If you’re renewing your car or bike insurance this year, be prepared to shell out more. The Insurance Regulatory and Development Authority of India (IRDAI) has recommended an upward revision in motor third-party (TP) insurance premiums, which could soon be notified by the Ministry of Road Transport and Highways (MoRTH). Once approved, the new rates will make the mandatory portion of your motor policy costlier, affecting both private owners and commercial fleets.

A Quick Refresher: What is TP Insurance?

Third-party insurance is the compulsory part of every motor policy. It covers:

• Injury or death of a third person caused by your vehicle.

• Damage to third-party property.

Unlike comprehensive insurance, TP does not cover your own vehicle damage — but it’s legally mandatory under the Motor Vehicles Act.

Why Are Premiums Rising?

The last few years have seen multiple stress points for insurers:

• Rising claim payouts – Court-mandated compensation and settlements have gone up.

• Medical inflation – Higher hospitalisation costs push up personal injury claims.

• Costlier repairs – Spare parts and labour have become more expensive.

• Pandemic after-effects – Insurers’ TP loss ratios worsened during COVID, as claims outpaced premium inflows.

Insurers argue that TP pricing hasn’t kept pace with these realities, leading to sustained underwriting losses.

Premium Hikes Over the Years

To put things in perspective, TP premiums have seen periodic revisions. Here’s a snapshot:

*Proposed – yet to be finalised.

Current vs Proposed TP Premiums (Illustrative)

(Figures are illustrative, based on industry reports and IRDAI proposals)

Who Will Be Most Affected?

• Commercial fleets (buses, trucks, goods carriers) – higher liability exposure means steeper hikes.

• Private car owners – moderate increases, but still noticeable.

• Two-wheeler riders – smaller hikes, but given India’s ~200 million two-wheelers, this has a wide impact.

How the Process Works

The approval mechanism is straightforward:

1. IRDAI recommends revised premiums.

2. MoRTH reviews the proposal.

3. Final rates notified in the Gazette.

4. Insurers implement the new TP rates on policy renewals from the effective date.

What You Should Do Now – Action Checklist

✔ Compare renewals – Even though TP rates are fixed, insurers compete on comprehensive + add-on pricing.
✔ Evaluate add-ons – Drop unnecessary covers if cost-cutting is a priority.
✔ Use No-Claim Bonus (NCB) – Maintain a clean claims record to save on own-damage premium.
✔ Consider long-term TP cover – For two-wheelers, multi-year TP plans can lock in today’s rates.
✔ Fleet managers: Reassess contracts and allocate budget for higher per-vehicle insurance costs.

Final Takeaway

The proposed TP premium hike is part of a larger effort to bring insurance pricing in line with actual claim realities. While the increases may seem burdensome, they are aimed at ensuring the long-term sustainability of the motor insurance ecosystem. For vehicle owners, the key is smart renewal planning, comparison shopping, and making the most of discounts and bonuses to soften the blow.