Indian roads are full of a large number of two and four wheelers without insurance, which made the Supreme Court passed a new order. It says, all the vehicles running on roads will be mandated to insure with three and five years third party insurance cover.
Two days ago, on August 28, Insurance Regulatory and Development Authority of India (IRDAI) issued a circular followed by a Supreme Court order dated 20th July 2018. As per the Supreme Court order, all the new cars and two-wheelers purchased after the 1st September will be provided with 3-year motor third party cover and 5-year policies respectively from the Insurers.
The mandate 5 years third-party motor insurance cover on all two-wheelers will consequently increase the prices of these products in the country. Under this scheme, the bikes purchased after the mentioned period will see a rise of 2.45-5.16 times. As of now, the premiums for motor insurance policies have to be paid on a yearly basis. Which clearly hints the bikes ranging from entry level like Honda Activa, Hero Splendor to mid segment Bajaj Dominar, Royal Enfield, to top end sport bikes will receive an increase in pricing.
Read also: Why Insurance is Mandatory for Bikes?
Third party insurance cover means a cover which insured the third party involved in an accident and gets injured or died. In this case, the third party will get the insurance claim from the insurance company if the owner of the vehicle found responsible for this misfortune. The new regulation will make the premium collection for the entire 5 years period at the time of sale of the two-wheeler.
The new order will be effected from 1st September 2018. With this new order, the insured two-wheeler owner will be benefited with options like a long-term package cover including motor third party insurance and own damage insurance for 5 years or a combination of 5-year term for the third party component and 1-year term for own damage. The own damage motor insurance cover will secure the vehicle against physical damage. In the long term, the two-wheeler owners will not be able to no claims bonus on own damage vehicles. The claim will only be provided when the police term comes to an end.
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Following this new order, the long-term premium rates for 5 years on two-wheelers will vary as per the capacity of vehicles, sold during the period 1st September 2018 to 31st March 2019. The premium rate for two-wheelers up to 75cc will be INR 1,045 while the two-wheelers ranging in the 75cc-150cc displacement will attract INR 3,285. On the other hand, the vehicles in the 150-350cc would make you shell out INR 5,453. While the insurance premium for the model above 350cc is INR 13,035 for the said period.