Vehicle Insurance: More than two challans will have to be paid on the vehicle, higher premium, increase can be up to 20 percent

New Delhi| The new financial year has started. People are wondering whether they will have to pay more motor insurance premiums this time, if they have more than two pending, unpaid invoices from the previous financial year. However, the current proposal has not yet come into force and is at the draft stage. Tracking the status of invoices after the policy is issued poses practical and systemic challenges. In such a situation, there is a need for a secure and continuous data sharing mechanism between the Road Transport Ministry, State Traffic Department and insurance companies. However, it will not be easy to implement, as it will require addressing many privacy and compliance concerns under the Digital Personal Data Protection Act.

Premium may increase by up to 20 percent
The proposed rule has a model where insurance premiums on two pending invoices can increase by 10 to 20 per cent in a financial year. Insurance companies can adopt a point based system, which determines the premium rate. Premium pricing will be done mainly through telematics based pricing mechanism. If the insurance premium hike is proposed due to multiple pending invoices, the premium calculation will be adjusted after correcting the mistakes, but the way to handle it is still unclear. This may include providing evidence of incorrect charges or submitting an appeal to the authorities to correct the record before the insurance premium is finalised.

Mobilizing state level data base is a major problem
The primary hurdle is to integrate the state level database. This becomes even more challenging due to India’s Data Protection Act. Implementing it for insurance companies requires direct and real-time access to government e-invoicing systems. This proposal also includes that the driving license should be suspended for non-payment of traffic e-challan within three months. This proposal has also not been implemented yet.

Work is underway to integrate the e-challan system with insurance premiums in many states. States like Delhi are testing data sharing between traffic police and insurance companies through centralized platforms. If a person advances more than two outstanding or pending challans in a financial year, according to the draft he may have to pay a higher premium for the vehicle’s insurance policy next year. This rule will have the advantage that any invoices which are not paid for years will be paid immediately.