Govt proposes an 85 per cent hike in insurance premium for cars with less than 1000cc motor.
Third party insurance is going to become even more expensive that also very soon because the Insurance Regulatory and Development Authority (IRDA) has proposed increase in the payable premium. Being proposed at 85 per cent, this revision will hit the hardest on the new entries level segment (1000cc). With the 1000-1500cc, a minimum increase of 1.4 per cent and the over 1500cc will see a 45 per cent increase in premium.
According to sources, considering the high graph of accidents in this space is the reason the maximum increase was suggested for the entry-level segment for first-time car owners. For commercial vehicles also, the third-party cover will go up from 30 per cent.
Unlike the Own damage insurance, the third party insurance is mandatory for all vehicles, commercial or private, which also covers claim of victims other than the car owners.
Because the insurance companies have to sustain losses in this area because of high owning up of outrageous claims is the main reason the hike was proposed for. These outrageous claims at times are two hundred times more than the actual cost of loss. Also high premium can go towards minimizing these losses.
Also due to these hikes, sources say Own Damage Insurance premiums are also expected to be hiked soon.