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No Change in Course Due to Hike in Third-Party's Insurance Premium
- DetailsWritten by PolicyBazaar -
- Hits : 1970 -
Modified 03 April 2014
Third party motor insurance premium is set to rise 20% from 1st April. A circular has been issued by IRDA last week telling the quantum of hike that is applicable to commercial vehicles, private cars and two-wheelers for the financial year 2014-15. The third party premium will rise up on renewing the policy this financial year. Its tariff is fixed by the insurance regulator every year. For private cars, the hike was in the region of 20% last year also.
According to industry watchers and insurers, the impact of this rise in premium will be nominal for car owners. CEO of insurance aggregator portal myinsuranceclub.com, Deepak Yohannan said that for private car owners, the maximum increase will be close to Rs 700. This rise of few hundred rupees should not worry the policyholders. According to Sanjay Datta, chief of underwriting and claims, ICICI Lombard General Insurance, the share of third party component for private cars in the whole premium is 15%. So, the premium will increase by 1-2% only.
Car owners having cars with less than 1000cc engine capacity will have to pay Rs 1,129 premium up by Rs 188. For cars with engine capacity between 1000cc and 1500cc, the increase in premium will be Rs 222. It will go up to Rs 4,109 for cars with engine capacity more than 1500cc.
There are two parts which make your comprehensive motor insurance policy – own damage component and third-party cover. The Third party cover kicks in when a person- whose property has suffered damage and who has sustained injuries in an accident that is caused by the insured's vehicle - has to be compensated. The Motor Claims Accident Tribunal determines the reimbursement payable in case of death or injury. Liability because of damage that is caused to the property is restricted to Rs 7.5 lakh.
Focus on the own damage component of the policy if the spike in premium will pinch your pocket as you can neither avoid buying third-party insurance nor control the third-party premium. This component covers those expenses which the policyholder incurs on repairing the car in case of an accident or a collision. It doesn't involve any third-party and is for your own consumption. The premiums for this component depend on the behaviour of your driving, pricing structure and the add-ons chosen.
Madhukar Sinha, national head of personal lines, Tata AIG General said that the policyholder can take measures to decrease the premium of the own damage component. One can go for voluntary deductibles like Zero Depreciation cover and Engine Protection cover, which will give direct discounts in the premium. Voluntary deductibles in which the initial expenses ranging from Rs 1,000 to Rs 25,000 could offer discounts of 5-25% depending on your insurance company. To retain the no claim bonus, one can avoid smaller claims of Rs 5,000 to Rs 10,000 which will reduce the renewal premium. Installing an anti-theft device and declaring a lower insured declared value are some other options.
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