Third Party Motor Insurance Rates (FY 2017 – 2018)

It’s that time of the year when I.R.D.A. (Insurance Regulatory & Development Authority) announces new T.P. Rates for Motor Insurance to be followed by all Insurers pan India.  Every year there is an increase/decrease in these rates that the regulator calculates on the basis of claims ratio & other important criteria.

The formula for the same & calculation method is detailed for your reference here.

This year I have compiled the data along with previous year rates so that increase is clearly evident for easy calculation at a glance.


Revised Motor Third Party Premium w.e.f. 01/04/2017 by I.R.D.A.

2 Wheelers

Current

Previous

a)    Not exceeding 75 C.C.

569.00

569.00

b)    Exceeding 75 C.C. but not exceeding 150 C.C.

720.00

₹ 619.00

c)    Exceeding 150 C.C. but not exceeding 350 C.C.

887.00

693.00

d)    Exceeding 350 C.C.

₹ 1,019.00

796.00

Private Car

Current

Previous

a)    Not exceeding 1,000 C.C.

2,055.00

2,055.00

b)    Exceeding 1,000 C.C. but not exceeding 1,500 C.C.

2,863.00

2,237.00

c)    Exceeding 1,500 C.C.

7,890.00

6,164.00

Goods Carrying Public Carrier (Other than 3 Wheeler)

Current

Previous

a)    G.V.W. not exceeding 7,500 K.G.

14,390.00

14,390.00

b)    G.V.W. exceeding 7,500 K.G. but not exceeding 12,000 K.G.

19,667.00

15,365.00

c)    G.V.W. exceeding 12,000 K.G. but not exceeding 20,000 K.G.

28,899.00

22,577.00

d)    G.V.W. exceeding 20,000 K.G. but not exceeding 40,000 K.G.

31,626.00

24,708.00

e)    G.V.W. exceeding 40,000 K.G.

33,024.00

25,800.00

Goods Carrying Private Carrier (Other than 3 Wheeler)

Current

Previous

a)    G.V.W. not exceeding 7,500 K.G.

₹ 7,938.00

7,849.00

b)    G.V.W. exceeding 7,500 K.G. but not exceeding 12,000 K.G.

₹ 14,330.00

11,528.00

c)    G.V.W. exceeding 12,000 K.G. but not exceeding 20,000 K.G.

9,871.00

9,390.00

d)    G.V.W. exceeding 20,000 K.G. but not exceeding 40,000 K.G.

14,805.00

12,821.00

e)    G.V.W. exceeding 40,000 K.G.

21,318.00

16,655.00

Goods Carrying Motorized Pedal Cycles & 3 Wheelers

Current

Previous

a)    Public Carrier

E Carts

3,969.00

3,969.00

Except E Carts

₹ 5,680.00

₹ 5,680.00

b)    Private Carrier

E Carts

3,438.00

3,438.00

Except E Carts

₹ 4,200.00

₹ 4,200.00

Trailers

Current

Previous

a)    Agricultural Tractors upto 6 H.P.

₹ 653.00

510.00

b)    Other Vehicles including Miscellaneous & Special type of Vehicles

1,673.00

1,307.00

Note: This rate is for one trailer, for more trailers, multiply by no. of trailers.

Passenger Carrying for Hire or Reward

4 Wheelers with Seating Capacity less than 6 passengers

Current (A)

Current (B)

Previous (A)

Previous (B)

a)    Not exceeding 1,000 C.C.

6,396.00

1,230.00

6,396.00

1,230.00

b)    Exceeding 1,000 C.C. but not exceeding 1,500 C.C.

8,408.00

1,035.00

8,408.00

1,035.00

c)    Exceeding 1,500 C.C.

₹ 11,144.00

1,183.00

₹ 11,144.00

1,183.00

Note: T.P. Premium is the total of a basic amount (A) plus an amount derived by multiplying the licensed carrying capacity by the amount in (B).

