MoRTH Considers Overhaul of Third-Party Motor Insurance Premiums and Mandates Sound Alerts for EVs

The Ministry of Road Transport and Highways (MoRTH) is contemplating significant changes to third-party motor insurance premiums across all vehicle categories in India. This move could potentially impact millions of vehicle owners nationwide.

Proposed Changes

The ministry is actively working on amendments to the Motor Vehicles Act to facilitate changes in premium structures. One of the key considerations in this revision is the inclusion of a driver's challan history in premium assessments. This suggests that drivers with a history of traffic violations may face higher insurance costs.

Potential Impact on Different Segments

While the exact details of the premium revisions are yet to be disclosed, early indications suggest varying impacts across different vehicle segments and driver demographics:

• Older Drivers: Individuals above 55 years of age might face steeper increases in their insurance premiums.
• Light Commercial Vehicles: This category is likely to see higher charges, potentially affecting small businesses and transportation services.
• Other Vehicle Categories: The revision is expected to encompass all vehicle types, though specific changes for each category remain unclear.

Implementation Details

The ministry has not yet revealed crucial information regarding:

• Timelines for the implementation of these changes
• Specific mechanisms for applying the new premium structure
• The extent of the revisions for different vehicle categories

Implications

This potential overhaul of the third-party motor insurance system could have far-reaching effects:

1. Financial Impact: Vehicle owners, especially those in high-risk categories or with poor driving records, may need to budget for higher insurance costs.
2. Behavioral Change: The inclusion of challan history in premium calculations could incentivize better driving behavior and compliance with traffic rules.
3. Insurance Industry: The changes may require insurance companies to adjust their risk assessment models and pricing strategies.

Mandatory Sound Alert Systems for Electric Vehicles

In a separate development, MoRTH has proposed making acoustic vehicle alerting system (AVAS) mandatory for all electric cars, buses and trucks effective October 1, 2027. New electric vehicle models manufactured after October 2026 must be equipped with AVAS, which emits artificial sounds to alert pedestrians and road users about the vehicle's presence.

The requirement applies to Category M vehicles (electric cars and buses for passenger transport) and Category N vehicles (electric trucks and goods vehicles). The systems must meet audibility requirements specified in AIS-173 standards.

This move aligns India with several other countries, including the US, Japan, and some European Union nations, which have already mandated AVAS use in hybrid vehicles.

As MoRTH continues to work on these amendments and new regulations, stakeholders in the automotive and insurance sectors, as well as the general public, will be keenly awaiting further details on these significant policy shifts.