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What is Traffic Violation Premium?

Traffic Violation Premium:

A Working Group set up by the Insurance Regulatory and Development Authority of India (IRDAI) for Traffic Management has recently proposed to add a “traffic violation premium” to the vehicle insurance policy.

  • Previously in September 2019, the IRDAI constituted the Working Group to examine the establishment of a system of Linking Motor Insurance Premium with Traffic Violations.

About the Premium:

  • Vehicle owners may have to pay an insurance premium depending on the traffic violations involving the vehicle.
  • The working group has recommended inserting a fifth section to motor insurance called “traffic violation premium” in addition to motor own damage insurance, basic third-party insurance, additional third party insurance, and compulsory personal accident premium.

Calculation of Premium:

  • A system of calculating traffic violation points basis the frequency and severity of different traffic offenses.
  • The amount of traffic violation premium will depend upon driving habits which will be determined by the number and types of challans.
  • Traffic violation premium shall be payable by the registered owner of the vehicle, whether an individual or an entity.

Calculation of Points:

  • As per the table of offences provided by the working group, drinking driving will attract the highest penalty of 100 points, while wrong parking will have 10 points penalty. The amount of premium will be linked to these penalty points.

Data Storage:

  • The data of traffic challans will be stored by the National Informatics Centre (NIC) and shared with the Insurance Information Bureau of India (IIB) on a daily basis.
  • IIB aims to provide information support in a Complete, Consistent, and Concise manner, to all stakeholders associated either directly or indirectly with the Insurance Sector, including Insurers, Regulator, and Government Agencies.


  • The premium is on the vehicle and not on the driver. This means when a new vehicle is bought, it will start with a clean traffic violation history and its owner, when buying motor insurance, will not need to pay any traffic violation premium, even if he has a past traffic violation history, either as a driver of a vehicle owned by another person or his own vehicle of similar or a different category.
  • However, if a person renews motor insurance, s/he will be assessed for her/his traffic violation points and traffic violation premium s/he needs to pay.
  • In case of transfer of insurance of a vehicle after the sale, the traffic violation premium would start from ground zero from the date of vehicle ownership transfer and build depending upon the traffic violations caused by the vehicle after ownership transfer.