3 Wheelers with Seating Capacity less than 6 passengers

Current (A)

Current (B)

Previous (A)

Previous (B)

a)    E Rickshaw

1,440.00

689.00

1,125.00

538.00

b)    Except E Rickshaw

2,218.00

1,061.00

1,733.00

829.00

Note: T.P. Premium is the total of a basic amount (A) plus an amount derived by multiplying the licensed carrying capacity by the amount in (B).

Seating Capacity exceeding 6 passengers

Current (A)

Current (B)

Previous (A)

Previous (B)

a)    3 Wheelers

5,318.00

1,061.00

4,155.00

₹ 829.00

b)    4 or more wheeled vehicles

13,176.00

805.00

10,294.00

₹ 629.00

Note: T.P. Premium is the total of a basic amount (A) plus an amount derived by multiplying the licensed carrying capacity by the amount in (B).

Motorized 3 Wheeler carrying passenger for Hire or Reward

Current (A)

Current (B)

Previous (A)

Previous (B)

a)    With carrying capacity more than 17 passengers

12,189.00

745.00

10,294.00

629.00

Note: T.P. Premium is the total of a basic amount (A) plus an amount derived by multiplying the licensed carrying capacity by the amount in (B).

Motorized 2 Wheelers for carrying passengers for Hire or Reward

Current (A)

Current (B)

Previous (A)

Previous (B)

a)    Not exceeding 75 C.C.

790.00

₹ 532.00

702.00

₹ 473.00

b)    Exceeding 75 C.C. but not exceeding 150 C.C.

790.00

₹ 532.00

702.00

₹ 473.00

c)    Exceeding 150 C.C. but not exceeding 350 C.C.

790.00

₹ 532.00

702.00

₹ 473.00

d)    Exceeding 350 C.C.

2,067.00

₹ 532.00

1,615.00

₹ 473.00

Note: T.P. Premium is the total of a basic amount (A) plus an amount derived by multiplying the licensed carrying capacity by the amount in (B).

Miscellaneous & Special Types of Vehicles

Current

Previous

a)    Pedestrian controlled Agricultural Tractors with Horse Power rating not exceeding 6 H.P., Hearses & Plane Loaders

1,148.00

897.00

b)    Other Miscellaneous & Special type of Vehicles

₹ 4,892.00

3,822.00

Motor Trade (Road Transit Risk)

Current

Previous

a)    Distance not exceeding 2,400 K.M.

1,088.00

1,088.00

b)    Distance exceeding 2,400 K.M.

1,308.00

1,308.00

Motor Trade (Road Risk) (Excluding Motorized 2 Wheelers)

Current

Previous

Named Driver or Trade Certificate

a)    1st named driver or certificate

₹ 1,108.00

₹ 985.00

b)    Per additional Drivers / Certificates upto 5

₹ 536.00

476.00

c)    Per additional Drivers / Certificates more than 5 but less than 10

₹ 345.00

307.00

d)    Per additional Drivers / Certificates more than 10 but less than 15

₹ 299.00

266.00

Motor Trade (Road Risk) (For Motorized 2 Wheelers)

Current

Previous

Named Driver or Trade Certificate

a)    1st named driver or certificate

530.00

530.00

b)    Per additional Drivers / Certificates

264.00

264.00

Zero Depreciation Insurance

Zero Depreciation or Zero Dep. Insurance also called Nil Depreciation is the costliest & most beneficial policy available as on date.  Here, additional premium is demanded over & above the premium charged for vehicle value.

This policy includes Comprehensive as well as Third Party Insurance.  It rather is a extension of Comprehensive Insurance as it is an optional add-on, which can be opted to convert Comprehensive Policy to Zero Depreciation Policy.  This policy compensates Third Party expenses as well as the repairing cost of the damaged vehicle – that too without any deductions for depreciation whatsoever.

It is available for new vehicles only for upto 3 years by most of the companies & 5 years by some companies.  It does offers different options like :

  1. Normal Zero Dep. – Its the cheapest zero dep. version which covers damages to car body.
  2. Engine Zero Dep. – A bit costly as it additionally covers engine & engine fluids in addition to the above.
  3. Consumable Zero Dep. – Its the costliest version with maximum benefits & covering each & every part of the vehicle, even tyres too.

