[shrikantbhogale]

As per the current norms of IRDAI, Third Party Car Insurance Premium is charged based on the Engine Capacity of the vehicle. Cars are classified into three different categories - Not exceeding 1000 cc, Exceeding 1000cc but not exceeding 1500 cc and Exceeding 1500 cc.

I contend that this classification of cars for Third Party Insurance and the premium being charged accordingly is grossly inequitable and distorted.

In support of my argument, I wish to put forth a few examples –

I myself own a Mitsubishi Lancer Diesel car, 1999 model, which has an engine capacity of 1998 cc. But it has a Max. Power output of only 67 Bhp and Max. Torque of 122 Nm. The cars kerb weight is 1095 kg.

The same Mitsubishi Lancer car’s Petrol version has an engine capacity of 1468 cc. But it has a much higher Max. Power output of 85 Bhp and Max. Torque of 132 Nm. The petrol version’s kerb weight is 1010 kg.

The Petrol version having a more powerful engine has a TP Insurance rate of Rs. 2863/-, since it has an engine capacity lower than 1500 cc. Whereas the Diesel version is charged Rs. 7890/- as the engine capacity exceeds than 1500 cc.

Theoretically TP Insurance rates are based on the probability of a vehicle causing an accident and the amount of damage it can inflict.

Logically a car with an engine with higher power and torque output (irrespective of engine capacity) will have higher acceleration and top speed and thus will have more probability of meeting an accident and may cause higher damage (given other factors like size of the vehicle, kerb weight and braking mechanism being same or almost the same).

But the current classification as seen from the above example is completely unfair and skewed. A car with lower engine power and torque output and thus in theory having comparatively lesser odds of accident is being charged much higher rate for TP Insurance just because it has a higher engine capacity.

Older Diesel engines did not have the kind of power and torque output per litre of engine capacity which the modern Diesel engines with CRDi technology have. The cars with older Diesel engines of that period needed to have higher engine capacity to achieve a decent power output to ensure drivability. Hence during that period Diesel versions of same car model were mostly of higher engine capacity compared to their Petrol versions.

The current TP Insurance classification is similarly unfair in case of many other cars of that period too. The Petrol versions are being charged a much lesser TP Insurance rate than the Diesel ones in spite of the Petrol cars being more powerful than their Diesel versions.

This is evident from some other similar examples as can be seen from the comparison of information of various older Petrol and Diesel car models given below –

Hyundai Accent Diesel 2000 model specs –

Engine displacement: 1527 cm3 / 93.2 cui, advertised power: 42 kW / 56 hp / 57 PS ( DIN ), torque: 95 Nm / 70 lb-ft
characteristic dimensions: outside length: 4250 mm / 167.3 in, width: 1670 mm / 65.7 in, wheelbase: 2440 mm / 96.1 in
reference weights: base curb weight: 1023 kg / 2255 lbs

2001 Hyundai Accent Petrol specs -

Engine displacement: 1495 cm3 / 91.2 cui, advertised power: 69 kW / 93 hp / 94 PS ( DIN ), torque: 123 Nm / 91 lb-ft
characteristic dimensions: outside length: 4250 mm / 167.3 in, width: 1670 mm / 65.7 in, wheelbase: 2440 mm / 96.1 in
reference weights: base curb weight: 1005 kg / 2216 lbs

Ford Ikon Diesel 2002 model specs –

Engine Capacity: 1750 cc, Max Power: 57 hp@4800 rpm, Max Torque: 100 Nm@2800 rpm

Ford Ikon Petrol [1999-2003] 1.3 Specs -

Length 4140 mm, Width 1634 mm, Height 1379 mm, Seating Capacity 5 Person, Displacement 1299 cc, Fuel Type Petrol, Max Power 59@5000, Max Torque 100@3200

Esteem [2002-2004] Diesel Specs -

Length 4090 mm, Width 1575 mm, Height 1395 mm, Seating Capacity 5 Person, Displacement 1527 cc, Fuel Type Diesel, Max Power 57@5000, Max Torque 96@2500

