If you are planning to purchase a new vehicle, read the Third Party Motor Insurance Rules

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.

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