( three years or five years as the case may be ) at the time of getting insurance. This means rather of paying annual third-party bounty, it has to be paid as a hunk sum in the initial class and again only in the beginning of the fourthly year. perceptibly, it ‘s alone the third party bounty that needs to be paid as a ball summarize, while the own-damage premium may be paid either annually or as a collocate sum.The upfront payment rule will apply only for cars and two-wheelers if it is purchased after September 1, 2018. On older vehicles, the choice to pay annual agio continues. : As can be seen in the table below, for car models such as ALTO 800 ( not exceeding 1000 milliliter ), the buyer now has to pay Rs 17,132 ( own wrong 1 year ) or Rs 30,142 ( own damage 3 years ), alternatively of Rs 10,541 per annum earlier. It may besides be noticed that rather of paying Rs 31,623 ( Rs 10541 for 3 years ) the upfront payment is now Rs 30,142, a savings of about Rs 1,400. however, this advantage is not available for higher capacitance car models.Remember, based on the capability of the car or two-wheel, the third-party bounty pace is fixed and notified by Irdai at the begin of a fiscal year. Post the new rule introduced mid-year, the duty has been revised ( till March 31, 2019 ) for purchases made after September 1, 2018.The moment shoot was the decision announced by Irdai it increased the compulsory personal accident cover for owner driver under motive indemnity policies from Rs 2 hundred thousand to Rs 15 hundred thousand. Earlier, personal accident brood ( PAC ) was capped at Rs 1 hundred thousand for two-wheelers and Rs 2 hundred thousand for private or commercial cars. The premium charged for two-wheelers and cars was Rs 50 and Rs 100 excluding the taxes, respectively.Now, Irdai has asked insurers to provide a minimum cover of Rs 15 hundred thousand under PAC for owner-drivers for both two-wheelers and cars each at the bounty rate of Rs 750 per annum for annual policy. : This rule applies flush on the existing policyholders. : It is the choice of the owner-driver to opt for a annual PAC or long-run PAC and insurers can not compel owner-drivers to go in for long-run package policy or long-run political action committee policy. IRDAI has directed insurers to ensure that they necessarily offer the choice of annual PAC to an owner-driver.Among the two types of car insurance in India, the third-party ( TP ) cable car insurance, which is a compulsory a binding, serves to protect the cover from claims arising from a third gear party, when the insure ‘s vehicle is at demerit. This overlay will pay for any fiscal liability and will besides take care of any legal repercussions that arise out of the accident. elsewhere, a software policy or a comprehensive policy covers loss or own wrong ( OD ) to the vehicle insured in summation to all the covers provided by a third-party policy.On new purchases, there ‘s no escape but to pay the TP premium as a hunk sum, but you do have the the option to pay the OD bounty either as a lump kernel for three years or per annum. rival among players may keep the OD rates at bay, hence choosing to pay annually may help. however, consider the discounts offered to evaluate the buying decision.The discount on the PAC may besides work in your party favor if the long term policy is chosen. indeed, unlike in the by, bribe car indemnity has become more develop and you will have to get the quotes from diverse insures and portals to compare them before taking a decision.

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