Esteem [1994-2002] Petrol Specs -

Length 4090 mm, Width 1575 mm, Height 1395 mm, Seating Capacity 5 Person, Displacement 1298 cc, Fuel Type Petrol, Max Power 85@6000, Max Torque 110@4500

In comparison to these older cars, the current car models in the same ‘C’ segment have engines with much higher power and torque output. But the engine capacity of most of these latest car’s, both Petrol versions and the Diesel versions (now equipped with CRDi tech), does not exceed 1500 cc. Hence they are being unfairly charged much lower TP Insurance rate, in spite of having much more powerful engines.

Even a car like Toyota Corolla Altis Diesel, which falls in the ‘D’ segment, but has a engine capacity less than 1500 cc, is also charged at lower rate.

Both Petrol and Diesel versions of SUV’s like Renault Duster and Captur and Nissan Terrano having higher Max Power, Torque and Kerb weight are charged lower rate of TP Insurance as their engine capacity does not exceed 1500 cc.

Expensive SUV like Jeep Compass Petrol which has an Max Power output of 160 bhp, Max Torque of 250 Nm and a Kerb weight of 1537 kg is also charged lower rate of TP Insurance as it has engine capacity of 1368 cc.

Specs of some of the latest Petrol cars & Diesel car models with CRDi engines –

Maruti Ciaz Petrol Specs -

Length 4490 mm, Width 1730 mm, Height 1485 mm, Seating Capacity 5 Person, Displacement 1373 cc, Fuel Type Petrol, Max Power (bhp@rpm) 91 bhp @ 6000 rpm, Max Torque (Nm@rpm) 130 Nm @ 4000 rpm

Maruti Ciaz 1.3 Diesel Specs-

Length 4490 mm, Width 1730 mm, Height 1485 mm, Seating Capacity 5 Person, Displacement 1248 cc, Fuel Type Diesel, Max Power (bhp@rpm) 89 bhp @ 4000 rpm, Max Torque (Nm@rpm) 200 Nm @ 1750 rpm

Honda City Petrol Specs -

Length 4440 mm, Width 1695 mm, Height 1495 mm, Seating Capacity 5 Person, Displacement 1497 cc, Fuel Type Petrol, Max Power (bhp@rpm) 117 bhp @ 6600 rpm, Max Torque (Nm@rpm) 145 Nm @ 4600 rpm

Honda City Diesel Specs -

Length 4440 mm, Width 1695 mm, Height 1495 mm, Seating Capacity 5 Person, Displacement 1498 cc, Fuel Type Diesel, Max Power (bhp@rpm) 99 bhp @ 3600 rpm, Max Torque (Nm@rpm) 200 Nm @ 1750 rpm


Nissan Sunny Diesel Specs -

Length 4425 mm, Width 1695 mm, Height 1505 mm, Seating Capacity 5 Person, Displacement 1461 cc, Fuel Type Diesel, Max Power 85 bhp @ 3750 rpm, Max Torque 200 Nm @ 2000 rpm

Volkswagen Vento Diesel Specs -

Length 4390 mm, Width 1699 mm, Height 1467 mm, Seating Capacity 5 Person, Displacement 1498 cc, Fuel Type Diesel, Max Power (bhp@rpm) 108 bhp @ 4400 rpm, Max Torque (Nm@rpm) 250 Nm @ 1500 rpm

Corolla Altis Diesel Specs -

Length 4620 mm, Width 1775 mm, Height 1475 mm, Seating Capacity 5 Person, Displacement 1364 cc, Fuel Type Diesel, Max Power (bhp@rpm) 87 bhp @ 3800 rpm, Max Torque (Nm@rpm) 205 Nm @ 1800 rpm


The IRDAI has thus already inequitably classified cars with Internal Combustion Engines running on Hydrocarbons for the purpose of TP Insurance premium.
At the same time they dont seem to have defined any criteria for classification of electric cars. In the next few years we will see the introduction of many new electric cars. With current criteria of engine capacity I am dumbfounded how will they classify them.

