Motor insurance to get costlier from Apr IRDA Increases Rates Between 6% And 40%

Mumbai: Motor insurance rates will rise from April 1 with the insurance regulator notifying new rates for motor thirdparty premium. The increase ranges from 6% at the lowest end to 40% at the higher end. 

    Third-party cover refers to the mandatory insurance that car-owners have to buy to provide compensation for accident victims. This is the only cover where the rates are notified by the regulator after taking into account inflation, average claim amounts and expenses in servicing the claims. But insurers say that the rate hike does not cover their losses. "If the revision in third-party rates is not sufficient to take care of claims, motor own-damage claims will have to go up," said K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance. Own-damage refers to the cover that car-owners buy to get compensated for their vehicle. 

    The worst affected by the hike will be commercial vehicles. For goods carrying threewheelers, the rate has gone up the highest—from Rs 2,440 to Rs 3,415. For trucks with capacity up to 7,500 kg the rate hike is from Rs 8,420 to Rs 9,818. For private cars, the third-party impact is low with rates for a 1000cc car rising from Rs 880 to Rs 925. Earlier moves by the insurance industry to raise premium on commercial vehicles had resulted in truck unions going on a nationwide strike. The other reason why insurance companies would hike motor own-damage rates is that the national reinsurer GIC Re has hiked reinsurance rates by 15 to 20%. 

    Announcing the revision rates, the IRDA said: "The frequency of claims shows a steady trend. This is also a reasonably correct assumption as there is no material change in the condition of roads, driving conditions, or drivers which may cause the frequency (number of accidents per thousand vehicles) to alter significantly." 

PAY MORE FOR COVER 

tGoods ferrying 3-wheelers: Up from Rs 2,440 to Rs 3,415 

tTrucks with 7,500 kg capacity: Up from Rs 8,420 to Rs 9,818 

t1000cc private cars: Up from Rs 880 to Rs 925

GURUSPEAK Tax plan not just for filing returns

 Proper tax planning today forms an unavoidable step in the annual tax filing exercise for those who have taxable income. With the challenge of managing financial goals and expenses on one hand and growing aspirations & rising inflation on other, proper tax planning can be effectively used to play a critical balancing act. However most of us fail to give tax planning the importance it deserves. 

    The common man usually wakes up to the urgency of tax planning at financial year end. This practice is fraught with risks where one usually ends up making less than appropriate choices. The aggressive sales practices by advisors & financial institutions also encourages this undesirable approach. Tax planning must not be treated as the last step before preparation of returns but something that should be taken before start of every financial year. It is an important part 

of your overall financial planning as it not only helps reduce the tax liability but also supports your other financial goals. The right approach to tax planning can be briefly summarised in the following steps. tAt the start of the financial year, undertake an assessment of your financial goals & resources. This will give clarity on the amount of investments required with time horizon and also on insurance needs. Preparation of a proper financial plan is highly recommended. tThe next step is planning your expenses like rent, tuition fees, care / treatment of handicapped persons, parents, home loan EMIs, charity, etc. tNext estimate how much of tax saving avenues are utilised given all the expenses, deductions already planned. 

tLastly estimate the possible taxable income considering the exemptions,deductions already enjoyed. Only if there is a taxable income remaining, is there any need for further tax planning. Tax liability can then be planned by deciding upon any new expenses or investments or insurance to be undertaken in line with your financial plan / objectives. The execution of same can be properly planned or spread throughout the year as per your comfort. 

    The above process can be real fun and easy to follow once you begin. It would ensure that our financial goals are on track and tax liability is reduced by judicious use of avenues only to the extent they are required. Know that tax planning is not the isolated exercise here but it is something that supports your overall financial plans. The key is to start the process at the start of financial year and see the benefits for yourself ! 

    The writer is co-founder, 

    NJ India Invest