CHINA will more than double the maximum coverage of mandatory vehicle insurance policies and cut the premium rates by an average 10 percent from February 1, the top insurance regulator said yesterday.

The top limit for the mandatory vehicle policy is set to be doubled to 122,000 yuan (US$16,788) from February 1 from the current 60,000 yuan, the China Insurance Regulatory Commission said yesterday on its Website.

The new top limit is higher than the previously proposed 120,000 yuan. The top insurance regulator held a hearing in December on proposed moves to cut the premium and double coverage.

From February, compensation for any death and injuries in a vehicle accident will be limited to 110,000 yuan under the new plan if the driver is responsible for the accident.

Up to 10,000 yuan will offset medical treatment fees, up from the December proposal of 8,000 yuan. Two thousand yuan will go for property loss compensation.

At the same time, insurance premiums will drop between five and 39 percent for 16 of 42 types of motor vehicles. It is estimated that 64 percent of policy holders can enjoy the rate cut with an average rate cut of about 10 percent.

Vehicles of under six seats for domestic use will take a 9.5 percent premium decrease, cutting the premium to 950 yuan.

China introduced nationwide mandatory vehicle insurance in July 2006 in line with its road traffic safety law.

In October, China amended its road traffic safety law and cut the up limit compensation for no-fault drivers from 20 percent to 10 percent.

"The coverage in cases where drivers are not at fault is in line with the traffic safety law amendment," said an industry insider.

For drivers who were not at fault, compensation for any death and injuries will be limited to 11,000 yuan.

Up to 1,000 yuan will offset medical treatment fees in the new plan while 100 yuan will go for property loss compensation.

For current policy holders whose policy is still effective after February, the new compensation coverage will take effect.

For current policy holders involved in accidents that happened before February, the compensation coverage would be based on current arrangements, the insurer said.