Planning to invest in a car or bike? Well, it is likely their prices will be higher, starting today.
Well, you may have to pay more for a car or two-wheeler for a ‘third-party insurance’ policy which has been made mandatory by the Insurance Regulatory and Development Authority of India (IRDAI) after a Supreme Court order.
How much does this third-party insurance cost?
According to a Hindustan Times report, this insurance will last for three years and will cost about Rs 5,286 for cars with engine capacity less than 1,000cc, Rs 9,534 (1,000cc-1,500cc) and Rs 24,305 for cars with engine capacity of 1,500cc and more.
Similarly, for two-wheelers, the insurance will be applicable for five years, costing Rs 1,045 for vehicles with engine capacity less than 75cc, Rs 3,285 for 75cc-150cc, Rs 5,453 for 150cc-350cc and Rs 13,034 for those above 350cc.
The apex court made it mandatory for vehicle customers to buy third-party insurance for cars and two-wheelers in June 2018.
Why do I have to pay for the insurance?
The idea behind the order is to ensure road accident victims can recover compensation from insurance firms, without having to rely on the owner of the offending vehicle.
The decision of having long-term third-party insurance came after a court-appointed panel headed by former SC judge KS Radhakrishnan was hearing a PIL related to road safety. It was asked to suggest measures to prevent road accidents and improve accountability.
The third-party insurance is compulsory and is covered under the motor vehicles act for theft and damage.
According to the report, the Supreme Court ordered IRDAI to implement the decision on all policies sold from September 1, 2018. Its circular stated that general insurance companies should “offer only three-year Motor Third-Party Insurance covers for new cars and five-year motor third party insurance policies for new two-wheelers”.
This insurance can either be a separate product or part of a comprehensive insurance product, which gives the vehicle buyer has to be given two alternatives. He/she can either opt for a long-term package covering both third-party insurance and own damage insurance for a period of three years or five years. Alternatively, the buyer can opt for a three or five-year term for the third-party insurance and one-year insurance for own damage.
(Edited by Shruti Singhal)