In the light of above argument and examples, it will be truly equitable and fair that instead of being based on Engine Capacity, the classification of Cars and the Third Party Insurance Premium rate be based on the actual Power and Torque output of the car’s engine, the Kerb weight of the vehicle, braking distance figures, Size and Segment of the vehicle etc.

The IRDAI has already constituted a committee for finalizing Motor TP Premium Pricing for 2019.
I have already sent an email to this esteemed Committee of IRDAI for Motor TP Pricing to consider these above mentioned contentions when finalizing the classification of Cars and the Third Party Insurance rates for the next year. I have also suggested that they should also consult the Automobile Research Association of India (ARAI) as experts in automobiles to verify these issues raised by me.

I sincerely hope that IRDAI changes the classification of Cars and the Third Party Insurance Premium rates and makes them unbiased and fair from the next year.

If these unjust rates and highly unfair classification continues, being aggrieved, I plan to approach the appropriate Court with a PIL/ Writ Petition to intervene in this matter and give me justice. If challenged in a Court, such utterly biased classification and inequitable Third Party Insurance Premium rates based on it will certainly not stand the test of Law.

I have also sought Team BHP's support on this issue and have requested them to send similar emails to IRDAI if they concur with my contention.

I also hereby request all BHPian's who think my argument holds water to email IRDAI regarding this issue in their personal capacity. The email id's of IRDAI concerned department/people are -
irda@irda.gov.in
janita@irda.gov.in
srihari.a@irda.gov.in
gicouncil@gicouncil.in
rcsekaran@gicouncil.in

[sharktale]

Originally Posted by shrikantbhogale

As per the current norms of IRDAI,

I appreciate the concerns regarding the premium pricing.

Looking upon this thread, even I feel that judging cars on the basis of their engine capacity is pretty dumb for insurance purposes. 1.2L engines can now create menace on the roads too.



However, I am against using the Power figures for deciding the premium.
What will happen is manufacturers will then resort to providing de-tuned engines firstly, and then provide a software fix via the dealers to modify the power. More profits, less impact.
Example : EcoSport has <4m of length, to claim exemption without the spare tyre, but in reality they always sell with the spare-tyre.

I am thinking, volumetric dimensions of the car could be a better measure, just like the volumetric size is used for delivery of parcels. Just use the figures mentioned in the brochure, and it's a good way of reducing overall footprint of the vehicle.


It isn't still foolproof, as ideally the premium should be based on safety ratings. Maybe the Govt. decides to factor the premium on the basis of BNCAP scores of cars along with the size. This shall result in much safer/better hatchbacks to capitalize the demand.

[sunilch]

Originally Posted by shrikantbhogale

As per the current norms of IRDAI, Third Party Car Insurance Premium is charged based on the Engine Capacity of the vehicle.............I sincerely hope that IRDAI changes the classification of Cars and the Third Party Insurance Premium rates and makes them unbiased and fair from the next year.......

Yes I completely agree that the current classification and premium determination mechanism is unfair to many but that is due to change in times. The guidelines haven't been changed since long since it is not impacting the primary stake-holders who have a major say - the Insurance providers.

On your argument, I believe the power figures are not the only factor that should be taken in to determine the premium. There are multiple dimensions in determining the possible loss from am accident or for that matter theft of any vehicle. Now TP insurance is primarily meant only for covering the possible damages from the other side, in case of an accident we can exclude the theft factor here for your argument only. But otherwise even that is important for the insurance provider to know as the accident can happen even after a theft.

What should be an ideal scenario would be a 'Score' based mechanism such as the CIBIL score in case of loans. Each applicant will have a default score to begin with based on certain factors - age, location, type of car (sports, regular hatchback, sedan). Post a certain period, the score will be adjusted based on your driving history, claim history or any change in the other factors. Kind of the no claims bonus that you currently get but this score will have multiple dimensions to it rather than just your claim history.

