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Third Party Insurance Premium for Cars

Due to the rise in the number of claims made and poor loss ratios, insurers have taken the TP premium price hike into account. Not convinced? Okay, have you or anyone else you know met with an accident that took a life? It is not only sad but also a devastating event in anyone’s life.

Such people or their dependents deserve compensation, right? To prevent undue loss of any person driving on the road, the government has revised the third party premium for cars. IRDA the regulatory body dictates the amendment as per the Motor Vehicle Act.

Third Party Car Insurance Premium Rates

The third-party car insurance premium is charged based on the engine capacity.

Let’s have a look at the prices for the year 2019-20 vs 2022.

Private Cars with Engine Capacity	The premium for 2019-20 in INR	New 4W TP rate (effective 1st June 2022)
Not Exceeding 1000 cc	₹2072	₹2094
Exceeding 1000 cc but not exceeding 1500 cc	₹3221	₹3416
Exceeding 1500 cc	₹7890	₹7897

No rate hike has been proposed for private cars above 1500 cc. The prices may continue to rise in the coming years as well- both due to inflations and higher level of risks. Hence, the IRDA has allowed insurers to issue long-term policies, such as for 3 and 5 years- that not only gives you an insurance for less but also protects you long term so you need not stress for renewals every year!

Factors that impact the Third-Party Car Insurance Premium?

A third-party premium is based on the following:

The engine capacity of the car
Number of Third-Party Claims in the previous year
Increase in the number of cars on the road has resulted in a higher probability of accident rates. It, in turn, impacts the premium rise too

What’s Covered in Third Party Car Insurance?

Personal Damage to Third Party

In case of a Third-party’s death or physical injury due to an accident with the insured car. There is no limit to the sum insured.

Property Damage Compensation

In case damage occurs to someone’s vehicle, house or any property, There is a limit of ₹7,50,000

Personal Damage to Owner/Driver

In case the driver/owner of the car, unfortunately, faces physical injuries or death/permanent disability.

What’s not Covered in Third Party Car Insurance?

It is equally important to know what’s not covered in your Third party car insurance policy so that there are no surprises when you make a claim. Here are some such situations:

Why Third Party Car Insurance is Important?

Considering the number of claims that any insurance company receives for a third-party injury or deaths, the IRDA has made the third-party insurance a mandatory cover. It applies to all kinds of cars and benefits car owners for the following:

Fulfil Legal Compliances: As per the Motor Vehicle Act, 1988 you cannot drive a car on the road without at least a Third-Party Liability Policy. You can either choose from the basic, Third-Party Liability Policy or Comprehensive Package Policy.
Quantum of Liability: Car Insurance companies observed that the number of claims received under the TP Liability section of Motor Policies poorly impacted their loss ratio. As a result, to prevent the insurers to go bankrupt IRDA made the Third-Party Liability policy mandatory.

Events under which the car owner is liable to pay for Third-Party losses

In case of loss of life: There have been many cases, both reported and unreported that shows the increase in the number of accidents in India. That may be either because of poor driving, damaged roads, violation of traffic rules, over speeding or racing. If you are involved in an accident and are held liable for the loss of life or property, then you are liable to pay. The legally held liable party or his insurance company will have to make compensation.
In the case of severe injuries or disabilities: While driving you may hit anyone on the road leaving them injured with permanent/temporary disabilities. In either case, if you are legally held responsible then you or your insurer will have to raise allowance.