Additional benefits of Zero Dep. Policy are as follows :

  1. Emergency Transport & Hotel Expenses.
  2. Loss of Personal Belonging.
  3. Key Replacement.
  4. Roadside Assistance Cover (Offered by some, while some charge for it).

Other benefits may vary from company to company.

Comprehensive Insurance – Part 02 (Discounts)

There are a few discounts offered in Comprehensive policy which are :

  1. Company Discount.
  2. N.C.B. (No Claim Bonus) Discount.
  3. Occupation & Membership Discount.
  4. Voluntary Deductible.
  5. Anti Theft Device Discount.

Company Discount :

Every insurer offers different % of discount on all brand & model which is called Company Discount.  This discount % varies from insurer to insurer for every particular brand & model from year to year.  Its higher in the initial years & reduces gradually & subsequently.

N.C.B. (No Claim Bonus) Discount :

N.C.B. (No Claim Bonus) Discount is nil/zero in the first year & increases gradually & subsequently – if there is no claim taken over period of time.  Once a claim is filed in a particular year, it starts from nil/zero in the subsequent year.  Discount slab is as under :

N.C.B. Slab

Occupation & Membership Discount :

People involved in Low Risk Occupations (like Scientists, Doctor, Engineers, Teachers, Nurses, Pilots etc.) can avail of Occupation Discount as statistically people in these professions exercise less risky driving behaviors than those engaged in other jobs.

Military Discounts can be availed by Army Personnel while Employees of certain companies can get benefit in form of Corporate Discounts.

Being a member of certain Professional Organisation, Auto Clubs (like A.A.I.), Credit Union (like Banks) etc. entitles you to pre-specified Membership Discounts.

Some companies also offer Age Discount.

Voluntary Deductible :

If you opt to bear a certain amount of loss on every claim you make, then that is called Voluntary Deductible & it entitles you to certain discount in your premium.

Voluntary Deductible

There is a Compulsory Deductible in every policy, the amount of which varies depending upon vehicle type.  If you opt for Voluntary Deductible then you got to bear the loss of Voluntary Deductible + Compulsory Deductible in every claim you make.

Anti Theft Device Discount :

If the vehicle is fitted with Anti Theft Devices approved by A.R.A.I. (Automobile Research Association of India) then Vehicle Owner is entitled for discount of 2.5% of O.D. Premium or max. of Rs. 500/-.

Comprehensive Insurance – Part 01 (Valuation)

Also known as First Party Policy or Package Policy – it is one level higher & is costly than Third Party Insurance, as valuation of the vehicle is done & additional premium charged for insuring the vehicle upto that value.  This part of Premium is termed as O.D. (Own Damage) Premium & is derived after applying all add-on charges/discounts/loading etc.

I.D.V. (Insured Declared Value) is the sum insured, upto which value the claims can be paid for in a particular policy period.  It is fixed at the time of policy issuance & derived on the basis of listed selling price of brand & model for the first year & later on :

  • 10% depreciation is applied each subsequent year.
  • Pre-defined values, reviewed on regular basis, are used.
  • Following table is used.

T.L. & C.T.L. I.D.V. Chart

For the T.L. (Total Loss) or C.T.L. (Constructive Total Loss) vehicles valuation is done on the basis of these numbers only.  A vehicle is considered as C.T.L. when the retrieval/repair cost exceeds 75% of the I.D.V.

If any additional Accessory (like Side Car in Two Wheelers, Alternate Fuel Kit (C.N.G./L.P.G.) in Cars or any such other accessory) is used then its valuation is also done as per above method.

Optional add-on is also offered along with this policy which comes in handy for the Vehicle Owner, its R.S.A. (Road Side Assistance).

R.S.A. (Road Side Assistance) :

When will the vehicle break down or when some unfortunate event would take place, is a thing which can’t be anticipated or avoided, this is where R.S.A. comes in handy.

