IRDAI Proposed Third Party Motor Insurance Premiums for FY24

Posted on: Aug 18, 2023 | | Written by:

IRDAI Proposed Third Party Motor Insurance Premiums for FY24

Published on August 14, 2023. EST READ TIME: 3 minutes

Vehicle owners are aware that third party car insurance is mandatory to drive legally on public roads. And failing to procure third party insurance will lead you to a hefty penalty. For the uninformed, the IRDAI regulates the premium rates for third party policies in India. And for FY24, the regulatory body has proposed new premium rates. Here is all that you need to know about it.

Understanding third party motor insurance

A lot of us would have heard of third party insurance or third party liability policy at some point or other. But what does a third party car insurance actually mean? And when is it helpful for car owners? A third party motor insurance is one of the most basic forms of vehicle insurance in India. This policy type offers protection to vehicle owners against damages or injuries to third parties. A third party can be a vehicle, an individual, or even a property.

The policy is also a statutory requirement as per the Motor Vehicles Act. However, it is important to note that the policy does not provide any direct protection to the owner or owner's vehicle.

In this context, the insured is the first party, the insurance provider is the second party and the person or vehicle involved in an accident is the third party. The policy offers protection against any injuries to individuals, damages to vehicles or even damages to property due to an accident. Thus, in an accident where other parties are involved, the policy will safeguard your finances. It also offers legal guidance if there is a need for any.

Since the policy is a mandatory requirement and offers the minimum possible coverage, premium rates for third party policies are usually quite affordable. And the premium rates for the policy are set by the IRDAI.

The role of IRDAI in setting premiums

IRDAI stands for Insurance Regulatory and Development Authority of India. The regulatory body is responsible for setting guidelines, norms, and regulations that the insurance industry must adhere to. These guidelines are designed in a bid to establish a sound framework that is beneficial for all the parties involved. This includes insurance providers, policyholders, and other intermediaries.

The IRDAI regulates the third-party motor insurance premiums, at regular intervals. The regulatory body considers a few factors before deciding on the premium for two and four wheelers. For example, they look at the data of insurance claims being filed, the number of road accidents for the previous years, etc.

The IRDAI also considers the engine capacity of vehicles, before deciding on a policy premium. Since the body decides on the third party motor insurance premiums, the third party premium rates are standard across all insurance providers. The only difference in premium is when you opt for a comprehensive plan or own damage cover.

Proposed changes for FY24

As mentioned above, the IRDAI regularly evaluates the third party premium charges for all vehicle categories. And if there is a need for any change in the premium rates, it takes the necessary steps. For FY24, the Ministry of Road Transport and Highways (MoRTH) in consultation with the IRDAI has proposed third party premium rates.

The premium rates for third party insurance for cars with engine capacity of 1,000 cc or lower is set at Rs. 2,094. For cars with an engine capacity between 1,000 cc and 1,500 cc, the premium rates are proposed to be Rs. 3,416.

There have been some changes to third party premium rates as far as buses are concerned. The IRDAI has proposed a 15% discount for premium of buses that belong to educational institutions and EVs. Similarly, the regulatory body has suggested a 7.5% discount for hybrid EVs as well. And there has been a proposed 6.5% discount for three wheeler passenger vehicles.

Here are the charges for third party premium rates for FY24.

Premiums for cars

Vehicle category - Cars	Premium Rates
Engine capacity of up to 1,000 cc	Rs. 2,094
Engine capacity between 1,000 cc and 1,500 cc	Rs. 3,416
Engine capacity above 1,500 cc	Rs. 7,897

Premiums for two wheelers

Vehicle category - Two wheelers	Premium Rates
Engine capacity up to 75 cc	Rs. 538
Engine capacity between 75 cc and 150 cc	Rs. 714
Engine capacity between 150 cc and 350 cc	Rs. 1,366
Engine capacity above 350 cc	Rs. 2,804

Premium for cars and two wheelers for three to five years

Vehicle category - Three year single premium for cars	Premium Rates
Engine capacity of up to 1,000 cc	Rs. 6,521
Engine capacity between 1,000 cc and 1,500 cc	Rs. 10,640
Engine capacity above 1,500 cc	Rs. 24,596

Vehicle category - Five year single premium for two wheelers
Engine capacity up to 75 cc	Rs. 2,901
Engine capacity between 75 cc and 150 cc	Rs. 3,851
Engine capacity between 150 cc and 350 cc	Rs. 7,365
Engine capacity above 350 cc	Rs. 15,117

Premiums for electric vehicles

Vehicle category - Electric cars	Premium Rates
Battery capacity up to 30 KW	Rs. 1,780
Battery capacity between 30 KW and 65 KW	Rs. 2,904
Battery capacity above 65 KW	Rs. 6,712

Vehicle category - Electric two wheelers
Battery capacity up to 3 KW	Rs. 457
Battery capacity between 3 KW and 7 KW	Rs. 607
Battery capacity between 7 KW and 16 KW	Rs. 1,161
Battery capacity exceeding 16 KW	Rs. 2,383

Conclusion

While buying car insurance online , you will come across different policy types and premiums for your car. And third party insurance is one important aspect of that. For FY24, the IRDAI has proposed rates, as mentioned above. The premium rates for cars have mostly remained unchanged from the previous year. Thus, there would not be a major bump in the policy premium on renewal of your existing policy.

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

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