Now, gear up for a longer term in third-party insurance

Beginning September 1, motor third party (MTP) insurance for new cars and two-wheelers will be issued for a longer duration as opposed to one year now. From next month, motor third party insurance for new cars will have to be purchased for a period of three years. For new two-wheelers, the cover will mandatorily be for five years. SC order The move follows a Supreme Court order and a circular from insurance regulator IRDAI directing general insurers concerned to implement the order and notifying the long-term premium rates. On whether the duration of the cover would remain the same at the time of renewal, sources in IRDAI said the choice was left to the policyholder. Unlike own damage premium, which is calculated by insurers, MTP premium rates are notified by IRDAI every fiscal. As per the long-term MTP rates, for new cars below 1,000 cc, the three-year premium will be Rs. 5,286. The premium for a year now is Rs. 1,850. In the case of new cars of 1000–1500 cc, the long-term premium will be Rs. 9,534 (Rs. 2,863 for a year now). For cars above 1,500 cc, the premium has been pegged at Rs. 24,305 (Rs. 7,890).

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