Motor Insurance Price Hike: Making The Best of The Situation

By | April 10, 2017

Motor Insurance Price Hike: Making The Best of The Situation

In a move that will hit consumers, non-life insurance has become costlier from April 1, 2017.

The Insurance Regulatory and Development Authority (IRDA), the apex body of our insurance industry, has proposed a hike in Two Wheeler Insurance and Car Insurance. The hike in insurance can be anywhere between 10% and 50%. The hike is applicable to third party insurance, which will result in higher insurance premiums.

Related Reading: Car, Health Insurance May Cost More

What the new proposal stipulates

In Car Insurance, there is no hike proposed on premiums for small cars – those with engine capacity under 1000 cc. The hike is for mid-sized cars in the 1000 cc to 1500 cc capacity. Bigger vehicles such as SUVs will see a higher increase, to the tune of 50%.

Among two wheelers, there is no increase in premiums for vehicles under 75 cc. Two wheelers above 75 cc and below 150 cc will see a 16% rise in the third party insurance premiums. Above 150 cc, the premium costs may go up by 40%.

While this will be unpleasant to the populace at large, premium hikes have been a regular affair. As per the IRDA, this is inevitable due to the rising costs of customer service every year.

Impact on customers

Let’s look at how these price hikes will impact your insurance budget.

Given below is the proposed hike on third party insurance of cars and motorcycles having different engine capacities.

The data given are ballpark estimates of the new third party premium costs. There could be small variations in the cost across different insurance companies.

Engine capacity of car Current third party insurance Proposed third party premium Increase in the premium
Below 1000 cc Rs. 2055 Rs. 2055 0%
1000 cc – 1500 cc Rs. 2237 Rs. 3132 40%
above 1500 cc Rs. 6164 Rs. 8630 40%
Engine capacity of two wheelers
Below 75 cc Rs. 569 Rs. 569 0%
75 cc – 150 cc Rs. 619 Rs. 720 16%
150 cc- 350 cc Rs. 693 Rs. 970 40%
Above 350 cc Rs. 796 Rs. 1114 40%

What vehicle owners can do

The cost of insurance is going to rise by nearly half for some vehicle owners. Therefore, here are some thoughts for those vehicle owners who might be hit the hardest.

Go online, compare insurance products: You don’t have to stick to your current insurance plan. You have the option to move on. The best way to do this is to compare various insurance options that are online. This would allow you to control the levers of your insurance search, and you would be able to narrow down on the product that is best suited to your needs. You would also be able to compare products by prices, and you may find the one that fits your budget.

Related Reading: How To Buy The Best Car Insurance

Avoid claiming minor expenses: It is tempting to cover your repair costs through insurance, but if you can avoid making minor claims, you can earn discounts on premium. By making a claim, you lose out on your No Claim Bonus (NCB), which you receive after a claim-free year. Therefore, you should use your insurance only if major damages have been caused to your vehicle.

Never miss policy renewals: Do not skip buying vehicle insurance. If you miss your car insurance renewal, your cover would terminate. Buying a new cover means you may have to pay an even higher insurance premium. It may even mean rejection if you’re looking to buy a comprehensive cover and your vehicle is found unfit upon inspection.

Drive carefully: This is a no-brainer. The best “insurance” you can give yourself is your own road discipline and skilled vehicle handling. Its importance cannot be overstated. Follow the traffic rules, give the right of way, and be considerate to pedestrians. Maintain the two-second rule. These habits would significantly reduce your chances of an accident, thus saving you not just from bodily harm but also from incurring costly repairs and insurance claims.

While the motor insurance premium hike may come as a bump on the road for insurance seekers, they can gain from some smart purchasing and safe driving.


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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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