As per the latest updates by IRDA, It’s mandatory for all the new vehicles to buy third party cover. This rule implies for all the motors purchased after September 1st, 2018. Consolidate amount of the third party(TP) premium need to be paid for 3 years or 5 years as a lump sum. It may be beneficial for small cars but majorly it’s loss for all others. There is a subsequent change in no claim bonus (NCB) as well.
Third Party Premium Impact on Motors
Supreme court orders stats, new cars have to pay TP premium as a lump sum for 3 years. It will prove out to be beneficial only for the car less than 1000 cc. Instead of Rs. 1850 yearly, they have to pay Rs. 5286 for 3 years. This result in an overall gain of Rs 264. Cars with the engine between 1000 cc & 1500 cc have to incur a loss of Rs. 945. They have to pay now Rs. 9534 instead of Rs. 2863 yearly. Cars with 1500 cc and more also have to bear a loss of Rs 635. There consolidate premium amount will come out to be Rs. 24305, instead of Rs. 7890 yearly.
In the case of two-wheelers, the premium for the third party needs to be paid for a complete 5 years.
ACKO General Insurance, Product head Animesh Das says “This move by IRDA was expected”. According to him, every year these changes are done based on the frequency of claims.
Along with the Third party Premium changes, there’s a major change in NCB as well. No claim bonus, that is increasing at the rate of 20% every year, now is locked for an initial 3 years after premium payment. Another crucial change in NCB is it is not applicable on Third party Insurance. It means whether you take any claim for TP or not it will not slash NCB rate.
With this new rule applicable from 1st Sept 2018 to 31st March 2019, third party premium is now an inbuilt and mandatory product for all the vehicles.