R.S.A. provides 24×7 spot assistance in case of any unforeseen situations by offering medical co-ordination & legal advice (if required) in addition to mechanical assistance, fixing flat tire, minor repairs, towing assistance etc.

On paying additional premium (varies from company to company) Vehicle Owner can avail this benefit.

Third Party Insurance

Third Party Insurance is also known as T.P. Policy or Liability Only Policy.  It is the basic insurance policy as well as the cheapest insurance option available.

This policy does not evaluates the vehicle or any other accessories installed, so no claim whatsoever is entertained for damage to the same under any circumstances.  The premium charged is only for covering the following risks :

  1. Third Party Liability.
  2. Personal Accident.
  3. Alternate Fuel.

Third Party Liability :

All damages done to any another person/property by the insured vehicle are Third Party damages & are payable under this policy.  Premium varies depending on Vehicle Category based on their :

  • No. of Wheels – 2 Wheeler, 3 Wheeler, 4 Wheeler etc.
  • Cubic Capacity – Below 1000 CC, 1000 – 1500 CC, Above 1500 CC etc. (Cars).
  • Nature of Use – Private, Public, Goods Carrying, Passenger Carrying, Miscellaneous etc.
  • & more.

These premiums are decided by I.R.D.A. (Insurance Regulatory & Development Authority) & renewed time to time on yearly basis.

Compensation can be claimed in case of Third Party damage, injury or death once the F.I.R. has been filed.

Personal Accident Insurance :

Accidents can happen anywhere, anytime & to anyone, especially while commuting.  Driver, Cleaner & Passengers do travel in the vehicle & in case of any unfortunate event they may lose their life.  It can be, that the person commuting in the vehicle is the only bread winner in his/her family & they may have to suffer severe financial losses in addition to the emotional loss (which is non measurable in terms of monetary compensation).

In order to provide some financial stability & security to the family of the deceased, insurers offer Personal Accidental Cover along with the Motor Policy.  Depending on the choice of Vehicle Owner, he may pay additional premium to cover :

  • Driver.
  • Cleaner.
  • Passengers.

Compensation can be claimed only in case of death & no claim is entertained in case of injury.

Alternate Fuel Insurance :

Vehicles are manufactured to run on conventional fuels like Petrol & Diesel but nowadays C.N.G. & L.P.G. are also used to run automobiles as their running cost is low.  Additional premium is therefore charged for these fuel types.

Hence we can conclude that Third Party policy simply covers the liability payable to the Victim (other person involved) in unfortunate event of an accident & no claim of any sort is payable to the Vehicle Owner for damage to his own vehicle however the other victims (driver/cleaner/passenger) can be insured & they will get compensated in case of death.

Understanding Motor Insurance

With the advent of technology in the field of automobiles, comfort (safety & luxury) has increased many fold in the way we commute & so has the vehicle maintenance & repairing costs.  Motor insurance is most important for all vehicle owners – as it protects them from huge repairing bills in unfortunate event of an accident.

Before we understand different policies, we should know who all are involved in the process of getting insured & procuring claim.  There are 2 parties involved in Getting Insured & 3 parties involved during Claim. These parties are namely :

  1. First Party – Vehicle Owner who purchases the Insurance Policy.
  2. Second Party – Insurance Company which covers the risk by selling the Insurance Policy.
  3. Third Party – Victim (other person involved) in unfortunate event of an Accident.

Now, let’s move forward to understand what options are available with the vehicle owners to get their daily & highly used asset insured.  There are 3 types of Motor Insurance available which are as follows :

  1. Third Party Insurance.
  2. Comprehensive Insurance.
  3. Zero Depreciation Insurance.

Third Party Insurance :

Third Party Insurance also known as T.P. Policy or Liability Only Policy is the basic insurance policy apart from being the cheapest option available.

This policy simply covers the liability payable to the Victim (other person involved) in unfortunate event of an accident & no claim of any sort is payable to the Vehicle Owner for damage to his own vehicle however the driver is insured & does gets compensated in case of death.

