Know Everything About The Revised Third Party Motor Insurance | RenewBuy

Know Everything About The Revised Third Party Motor Insurance

Know Everything About the Revised Third-Party Motor Insurance

 

A Third Party Liability Insurance covers for the damage caused to the third-party in the event of an accident/ collision involving the policyholder. The Motor Vehicles Act of 1988 makes it mandatory for every car-owner to have a third-party motor insurance. The third party insurance covers for legal liabilities of the insured towards the third party in relation to bodily injury and property damage.

However, the revised third-party motor insurance requires vehicle owners to come in terms with the amends in the law effective from the upcoming financial year.

All about the New-Third Party Motor Insurance

Following the order of the Supreme Court of India, motor insurance regulators have mandated long term covers in third-party motor insurance. The revised law requires the insured to pay third party premium for three years in a lump-sum during the first year itself. It will increase the cash outflow towards the motor insurance premium in the first year. The revised policy applies only to vehicles purchased on or after September 1, 2018.

Here are a few pointers related to the revised third-party insurance which will give you a deeper insight into the current plan:

  • The amended rule does not apply to policies existing before September 1, 2018. The policyholders of existing policies continue with the payment of a one-year premium. The multi-year premium rule is applicable only on cars and two-wheelers purchased after the date.
  • The premium rate for the third-party policy is fixed based on the cubic capacity of the two-wheeler/ four-wheeler. The rates shall be announced by the Insurance Regulatory and Development Authority of India (IRDAI) at the beginning of the financial year.
  • No-Claim Bonus or NCB will only apply to the OD portion.
  •  The insured shall receive a discount of Rs. 50/- or waiver on the premium paid towards third party property damage will be given Rs. 6000/-.

The Changes in Third Party Liability Insurance

The new rules on third-party motor insurance have an impact on the rate of premium outflow. The revised rules link the third-party tariffs directly to the capacity of the vehicle insured. There are some additional inclusions which the revised third-party motor insurance plan features. Some of the major changes are listed down below:

  • As per the amended rule, the premium on the third party policy for 3 years has to be paid as an upfront payment in the first year. Therefore, the premium outflow will increase for customers in the first year.
  • All vehicles have been segmented into three major sections:  Vehicles exceeding 1000 cc, vehicles above 1000 cc but less than 1500 cc and vehicle exceeding 1500 cc. Tariffs for new cars have been increased, except for cars under 1000 cc segment.

The revised rate of tariffs can be figured out from the table below:

 

 

Current rate of Tariffs (Annual)

Revised rate of Tariffs (one-time)

 

 

FY

2018-19

Total for 3 years

FY 2019-20

Difference in the amount

Below 1000 cc

1850

5550

5286

264 (less)

1000 cc to 1500 cc

2863

8589

9534

945 (more)

More than 1500 cc

7890

23670

24305

635 (more)

 

  • Premium paid for third-party liability plans will be collected for the entire term of 3 years and shall be evaluated and recognized on a yearly basis.

Conclusion

The decision in relation to 3rd party insurance plans has been incorporated for policies sold after September 15, 2018. It is only wiser for the buyer to compare and purchase third party car insurance online to cover their precious vehicle against potential risk.

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