The ministry of road transport and highways has approved an increase in the third-party motor insurance premium rates for various categories, which will result in the premium rates going up from June 1.

Motor insurance comprises two parts — the mandatory third party liability insurance for which the rates are prescribed by the government in consultation with IRDAI.

The second part is the optional own damage cover for which the rates are determined by the insurance companies. The increase in third party liability premium is expected to jack up the insurance costs of cars and two-wheelers, not just for plain liability cover but also for comprehensive policies.

According to a gazette notification dated May 25 from the ministry of road transport and highways, the annual rate of third-party insurance for private cars with engine capacity between 1000 cc and 1500 cc has been raised to Rs 3,416 in 2022-23 from Rs 3,221 in 2019-20.

Larger private vehicles having engine with a capacity of more than 1500 cc will have to pay Rs 7,897 as base premium, up marginally from Rs 7,890 in 2019-20. For two wheelers with engine capacity between 150 cc and 350 cc, the third party premium rate has been set at Rs 1,366 against Rs 1,193 in 2019-20.

The increase in premium comes after a gap of two years with the insurance regulator through a notification dated March 27, 2020, having kept the existing third party rates unchanged from the rates set for 2019-20.

Electric vehicles

The prescribed base third party rates have seen a marginal increase for electric vehicles. Premium rates for private electric cars with a battery capacity between 30KW and 65 KW have been increased from Rs 2738 in 2019-20 to Rs 2904 in 2022-23.

Electric two wheelers with a battery capacity between 7KW and 16KW will now have a third party liability rate of Rs 1161 against Rs 1014 in 2019-20.