Comprehensive Insurance :

Also called First Party Policy or Package Policy – it is one level higher & is costly than Third Party Insurance, as valuation of the vehicle is done & additional premium charged for insuring the vehicle upto that value.

In addition to facilitating payment of claims to the Third Party, this policy compensates Vehicle Owner for the repairing of his damaged automobile but after making depreciation deductions according to the age of the vehicle & its damaged parts.  Different parts like glass, plastic, metal, rubber etc carry different depreciation %  which also varies according to vehicle age.

Zero Depreciation Insurance :

Zero Depreciation or Zero Dep. Insurance is the costliest & most beneficial policy available as on date.  Here, additional premium is demanded over & above the premium charged for vehicle value apart from the Third Party charges.

This policy compensates Third Party expenses as well as the repairing cost of the damaged vehicle – that too without any deductions for depreciation whatsoever.

Types of Insurance

Insurance can be classified into 3 broad categories, which are :

  1. Life Insurance.
  2. Health Insurance.
  3. General Insurance.

Life Insurance :

Life Insurance covers risks related to the human life.  It compensates normally in case of unfortunate Demise but nowadays contracting a Critical Illness also triggers Claim & Compensation is paid to the Insured/Nominee, as per the situation.

There are presently 24 Life Insurers operating in India, as per I.R.D.A.

Health Insurance :

Risks related to health like accidental injuries, ailments & diseases which lead to sudden unexpected huge expenses due to hospitalization & high medical costs can be taken care off, if we are covered under Health Insurance.

There are presently 5 Stand Alone Health Insurers serving Indian citizens according to I.R.D.A.

General Insurance :

Protection cover for all things other than Life fall under the category of General Insurance.  It covers everything from vehicles, buildings, electronics, machinery, raw material, finished goods, goods in transit, animals etc.

Health Insurance also falls under this category but due to its ever increasing utility, importance & awareness many companies deal specifically in it & are called Stand Alone Health Insurance Companies.  However, all General Insurers provide Health Insurance covers.

According to I.R.D.A. there are 28 General Insurance Companies working in India (Including 5 Stand Alone Health Insurers).

Principles of Insurance

As is with all the good & beneficial things in life it happens with Insurance also, that people start making misuse of the security that Insurance helps safeguard us from. Therefore, Insurance works on certain principles so that no one misuses it.

Principles of Insurance :

  1. Principle of Insurable Interest.
  2. Principle of Utmost Good Faith.
  3. Principle of Indemnity.
    • Principle of Contribution.
    • Principle of Subrogation.
  4. Principle of Proximate Cause.
  5. Principle of Mitigation.

Understanding Insurance

We all are familiar with the term INSURANCE but very few clearly know what it means, how it works & what exactly is its use. So, let’s understand all these aspects of Insurance.

What is INSURANCE ?

Insurance is an legal arrangement by which a company undertakes to provide a guarantee of compensation for specified significant loss, measurable in monetary terms, in return for payment of a specified premium, payable at regular intervals. Hence, insurance is –

  • a precaution or preparing in advance, for unfriendly future situations of life.
  • a way of protecting ourselves against sudden significant losses, which may otherwise affect us adversely.
  • Sudden significant losses are covered against the payment of regular small amounts called Premium.
  • a contract, between the Insured & the Insurer to cover the specified Events in exchange of timely periodic Payments.

In India, insurance is governed by the Indian Contract Act 1872.

How does INSURANCE works ?

INSURANCE distributes our sudden losses over a long period of time.

  • Insured person has to pay regular Premium over the Policy Tenure whereas the payout in case of a mishappening is always paid lump sum upto the Sum Assured.

INSURANCE does not minimizes or stops/ends our losses but compensates us for them.

  • Mishappenings can be avoided to some extent but they can’t be stopped. It’s here that Insurance compensates the insured for the risk cover opted in lieu of the regular premium.

INSURANCE distributes losses of a person among a large group of people facing a common risk.

  • Insurance works on the principle of quantity. A large group of people who face similar risk are grouped together. As all insured will not incur the losses at a particular time hence insurer compensates as & when any of the insured requires from that vast pool of funds.