The Insurance Regulatory and Development Authority of India (IRDAI) has asked general insurance companies to offer long term ‘third-party’ motor covers to policyholders. Policyholders get 3-year motor third-party cover for new cars and a 5-year third-party cover for new two-wheelers.
New options for policyholders:
- A long-term package cover including a Third-Party Insurance and Own Damage insurance for 3 or 5 years.
- A bundled cover with a 3-year or 5-year term for the third party component and a 1-year term for Own Damage plan.
Also, no new vehicle can run on the road without a third party insurance cover. In addition to this, it includes the loss or damage caused to the third-party in case of an accident.
Unchanged components of the new insurance rules:
- Impact on the old policies- The new rules do not apply to old vehicles. The registration date is the date of purchase to check exemption.
- Changes made to the third-party premium only– The 3 or 5-year premiums have to be paid upfront only for third party liability. The capacity of the vehicle will decide the rate of premium.
- IDV– The Insured’s Declared Value will not be affected.
- NCB– the rules will have no effect on the No-Claim Bonus.
New components of the third party motor insurance rules
- Premium tenure- The Third-Party motor insurance rule (TP) premium will be paid as an upfront-lumpsum payment, instead of making annual premium payments.
- TP Tariff increase– For new cars, except those below 1000cc segment, the premium will increase. You may find the rates on the IRDA website.
- Premium computation- The premium will be collected for the entire term three years or five years accordingly at the time of sale of insurance but would be identified on a yearly basis.
For more latest updates and stories click here.