Costly Car Insurance In India
Maintenance of car in India is going to squeeze your wallet and put a strain on your monthly budget. After the continuous hike in car prices in the Budget 2012 and never ending rise of fuel prices, premiums on vehicle insurance is going to cost more in India.
First the Insurance Regulatory Development Authority (IRDA) increased the cost of third-party cover starting from 01 April, 2012 and then with the dismantling of the third party pool, it was suggested that the premium rates for owen damage cover for commercial vehicles will move up. Finally, service tax has gone up by 2%. Thus to counter the rising inflation, insurers are considering increasing the premiums for own damage cover. Individually, each of these factors may not pinch you that hard, but on a cumulative basis they will affect your premium rates-significantly.
There are two aspects of motor vehicle insurance – own damage and third party insurance cover coupled with the service tax.
Rise in Own Damage Premium:
According to the industry experts, own-damage insurance cover of private vehicles will increase by 5-6% this year on account of rising inflation.
Increase in Third Party Insurance Cover:
After the IRDA notification, the third party insurance for private cars has been increased by 2% to 6% from 01 April, 2012. For commercial vehicles, the increase is much steeper, from 10%to 36%. However, considering that third party premiums are comparitively less than own damage premiums, and consitute a miniscule of the total premiums, the hike, in case of private vehicles, will not hurt policy holders that much. For private cars (not exceeding, 1000 cc) the insurance cost has increased from INR 740 to INR 784.
Rise in Service Tax:
Increase in the service tax from 10% to 12% from this financial year will make insurance premium dearer. From now, the portions will be calculates on the increased premium rates, which will overall increase your tax outgo on motor insurance cover.
Seperately, you will have to bear a higher sum from your pocket in each and every claim for policies issued after 01 April 2012 as these policies will have higher deductibles now which is the amount paid by the policyholder before making a claim. Recently, IRDA increased the value of deductibles citing that compulsory deductibles had not been revised for 10 years and the cost of repairs is growing rapidly. Also keep in mind these reasons of denial of insurance claim.
For instance, for vehicles less than 1,500 cc, the excess is increased from INR 500 to INR 1,000. Similarly, for vehicles above 1500 cc, the deductible is INR 2,000 as compared to INR 1,000 earlier.