September 1 will mark another historic change in on-road pricing calculations for brand new cars in India. The insurance regulatory and development authority of India (IRDA) has made it mandatory for companies to bundle a minimum three-year third party insurance plan with the purchase of a new car. The tenure will not change on request of the buyers or will of the dealerships selling a particular product.
However, buyers are free to choose any insurance plan that follows the minimum cover period and offer even additional protection to the vehicle or the owner. Overall, the buyer pays a huge premium over what they actually paid with the one-year policy. Here is an overview of how many times you need to pay, based on your car’s engine size. Also, these values are effective on brand new products.
- Under 1000cc – 2.9x
- Between 1000cc-1500cc – 3.3x
- Above 1500cc – 3.1x
The number clears how many times a buyer will need to pay in comparison to present day third party insurance value. Those getting a small car will benefit by paying the policy amount in one go as they will save 0.1 percent of the total amount while other segment buyers will pay 0.3 percent extra for their purchase. In all three cases, a person will need to pay the entire amount on the purchase.
In other words, a person buying a new Verna 1.6 petrol will pay INR 24,305 for third party insurance instead of INR 7860. Although, all the benefits will be passed on to the vehicle for the entire 3-year period. Overall, it means adding approx INR 16,000 or INR 6,600 or INR 3,400 plus the amount spent on first party cover for next 2 years will be the total increase in the on-road calculation for any car bought in India.