Summary
Third-party premiums aren't set by your car insurance company; IRDAI fixes them, and every insurer charges the same rate. For private cars, the rate is ₹2,094 up to 1,000 cc, ₹3,416 for 1,000-1,500 cc, and ₹7,897 above 1,500 cc. These rates were last officially notified for FY 2025-26 and continue to apply throughout this year, though a hike is under active discussion for the year ahead. Here's what shapes your premium and what to check before renewal.
Introduction
Most car owners don't realise that the third-party portion of their car insurance premium isn't decided by their insurer at all. Whether you drive a small hatchback or a mid-size SUV, this part of your bill depends purely on engine capacity, and it's identical no matter which company you buy from.
This guide covers the exact IRDAI rates, what decides them, whether they're due for a revision, and a few checks worth making before you renew.
What Are the IRDAI Third-Party Car Insurance Premium Rates for FY 2025-26?
Third-party rates come from IRDAI, in consultation with the Ministry of Road Transport and Highways, not from individual insurers. Every general insurer in India charges the same base premium for this cover. It applies only to the mandatory liability portion of a policy, and is not applicable for the own-damage section.
What Determines the Cost of Third-Party Car Insurance?
Third party insurance online rates depend on one factor above all: engine capacity. Vehicle type matters too, since private cars, commercial vehicles, and electric vehicles each follow separate rate charts.
How Are the Premium Rates Based on Engine Capacity?
Your car's cc decides the actual band for the premium rates. IRDAI splits private cars into three slabs:
● Up to 1,000 cc
● Above 1,000 cc and up to 1,500 cc
● Above 1,500 cc
Electric cars run on a separate kilowatt-based scale instead.
What Are the Applicable Rates for Different Private Cars?
Here's what you'll actually pay this year, excluding GST and add-ons.
● Up to 1,000 cc: ₹2,094 annual premium
● Above 1,000 up to 1,500 cc: ₹3,416 annual premium
● Above 1,500 cc: ₹7,897 annual premium
1. Interesting fact
These three figures have barely moved since FY 2019-20, a rare stretch of price stability in Indian insurance. The last formal notification confirming them was MoRTH's GSR 354(E), dated 28 March 2024, and insurers are still applying the same numbers today.
How Does Engine Capacity Affect Third-Party Car Insurance Premiums?
Engine capacity drives most of your third party insurance online cost. A bigger engine means higher assumed liability risk, so rates climb across each band. Here's exactly where your car lands, what you'll pay, and how much more that is than the entry-level slab.
● Up to 1,000 cc (Alto, Kwid, WagonR): ₹2,094 — base slab
● Above 1,000 up to 1,500 cc (Swift, Creta, Ertiga): ₹3,416 — about 63% more than base
● Above 1,500 cc (Innova Crysta, XUV700): ₹7,897 — about 277% more than base
Small hatchbacks fall in the cheapest slab and are where most first-time buyers land. Compact sedans and mid-size SUVs sit in the middle band, paying meaningfully more for the extra engine capacity. Larger SUVs carry the highest slab in the entire private car schedule, since bigger engines are treated as a higher liability risk.
Are These Rates Still Current, or Is a Revision Coming?
As of now, the ₹2,094 / ₹3,416 / ₹7,897 structure is still the rate every insurer applies. MoRTH and IRDAI have been discussing a revision of 10% to 25% for the coming cycle, citing rising accident-related compensation and claim costs, but no fresh notification had replaced the existing rates at the time this article was published. Always confirm the live rate on your insurer's portal at the time of renewal rather than relying on last year's figure alone.
What Does Third-Party Car Insurance Cover?
Third-party insurance is the legal minimum for every car owner in India. Knowing what it covers and what it leaves out matters before you buy.
It covers your legal liability if your car injures someone or damages their property. Compensation for death or injury has no upper limit and is decided by the Motor Accident Claims Tribunal. Compensation for property damage is capped at ₹7.5 lakh per incident under current Motor Vehicles Act provisions.
Why Is Third-Party Motor Insurance Mandatory in India?
Section 146 of the Motor Vehicles Act, 1988 requires every vehicle used on a public road in India to carry at least a valid third-party liability policy. Driving without one is punishable under Section 196 of the Act: a first offence draws a fine of ₹2,000, imprisonment of up to three months, or both, and a repeat offence draws ₹4,000, imprisonment of up to three months, or both.
Read More:What to Know About Third-Party Car Insurance in India
What Factors Can Affect Your Overall Insurance Cost?
The third-party portion is fixed, but your total bill isn't. Other factors that move the needle include:
● Make and model of your car
● Own-damage add-ons chosen
● Your city and RTO location
● Your No Claim Bonus history as it affects the overall insurance cost
● Buying through a car insurance company directly online
Read More:What Is No Claim Bonus (NCB) in Car Insurance?
How Do You Choose the Right Third-Party Car Insurance Policy?
Comparing insurers still helps, even with a fixed third-party rate. Before you renew, it helps to comparecar insurance online quotes and look at:
● The speed of the claim settlement process
● The level of customer service
● Instant issuance when you buy car insurance online
● The exclusions printed in the policy wording
What Smart Checks Should You Make Before Renewing Your Car Insurance?
Renewals get rushed more often than they should. A few quick checks go a long way.
● Confirm your expiry date early, and mark it on a calendar reminder.
● Check that your No Claim Bonus has carried forward correctly.
● Compare own-damage quotes across two or three insurers before committing.
● Drop add-ons you no longer use.
● Keep your PUC certificate and RC details current and handy.
● Buy or renew through a trusted car insurance online portal so your policy document and receipt are issued instantly.
Read More:A Complete Guide of Things to Check Before Renewing an Expired Car Insurance
1. Pro Tip
Renew a few days before expiry instead of on the deadline itself. Most insurers allow early renewal without any loss of coverage, and it locks in the current rate before any scheduled revision takes effect.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
FAQs
You face a fine of ₹2,000 for a first offence and ₹4,000 for repeat offences, along with possible imprisonment of up to three months under Section 196 of the Motor Vehicles Act.
No. Third-party car insurance covers only liability to another person or their property; it does not pay for damage to your own vehicle.
Yes, though rates have stayed largely unchanged since FY 2019-20. Any revision depends on inputs from MoRTH and IRDAI, and a hike is currently under discussion.
References
1. MoRTH – Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 [GSR 394(E), dated 25 May 2022]
2. MoRTH – Third Party Insurance Base Premium and Liability Amendment Rules, 2024 [GSR 32(E), dated 5 January 2024]
3. IRDAI – Motor Insurance (Policyholder Information)
4. The Economic Times – When Will Your Insurer Not Cover Claims Under Your Third-Party Motor Insurance?
5. The Economic Times – Third-Party Premiums Take the Wheel in Motor Cover Growth
6. The Economic Times – No Insurance, No Fuel: Supreme Court Proposes Pilot Project, Extends Tenure of Third-Party Insurance Cover for New Vehicles
7. Moneycontrol – IRDAI Said to Be Revising Third-Party Motor Tariffs
8. The Economic Times – Govt Plans 10% Hike in Third-Party Motor Insurance Premium
