Cars, two-wheelers set to become expensive in India from June 1, govt announces insurance premium hike

The Ministry of Road Transport and Highways has issued a notification announcing that the prices of the third-party insurance premiums will be hiked in the Indian market from June 1. The announcement came from the Ministry instead of the Insurance Regulatory and Development Authority of India (IRDAI), the nodal body for insurance companies in India. The hike in third party insurance will result in a price increase of all vehicles in India, including four-wheelers and two-wheelers. The increased vehicle prices will pose trouble for OEMs in India already struggling with chip crunch and raw material shortage. 

Here's how much third-party insurance price hike is expected for different vehicle categories-

As per the notification, motorcycles in the Indian market will witness a 15% premium hike. However, the hike only affects bikes over 150 cc in the Indian market, such as Bajaj Pulsar, KTM RC 390, Royal Enfield Bullet and many others in the segment. Making things harder for the middle-class of the country, the masses will have to pay 17 per cent more insurance premium on a new two-wheeler in India. Combined with the recent price hikes by the manufacturers the hike will add to the struggles of people.

Also read: Hyundai recalls over 2 lakh cars in US and Singapore for exploding seat belt parts

Moving on, private cars falling in the 1000 cc to 1500 cc segment will see a 6 per cent hike in the third-party insurance premium. The surge, when combined with recent manufacturer price hikes, will exacerbate people's difficulties. Adding to it, a third party premium for a new private car will be increased by 23% for all the cars with engines up to 1000 cc. Moreover, new cars with engines between 1000 cc to 1500 cc will witness an increase of 11 per cent in the third party insurance premiums.

Private cars with an engine capacity between 1,000 cc and 1,500 cc will attract rates of Rs 3,416 compared to Rs 3,221, while owners of cars above 1,500 cc will see a drop in premium from Rs 7,897 to Rs 7,890. Two-wheelers over 150 cc but not exceeding 350 cc will attract a premium of Rs 1,366, and for over 350 cc, the revised premium will be Rs 2,804.

According to the ministry's notification, a discount of 7.5 per cent on the premium shall be allowed for hybrid electric vehicles. While electric private cars not exceeding 30KW will attract a premium of Rs 1,780, those exceeding 30 KW but not 65 KW will attract a premium of Rs 2,904. The premium for goods carrying commercial vehicles exceeding 12,000 kg but not 20,000 kg will increase to Rs 35,313 from Rs 33,414 in 2019-20.

In the case of goods carrying commercial vehicles exceeding 40,000 kg, the premium will increase to Rs 44,242 against Rs 41,561 in 2019-20. "A discounted price of 50 per cent of the premium has been allowed to a private car registered as vintage car," it said. According to the notification, a discount of about 15 per cent on the premium has been allowed for electric vehicles.

At the start of the year, multiple major OEMs like Maruti Suzuki, Toyota, Mahindra and Tata had increased the prices of their model line up owing to the shortage of raw materials. Moreover, the prices of two-wheelers in the Indian market also increased during the first quarter of the year.

With inputs from PTI