That I believe will be a better parameter in judging the TP insurance premium (or even the comprehensive one).

[GTO]

I feel your pain, brother. In the year 2011, I paid Rs. 3282 for the 3rd-party insurance of my 1997 Mahindra Classic. In 2017, I paid 9,694 . Again, this is ONLY for 3rd-party coverage and nothing else (no comprehensive insurance policies are available for her as she has depreciated completely in book value).

You could insure a new hatchback comprehensively for accidents, theft etc. for the same money. My Jeep's only fault is its big engine. But the geniuses at insurance companies haven't figured out that its 0 - 100 time is 100 seconds (compared to ~15 seconds for most hatchbacks). And that's if you find a long enough road .

[saket77]

Let me share my 2 cents on the topic. The logic behind this stupid policy of insurer is that someone who has a car with bigger engine means that he has a bigger car in general. And that means he/ she is rich. So, they can extract insane amounts from the owner, because they can pay. No other logic. As someone stated above, a 1.2 ltr engine can create enough havoc on the street.

Same goes for the PUC/ pollution check centers run by the Govt. Pray tell me that how a 2 wheeler can go through the same test for Rs. 40-50 while the charges for cars for undergoing the same test is Rs. 100/-
The reason: only because car guy is supposedly rich than the biker, so he/she can pay.

And let the insurers come out with stats that how many 3rd party claims they settle against the claims made. Heck, given the drama of claiming TP insurance, most of the sane breed claim their own damage policies/ first party insurance.

[blackwasp]

While you chaps are discussing rates for private cars, let me share my WagonR's third party rate with you. The car has yellow plates and engine size is 998cc. I paid around 10k+ GST only for 3rd party. And that's for a car thats just 2 years old. However, an Innova cabbie pays 19k including GST !!



The proper way to evaluate would be accident histories of models, popular models to thieves, driver training - optional training to reduce premium and so on. But no, nothing like this to happen as IRDA sits on the rules. Deregulate insurance sector and see companies offer differential premiums (I can already imagine lesser premium for Team-BHP members)!

[rajathv8]

Perhaps there is no single criterion on which the slabs should be based. Maybe a combination of engine capacity/power, length, class of vehicle, seating capacity, emissions etc can be used.

[ghodlur]

Originally Posted by shrikantbhogale

I contend that this classification of cars for Third Party Insurance and the premium being charged accordingly is grossly inequitable and distorted.

Theoretically TP Insurance rates are based on the probability of a vehicle causing an accident and the amount of damage it can inflict.

Logically a car with an engine with higher power and torque output (irrespective of engine capacity) will have higher acceleration and top speed and thus will have more probability of meeting an accident and may cause higher damage (given other factors like size of the vehicle, kerb weight and braking mechanism being same or almost the same).

I disagree with few arguments made in this post. Third Party Liability premiums are purely based on the total damage repair cost and not on the probability of the vehicle causing the damage. I am of the belief that a car on its own is incapable of causing any damage and it is the person driving the car which is the sole root cause for any damage.

Given below is the Third party liability premium calculation which IMHO is correct.

P (t) = C1 (t) * CII (t-1) + C2 (t)
Where,
P (t) is the motor TP premium applicable to the financial year‘t’,
CII (t-1) is the Cost Inflation Index for the year ‘t-1’ as notified by CBDT, and
C1 (t) and C2 (t) are the parameters applicable to the financial year ‘t’ whose values shall be determined and notified by the Authority in each financial year based on the experience measured in terms of average claim amounts, frequency and expenses involved in servicing the motor TP business. The values of the parameters C1 (t) and C2 (t) may vary according to the class of vehicle.

The above calculation are on same terms as those used in countries like UK. In fact UK Insurance premium calculation requires a few more parameters for the calculation. Even in UK, the CC of the car is an important criteria for Insurance calculation, they have 50 groups in fact where the cars are being placed and forms the basis for premium calculation.

