In a recent development, the Centre has announced new base premium rates for third-party motor vehicle insurance. These revised rates, which will come into effect from June 1, 2022, aim to provide greater clarity and transparency in the insurance industry. The rates were last revised in the financial year 2019-20 and have remained unchanged during the COVID-19 pandemic. The new rates will impact private cars, two-wheelers, and electric vehicles, among other categories.

Private Cars Insurance Rates

For private cars not exceeding 1000 cc, the annual rate of third-party insurance has been fixed at Rs 2,094, up from Rs 2,072 in the previous revision. Similarly, for private cars with an engine capacity between 1000 cc and 1500 cc, the rate has been raised to Rs 3,416 from Rs 3,221. However, larger private vehicles with an engine capacity above 1500 cc will see a slight reduction in premiums, with the rates falling to Rs 7,897 from Rs 7,890.

Two-Wheelers Insurance Rates

When it comes to two-wheelers, the insurance premium will vary based on the engine capacity. Two-wheelers over 150 cc but not exceeding 350 cc will have a premium of Rs 1,366, while those over 350 cc will command a premium of Rs 2,804.

Electric Vehicle Insurance Rates

The newly notified rates also include insurance premiums for electric vehicles (EVs). A new private EV not exceeding 30 KW can be insured at Rs 5,543 for three years. If the EV exceeds 30 KW but is less than 65 KW, the three-year premium will be Rs 9,044. Larger EVs exceeding 65 KW will be insured at Rs 20,907 for three years.

Single Premium Options

Apart from the annual premiums, the notification also introduces single premium options for certain categories. For example, a new car not exceeding 1000 cc can be insured for three years with a single premium of Rs 6,521, while a car between 1000 cc and 1500 cc can be insured for three years with a single premium of Rs 10,640. Similarly, a new private vehicle exceeding 1500 cc will have a three-year insurance premium of Rs 24,596.

Two-Wheeler EVs Insurance Rates

For two-wheeler EVs, the five-year single premium options are available. Two-wheelers not exceeding 75 cc can be insured for five years with a single premium of Rs 2,901. For two-wheelers exceeding 75 cc but not 150 cc, the premium is Rs 3,851, and for those exceeding 150 cc but not 350 cc, the premium is Rs 7,365. Higher-powered EV two-wheelers with a capacity exceeding 16 KW can be insured for five years at Rs 12,849.

Impact on Policyholders

The new vehicle insurance rates will have a direct impact on policyholders, with some witnessing a slight increase in premiums, while others may benefit from reduced rates. It is essential for vehicle owners to review their insurance policies and understand the implications of the revised rates. By doing so, they can make informed decisions and ensure adequate coverage for their vehicles.

Benefits of the New Rates

The introduction of new vehicle insurance rates brings several benefits for policyholders and the insurance industry as a whole. Some of these benefits include:

1. Clarity and Transparency: The new rates provide clear and transparent guidelines for calculating insurance premiums, eliminating any ambiguity or confusion.
2. Better Risk Assessment: The revised rates take into account factors such as engine capacity, vehicle type, and usage, allowing for more accurate risk assessment by insurance companies.
3. Fair Pricing: The rates are designed to ensure fair pricing for insurance premiums, taking into consideration the specific characteristics of each vehicle category.
4. Improved Affordability: The single premium options for certain categories allow policyholders to pay a lump sum amount upfront, making insurance more affordable and convenient.
5. Enhanced Protection: By aligning the premiums with the risk profile of each vehicle category, the new rates ensure that policyholders have adequate protection in case of any unfortunate events.

Conclusion

The Centre’s notification of new vehicle insurance rates brings much-needed clarity and transparency to the industry. With revised premiums for private cars, two-wheelers, and electric vehicles, policyholders can make informed decisions and ensure adequate coverage for their vehicles. The introduction of single premium options further enhances affordability and convenience. It is crucial for vehicle owners to review their insurance policies in light of these changes and consult with insurance providers to understand the impact on their coverage. By doing so, they can ensure they are adequately protected and comply with the new rates set by the Centre.