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Vehicle insurance premiums to increase from June 1 – here’s how much the new premiums will cost you

May 26, 2022, 10:39 IST
Business Insider India
Motor insurance premiums could increase soonUnsplash
  • Insurance premiums are increasing from June 1st, after a draft proposal by the government proposed hikes in third-party cover was notified.
  • Now that the proposal has been passed, vehicle owners have to shell out up to 21% more for third-party insurance.
  • Insurance premium rates are usually revised annually, but the government had frozen rate hikes for two years.
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Vehicle insurance premiums are all set to increase from June 1st, after the government’s proposal was accepted by the relevant stakeholders. According to the now-approved proposal by the Ministry of Road Transport, third-party motor insurance premiums have seen an increase of up to 21%, making it more expensive than ever to insure your car or two-wheeler.

Insurance premiums have not been revised for two years, since the onset of the COVID-19 pandemic. The last revision was done in 2019-20, and this could be the justification behind the relatively steep hike proposed by the ministry.

It is worth noting that third-party insurance premium rates are revised by the Insurance Regulatory and Development Authority of India (IRDAI) every year.

Third-party insurance is mandated by law, which means the increase in insurance premium will be passed on to vehicle owners. Third-party insurance covers damage to others in a road accident, and is mandatory alongside cover for own damage.

However, if you want to avoid this, you can renew your vehicle insurance policy before June 1, 2022.

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Interestingly enough, there is a 5% decrease in the premium for two wheelers with an engine capacity of 75-150cc. Premiums for private cars above the 1,500cc capacity also see a nominal increase of ₹7.

Proposed third-party insurance premium rates from 2022-23:



ParticularsOld rateNew rateChange
Cars 1000cc₹2,072₹2,0941%
Cars 1000-1500cc₹3,221₹3,4166%
Cars >1500cc₹7,890₹7,8970%
Two wheelers <75cc₹482₹53812%
Two wheelers 75-150cc₹752₹714-5%
Two wheelers 150-350cc₹1,193₹1,36615%
Two wheelers >350cc₹2,323₹2,80421%

Source: Insurance Regulatory and Development Authority of India

Government proposes a discount of 15% for electric vehicles



In order to further incentivise electric vehicle sales, the government has also proposed a discount of 15% on the premiums for electric cars and two wheelers.
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Apart from this, a 7.5% discount has been proposed for hybrid electric vehicles.

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