Third-party motor cover may cost you 30% more

Third-party motor insurance premiums will become more expensive from April 1 as the insurance regulator gears up for its annual revision of rates. The Insurance Regulatory and Development Authority of India ( IRDAI) is likely to increase rates on an average by 30% in some categories, according to a draft proposal.

For commercial vehicles, a rise of 25-30% has been proposed. “Claims are he highest in the commercial vehicle segment.Trucks between 2-7.5 tonnage usually ply within the state and travel on average as much as 2.5-3 lakh kilometres a year. With trucks between 7.5-12 tonne with a national permit, they could cover as much as 4 lakh kilo metres a year -making the risks higher,“ Puneet Sahni, head of product development, SBI General Insurance Co, said.

An IRDAI internal note says that for two-wheelers on average, there could be a rise of 10-15% for vehicles with an engine capacity below 350cc like the Hero HF Dawn, TVS Star City , Mahindra Centura, Bajaj Discover, Hero Splendor Pro and Yamaha RX 100cc. But a 10% cut has been proposed for vehicles with an engine capacity exceeding 350cc like the Royal Enfield Thunderbird, Harley Davidson Street 500, Yamaha R3 and Mahindra Mojo.

Like in the case of bikes, cars with a higher engine capacity will not face as steep a hike as smaller models with lower engine capacity. For private cars with engine capacity not exceeding 1,000cc like the Maruti Suzuki Alto K10 and Tata Nano, the hike proposed is 30%. While for cars exceeding 1,000cc like Maruti Suzuki Swift DZire and Volkswagen Vento, the proposed hike is 25%.

“We need to do a balancing act. The motor insurance portfolio for insurers has been bleeding for many years now. But we can't place the burden of their losses on policyholders. So we can only gradually increase rates to curb losses," said a senior IRDAI official.