IRDAI Increases Third Party Two Wheeler Insurance Premiums

Posted on: Aug 23, 2022 | | Written by:

IRDAI Increases Third Party Two Wheeler Insurance Premiums

People looking for a convenient mode of transport need not look any further than a two wheeler. With a constant influx of vehicles in the country, a two wheeler will help you reach the destination earlier and by spending less than a four wheeler. When you compare them with cars, they are also cheaper to buy and maintain. However, it is essential that you opt for third party two wheeler insurance, at least to ensure safety while riding.

There are various types of bikes that you can choose from, depending on what your needs are. To start with, you can opt for a cruiser bike if you like going on long rides or trips. If you are someone who enjoys a lot of off-roading, an adventure bike will make for a good purchase. Riders who love racing can explore sports bikes as an option. And if you want something for the city, a commuter bike can be an ideal option.

Irrespective of which type of bike you choose, third party two wheeler insurance is mandatory, as per the Motor Vehicles Act. Here is all that you need to know about third party two wheeler insurance and the role of IRDAI.

Insurance Premium Hike

The IRDAI or Insurance Regulatory and Development Authority of India is the governing body that looks after all things related to insurance policies in the country. The IRDAI has recently announced that there will be a hike in the insurance premium for third party insurance for two wheelers. The last hike took place in July 2019, just before the onset of the pandemic. IRDAI usually hikes the third party premium every year. However, due to the ongoing pandemic, the hikes were halted for a duration of two years. The premiums remained the same for a couple of years. The revised premiums for third party two wheelers policy are effective from the 1st of April, 2022.

Third Party Two Wheeler Insurance

The premium rates of third party policies for all the two wheelers in the country is decided by the IRDAI. And all insurance providers must adhere to these premium rates. However, there are a couple of other components of a bike insurance policy that an insurance provider can change on their own.

The standalone own damage and comprehensive cover are the two components of insurance that insurance companies have control over the premiums. The same goes for add-ons for the policies as well.

The IRDAI assess certain factors every year and then decides if the premiums need a hike or not. It looks at parameters such as the loss ratios of all the companies providing motor insurance and the total number of claims that were raised for the previous year. Based on these, IRDAI decides whether or not to hike the premiums.

Revised Premiums Rates

The IRDAI decides the premiums based on the engine capacity of the two wheelers. And there are essentially four categories. Bikes with less than 75cc as the engine capacity, bikes with engine capacity between 75cc to 150cc, bikes with engine capacity between 150cc and 350cc and bikes with engine capacity above 350cc.

As per the revised premium rates, bikes with 75cc or lower engine capacity will see a 12% increase in the premium. On the flip side, bikes with engine capacity between 75cc and 150cc will see a 5% reduction in premiums. Bikes with an engine capacity between 150cc and 350cc will see a 15% hike in their premiums. Similarly, bikes with bigger engines, over 350cc to be precise, will see a 21% increase in the premiums.

Here is a small table to help you better understand the premium rates and how they have changed since 2019.

Engine Capacity of Bike	Premium in 2019	Premium in 2022	Change in premium (%)
75cc or less	482	538	12
75cc to 150cc	752	714	-5
150cc to 350cc	1,193	1,366	15
350cc or more	2,323	2,804	21

There were some amendments to the law, according to which, it is now mandatory for new bike owners to have a long term policy for their bikes. You can either opt for a 3-year long-term policy or a 5-year long-term policy. As was the case with a single-year policy premium, the long-term policy premiums have not seen any revision as well. However, in 2022 they will also see a revision.

As per the revised premium rates, bikes with 75cc or lower engine capacity will see a 178% increase in the premium, one of the highest to date. Bikes with engine capacity between 75cc and 150cc will see a 17% increase in the premiums. Bikes with an engine capacity between 150cc and 350cc will see a 35% hike in their premiums. Similarly, bikes with bigger engines, over 350cc to be precise, will see a 16% increase in the premiums.

The following table will help you better understand how the premiums for long-term plans have changed since 2019.

Engine Capacity of Bike	Premium in 2019	Premium in 2022	Change in premium (%)
75cc or less	1,045	2,901	178
75cc to 150cc	3,285	3,851	17
150cc to 350cc	5,453	7,365	35
350cc or more	7,365	15,117	16

Before you proceed with buying a third party two wheeler insurance policy for your bike, here are the salient features of the policy.

● The Motor Vehicles Act of 1988 mandates having at least a third party liability cover for your bike

● In the event of an accident, the third party gets compensation for the damages caused by your bike

● In the unfortunate event of another person being injured during the accident, or permanently disabled or losing their life, the insurance provider will cover the medical expenses or pay a lump-sum amount for the cause.

If you wish to ride your bike in India, it is mandatory to have at least third party two wheeler insurance. It will offer you minimal coverage as far as accidents related to bikes are concerned and give you legal clearance to ride your bike as well. You can opt to buy third party two wheeler insurance online. It is convenient and will save you a considerable amount of time.

When you buy online, you can find better deals to go along with your third party liability plan as well. And if you wish to enhance the capabilities of your policy, you can always opt for a comprehensive plan or add-ons along with your third party liability plan. Also, driving without third party two wheeler insurance might fetch you hefty fines.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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