Motor insurers want third-party premiums freed from fixed rates, according to reporting by The Economic Times. They also want to end knock-for-knock pacts between insurers.
For you, that could mean your car or bike insurance costs more or less, depending on the insurer. Nothing has changed yet. This is a request, not a rule.
Key takeaways
- Insurers are asking to set their own third-party premiums, as reported by The Economic Times.
- Today, the insurance regulator fixes these rates for each vehicle type.
- Knock-for-knock pacts let insurers pay their own customers' repairs, whoever was at fault.
- Nothing is approved. Your current renewal price stays the same.
- If approved, prices could vary more from one insurer to another.
How third-party premiums work today
Third-party cover pays for harm you cause to other people. That means injury, death or damage to their property. Indian law requires every vehicle owner to have it.
Right now, IRDAI, the insurance regulator, sets the third-party price. It's the same at every insurer for a given vehicle type and engine size. So you can't shop around for a cheaper rate on this part.
The own-damage part is different. It pays for repairs to your own vehicle. Insurers set that price themselves, so it already varies.
What are knock-for-knock pacts?
Picture two cars that bump into each other. Each driver's insurer pays for its own customer's repairs. Nobody argues about who was at fault. It saves time and legal cost.
According to the report, insurers want these pacts to end. The headline doesn't tell us why, so we won't guess. Ending them could mean more back-and-forth between insurers. That's a possible effect, not a reported one.
What could change for your bill
Here's a simple example. Say your car's third-party premium is ₹3,000 and the own-damage premium is ₹7,000. Your yearly bill is ₹10,000.
These numbers are only for illustration. They aren't forecasts, and no rise or fall has been announced.
| Case (example only) | Third-party premium | Own-damage premium | Yearly total |
|---|---|---|---|
| Today | ₹3,000 | ₹7,000 | ₹10,000 |
| Third-party up 10% | ₹3,300 | ₹7,000 | ₹10,300 |
| Third-party up 20% | ₹3,600 | ₹7,000 | ₹10,600 |
| Third-party down 10% | ₹2,700 | ₹7,000 | ₹9,700 |
So a 10% change on this part is only ₹300 a year. The own-damage part stays as it is.
Who is affected
Almost every vehicle owner would feel some effect if rules change. Some groups would feel it more.
- Two-wheeler owners: Their premiums are small, so the rupee change would be small too.
- Car owners: You'd see more price gaps between insurers on the third-party part.
- Taxi and truck owners: They pay for many vehicles, so a small change adds up fast.
- Buyers using a loan: Insurance is part of the on-road cost. Use the EMI calculator to see how a higher cost changes your monthly payment.
What to do now
You don't need to act today. A few calm habits will serve you well.
- Don't renew early out of fear. Premiums haven't changed.
- Renew on time. Third-party cover is a legal must, and a lapse can bring a fine.
- Compare own-damage quotes from two or three insurers each year.
- Check your policy papers to see what your insurer covers.
- Follow the news hub for updates if the regulator decides.
Frequently asked questions
Will my car insurance cost more now?
No. Nothing has been approved, so your renewal price stays the same for now. Any change would need a decision first.
What is a knock-for-knock agreement?
It's a deal between insurers. Each pays for its own customer's vehicle repairs after a crash, whoever was at fault.
Do I still need third-party cover?
Yes. It's required by law for every vehicle on the road. Driving without it can bring a fine.
BankCreds analysis
This is a request, not a decision. Rules on third-party premiums are set by the regulator, and nothing has been approved. Your next renewal won't change because of this report.
Who gains and who loses
Think of a family with one car and a ₹3,000 third-party premium. A 10% rise adds just ₹300 a year. That's small next to fuel and EMI costs.
The bigger effect would fall on people with many vehicles. A small taxi owner with five cabs would pay five times the change. Safe drivers with clean records might gain if prices follow risk. Owners of older or high-risk vehicles might pay more.
The knock-for-knock part matters less to you day to day. Your claim is still handled by your own insurer. Don't over-read this as a sure price hike.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- The Economic Times — originating report https://m.economictimes.com/industry/banking/finance/insure/motor-insurers-seek-third-party-premium-deregulation-end-to-knock-for-knock-pacts/articleshow/135002304.cms
- IRDAI — The insurance regulator that oversees motor insurance rules and third-party premiums https://irdai.gov.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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