The first third-party rate revision since 2022 is on the table
India's motor insurance market is heading for its biggest repricing in years. IRDAI has proposed raising third-party motor premiums by an average of roughly 18%, with some vehicle categories reportedly facing hikes of 20-25%, according to Business Today, citing the regulator's proposal. The Ministry of Road Transport and Highways is now reviewing it — the third party insurance premium hike India's vehicle owners have been half-expecting, finally arriving in draft form.
The context matters. Base third-party rates were last revised in June 2022 and have sat frozen ever since. Draft-stage details have been circulating through 2026, and the numbers above are proposals, not notified rates.
And because third-party cover is legally mandatory for every vehicle in India — from a scooter to a truck — nobody gets to sit this one out. If the proposal goes through in anything like its current shape, on-road ownership costs rise across every segment.
What the third-party insurance premium hike actually proposes
The headline figure is an average increase of around 18% across third-party motor premiums. Within that, some vehicle categories are reported to face steeper rises of 20-25%. Which categories land in the steeper band is still working through the draft process, so treat category-level claims elsewhere with caution until the final notification appears.
The process builds in room for change. A draft notification must go through public consultation before new rates take effect — the standard MoRTH process — so the final percentages could shift. As of August 2026, the final notified rates remain unconfirmed. The direction of travel is up; the size of the step is not settled.
Worth remembering: third-party premiums are set by regulation, not market competition, which is why they can sit frozen for years and then move in one lump. The own-damage portion of a comprehensive policy is priced by insurers; the third-party slice is not. Our guide to comprehensive vs. third-party car insurance in India covers the split.
A 15% discount for going electric
There is a carrot in the draft as well as a stick. The proposed framework includes a 15% discount on third-party premiums for electric private cars, electric two-wheelers and electric commercial vehicles, according to the draft notification as reported via Coverfox and ACKO Drive.
That is a deliberate policy signal: make the mandatory cost of running an EV visibly lower than the petrol equivalent. For someone weighing a Tata Nexon EV against its petrol sibling, a 15% discount on one side and a possible 20-25% hike on the other widens the running-cost gap in the EV's favour — assuming both survive consultation intact.
Why every vehicle owner should pay attention
Because third-party cover is compulsory, this reaches everyone: new-car buyers, whose on-road price includes the first year's premium; comprehensive policyholders, whose policies bundle the third-party component being repriced; and the owner of a ten-year-old commuter bike buying the bare legal minimum every year.
That universality is why public consultation exists — rate revisions on a mandatory product are politically sensitive. Nothing here is legal or financial advice, and once rates are notified the impact will vary by vehicle class and category, so check the final notification against your own policy before renewal.
The honest assessment
An increase was always coming. Rates frozen since June 2022 were never going to hold indefinitely, and an 18% average rise after a multi-year freeze is less dramatic than the headline suggests.
But it stings. The hike lands on a mandatory purchase, so there is no shopping around it, and the categories facing 20-25% will feel it most. The EV discount is a sensible offset, though it helps only those already in a position to switch. The sober read: budget for a higher renewal, but do not panic-buy a long-term policy on draft numbers — consultation could still trim them.
The questions buyers actually ask
When will the new third-party rates take effect? No date is fixed. The draft notification must complete public consultation first, and as of August 2026 the final notified rates are unconfirmed. Watch for the official notification rather than draft-stage reports.
I have a comprehensive policy — does this affect me? Yes. Comprehensive policies bundle the third-party component with own-damage cover, so a third-party hike feeds into your total premium.
Will electric vehicles really get cheaper cover? The draft proposes a 15% third-party discount for electric private cars, e-two-wheelers and electric commercial vehicles. It is not yet in force and could change after consultation.
Key takeaways
- IRDAI has proposed an average 18% rise in third-party motor premiums, with some categories reportedly facing 20-25%; MoRTH is reviewing the proposal.
- This would be the first revision since base rates were last set in June 2022.
- The draft framework includes a 15% third-party discount for electric private cars, e-two-wheelers and electric commercial vehicles.
- A public consultation must run before rates take effect, so final percentages could change — nothing is notified as of August 2026.
- Third-party cover is mandatory for every vehicle in India, so any hike raises on-road ownership costs across all segments.
Sources & further reading
- IRDAI proposal and draft notification details reported by Business Today, ACKO Drive and Coverfox
- MoRTH review process coverage, mid-2026
Figures, prices and policy details were current at the last-updated date above. Automotive pricing, incentives and regulations change frequently — verify time-sensitive details with the linked primary sources. Read our editorial policy and fact-checking standards.
