Features Offered by the Insurers and IRDAI to Bring Down Premium Prices During the COVID Crisis

In the wake of the pandemic in March 2020 and the resultant lockdown, the entire Indian economy was affected. The motor insurance sector was hit too, and vehicle sales slowly began dipping. A loss of jobs due to businesses shutting down caused an unplanned deficit in people’s finances. As a result, policyholders began facing hardships when it came to paying their premiums and continuing the insurance policy cover.

To remedy these challenges, the Government of India and the Insurance Regulatory and Development Authority of India (IRDAI) took some measures to break the impact of the pandemic on motor insurance policyholders:

  1.       Proposal to cancel the annual hike in third-party premiums

Each year, the IRDAI revises the third-party premium rates for two-wheelers and four-wheelers. However, considering how the current pandemic has caused an unusual drop in car sales as well as a dent in people’s finances, the authority has proposed to cancel the hike of third-party car and bike insurance premium for FY 2020-21.

Earlier, even the compulsory long-term motor insurance was cancelled by the government, to tackle the problem of low car sales in India. In the light of the pandemic, this seems to have provided relief to policyholders as well. That is why now your motor insurance policy is valid for a year and will need to be renewed when it expires.

In the current situation, the third-party premium rates will remain the same as they were during FY 2019 – 20 until further notice.

Existing Third-Party premium rates for private cars

Engine capacity

Existing Rates (FY 2019-20)

Not exceeding 1000 cc

Rs. 2,072

Exceeding 1000 cc but not exceeding 1500 cc

Rs. 3,221

Exceeding 1500

Rs. 7,890

Source: IRDAI


Existing Third-Party two-wheeler insurance premium amount

Engine capacity

Existing Rates (FY 2019-20)

Not exceeding 75 cc

Rs. 482

Exceeding 75 cc but not exceeding 150 cc

Rs. 752

Exceeding 150 cc but not exceeding 350 cc

Rs. 1,193

Exceeding 350 cc

Rs. 2,323

Source: IRDAI

  1.       An emphasis on online purchase and renewal of motor insurance

With the lockdown affecting almost every sector in the economy, it is essential that people should keep themselves as safe as possible. In order to ensure everyone’s safety, the government, the IRDAI as well as motor insurance companies, are encouraging people to buy their car or bike insurance online.

Not only does this make the entire process convenient and hassle-free but also makes it a more cost-effective option. This is due to the elimination of overhead costs. When you visit the insurance company to purchase your motor insurance, there is an agent who helps you along the process. Since the online procedure is carried out by you, the cost of labour is removed.

Also, visiting the company and filling out forms will require loads of paperwork. The digital alternative involves no papers at all. Even the insurance offer documents are in the digital format and can be simply downloaded. Apart from downloading and printing a copy of your insurance policy, there is no use of papers over here. This process is also quite environment-friendly.

To boost this initiative, nearly all insurance companies offer some discounts on car insurance and bike insurance prices. You can also renew your bike insurance or car insurance policy online and avail quick processes and attractive discounts.

  1.       The Pay-as-you-Drive model

The Pay-as-you-Drive model has been introduced, especially so that motor insurance policyholders can cut down a little on the premiums they pay. The pandemic has led to a loss of jobs and an unstable flow of income for many. Therefore, many vehicle owners are concerned about the high premiums they have to pay.

In Pay-as-you-Drive, a GPS tracking application will help you drive safely. Apart from keeping you safe, it also tracks the distance you drive. Naturally, as the name suggests, you will only have to pay for the distance that has been calculated. For example, during the lockdown, if you’re only consuming a few kilometres per week, then you need to only pay for that much.

It is another initiative that is being boosted by insurance companies to promote safer driving and to help vehicle owners handle their car and bike insurance premium payments.


Despite the financial problems that the pandemic has caused, you should not consider cancelling your insurance policy. It is a legal mandate and will attract penalties as per law. It is also dangerous to not have motor insurance since, in the event of an accident or damage to your vehicle, the stress of footing all the bills proves to be extremely inconvenient.

Moreover, there are a few benefits that come out of having a good car or bike insurance policy. You have peace of mind because you know that our vehicle is well-protected against damages. While your comprehensive insurance covers nearly all types of damage, there also add-on covers that help cover other expenses. Lastly, you are exempt from paying traffic fines if you always have a motor insurance policy. There are also discounts available on your car or bike insurance renewal price of your policy online. 

So, ensure that you buy the best coverage for your bike or car and be protected from any financial liabilities arising from the damage or loss of your vehicle.