If you are planning to buy your dream car or bike, then get ready to pay more. The prices have increased as IRDA has made the long-term third-party insurance compulsory for all new two-wheelers and four-wheelers as per an order from the Supreme Court. Hence, with the addition of the cost of long-term third-party insurance, the overall cost of the cars and bike will increase.

As per the new rule effective from 1st September 2018, all general insurance companies should only offer a 3-year Third-Party Car Insurance Policy for new cars and 5-year Third-Party two wheeler insurance for new bikes. Previously, the rule was that only one year worth of premium would be paid towards Third Party Insurance and later the owner can get it renewed annually. But, now there is no such provision. Long-Term Motor Third-Party Insurance is a mandatory law in India. The apex court while referring to the suggestions of the Supreme Court Committee on Road Safety, figured out that over 1 lakh people were dying in India every year in road accidents.

Former apex court judge, KS Radhakrishnan, headed the committee appointed by Supreme Court and urged the Supreme Court to make Third Party Insurance compulsory for an extended period rather than having it for just one year. The idea behind the same was to ensure that the road accident victims could get proper compensation. Also, he requested the insurance firms to look at the situation with a human point of view rather than a commercial point of view. Based on this, long term car insurance and long term two wheeler insurance for third party policy is introduced.

It was pointed out by the committee that over 18 crore vehicles are plying on Indian roads out of which only one-third of the total, which is six crore vehicles, have third party insurance. This is the main reason why road accident victims are not getting adequate compensation.

However, let’s know the in-depth meaning of Third Party Motor Insurance

A Third Party Motor Insurance offers cover against any legal liability to a third party caused when you are at fault. Any losses arising due to damages or injury caused by the insured to a third party or third party’s property are covered under the Third Party Vehicle Insurance policy. As per the Indian Motor Vehicles Act, 1988, a Third Party Motor Insurance cover is a must and a fundamental requirement under a vehicle’s insurance policy.

With the onset of the new rule, the Third-Party Insurance for the three-year insurance.

• for cars under 1,000 cc engine will now cost Rs 5,286.
• for cars with the engine capacity between 1000-1500cc will cost Rs. 9,534
• for cars with the engine capacity above 1,500cc will cost an immense amount of Rs. 24,305

On the other hand, the five-year Third-Party Insurance for two-wheelers

• with an engine capacity of below 75cc will cost Rs 1,045.
• two wheelers between 75-150cc engine will cost Rs. 3,285,
• or bikes between 150-350cc, will cost Rs 5,453 and
• the bikes above 350cc engine capacity will come with an insurance policy that costs Rs 13,034.

But As per IRDA norms, there is a limit to damages covered for damage to other vehicles. If damages are more than the upper limit, the balance has to be paid by the policyholder himself.

• The third-party damages are covered up to a sum of Rs. 1 lakh for 2 wheelers.
• The third-party damages are covered up to a sum of Rs. 7.5 lakh for 4 wheelers.

Comprehensive or Third Party Insurance Policy

Comprehensive Insurance Policy is over and above Third Party

• covers damages caused to your vehicle, or to you, or another vehicle or person due to collisions, stealing, natural calamities such as flood, man -made calamities and even fire.
• covers all kinds of damages, except for the loss suffered while drinking under the influence of alcohol or drugs or without a policy or license.

The table below shows the Difference between Third Party Motor Insurance and Comprehensive

Our article Difference between Third Party and Comprehensive Insurance Policy for Cars and Bikes answers questions like What is the difference between Third Party Insurance Policy and Comprehensive Policy? Which policy should you go for? How does a Third Party Damage work? Which documents must you carry while driving? Choosing the correct insurance policy matters. Not all insurance types offer widespread coverage.

Plan well before buying a vehicle for yourself and don’t forget to buy the mandatory motor insurance.