A recent report claimed an almost 50% upsurge in insurance price across most of the models of passenger vehicles in 2017-18, as was proposed by the Insurance Regulatory and Development Authority of India. Third party insurance basically refers to the benefit of the policy which is granted to someone other than the two parties involved in the contract, ie, the car owner and the insurance company. The policy does not provide any benefit to the insured. However, it covers the insured's legal liability for death/disability of third-party loss or damage to the third-party property. This 'third-party insurance' will be made compulsory under this act, but the self damage insurance will remain optional.
This way, the cars are likely to benefit a larger amount of people even in the case of serious accidents or road injuries. This is the major reason the govt. has put forth the act, so as to provide the benefit of the insurance to the rightful person, as is mentioned in the insurance as third-party.
The act proposes to increase the premium of cars that have 1000 to1500 cc engine displacement. Sources said the final hike could be 25-30%. General Insurance Council's data show that out of 19 crore (approx.) registered vehicles in India only 8.26 crore had third party insurance in 2015-16.