Attached is the link related to UK car Insurance.
https://www.money.co.uk/car-insuranc...-insurance.htm

[blackwasp]

Originally Posted by ghodlur

I disagree with few arguments made in this post. Third Party Liability premiums are purely based on the total damage repair cost and not on the probability of the vehicle causing the damage.

I agree on this, but applying a flat % on a car based on cc is grossly unjust. Let me share two examples.
1. My Spark <1L engine has insurance 3rd party of Rs. 1850 + taxes, while Baleno RS with similar capacity also has same premium but makes 101 BHP to Spark's 60 odd BHP.
2. My Abarth 1<1.4<1.5 costs Rs. 2863 + taxes, makes 145 BHP, pays same as 99 BHP Etios petrol.

Shouldn't it be based on a car's BHP? Do you think an Innova is likely to causes 4.3X more damage than a maruti 800? - Going by the current rates i.e., I would definitely like to see some numbers based on which premiums are calculated.

Further by one logic, a Maruti causing damage will be 2X more likely in India just because 1 out of 2 cars is a Maruti. On the other hand, probability of a say a limited edition VW GTI would be much less. right? But no change in premiums.

The above calculation are on same terms as those used in countries like UK. In fact UK Insurance premium calculation requires a few more parameters for the calculation. Even in UK, the CC of the car is an important criteria for Insurance calculation, they have 50 groups in fact where the cars are being placed and forms the basis for premium calculation.

Attached is the link related to UK car Insurance.
https://www.money.co.uk/car-insuranc...-insurance.htm

While they got the premium part partly correct what about NCB? I see upto 75% discount post 5 years on premiums including 3rd party. Why isn't it being implemented in India? As it is, we know most never claim from 3rd party due to the cumbersome process.

[ghodlur]

Originally Posted by blackwasp

Shouldn't it be based on a car's BHP?

How can you prove that the car's BHP was responsible for the accident? You can't. Equate it something similar to the housing society common service charges. You bundle all the charges and divide it equally amongst the members, you wouldn't do it on the area of the flat basis. Because the lift for eg is a common service whether the smaller flat or the bigger flat uses it. Similarly you cannot compare the maintenance charges of 7 storied building to a 25 storied building, they are different class type buildings something akin to the cc of the car. Sorry if I have gone overboard with the example.

While they got the premium part partly correct what about NCB? I see upto 75% discount post 5 years on premiums including 3rd party. Why isn't it being implemented in India? As it is, we know most never claim from 3rd party due to the cumbersome process.

That's the misfortune of Indians, they didn't copy the British completely. If they had we would have a robust & smoother 3rd party claims process.

[GTO]

Originally Posted by GTO

I feel your pain, brother. In the year 2011, I paid Rs. 3282 for the 3rd-party insurance of my 1997 Mahindra Classic. In 2017, I paid 9,694

For the first time in its history, I have paid 5 digits in insurance premium for my 22-year old Jeep with 0 book value & only 3rd-party coverage. I'm told that "the premium has gone up by Rs 800 as the IRDA has made it compulsory to charge Rs 750 for owner driver from Rs 100".

My latest bill

[narayan]

Just noticed this thread. So this is another pat on the back to car makers who are investing heavily in turbo charged <1.2L engines ! so NA petrol engines of higher cc will be at a disadvantage on the insurance front also.

[fordday]

Off topic.

Originally Posted by ghodlur

Equate it something similar to the housing society common service charges. You bundle all the charges and divide it equally amongst the members, you wouldn't do it on the area of the flat basis.

Our society do charge on flat area (per sqft) basis and there are many who do it similarly and the lawbook actually says so. If you follow the rules.

Originally Posted by ghodlur

Because the lift for eg is a common service whether the smaller flat or the bigger flat uses it.

But it is entirely for a different reason and not as you mentioned.