Owning a car to get expensive by at least 50% every year. Here's why

If you own a car that has engine capacity more than 1000 CC, get ready to pay a hefty premium. The government has agreed to do away with the cap on third party liability of insurance companies in case of grievous injuries or deaths in road crashes.

The Insurance Regulatory and Development Authority has proposed a nearly 50% hike for most categories of vehicles for 2017-18, according to a news report by The Times of India.

It is mandatory for vehicles to have third party insurance while insurance for own damage is optional. In comprehensive insurance policies, which have both components, the share of third party insurance is barely 30%. IRDA has not proposed increase in third party insurance premium only for a few categories of vehicles such as Maruti Alto, Tata Nano and Datsun Go as well as pick-up vans and mini trucks.

But it proposes to increase the premium of cars that have 1,000-1,500cc engines by almost 50%. Sources said the final hike could be 25-30%. It is likely that insurers would push for another round of increase once the Motor Vehicle (Amendments) Bill is passed with the proviso that insurance companies pay the entire compensation awarded by motor vehicle claims tribunal.