New Delhi: If you are planning to buy a new car or two-wheeler after August 1, then there is good news for you. Insurance Regulatory and Development Authority of India (IRDAI), in June, ordered insurance companies to stop selling long-term motor insurance to new vehicle owners as of August 1, 2020. The decision was announced by IRDAI to price a new vehicle. This means that customers who purchase a new vehicle from August 1 will no longer need to purchase long-term insurance with own damage (OD) cover and third-party liability insurance for three years for car owners and five years for two. Wheeler owners.
As of August 1, the long-term comprehensive motor insurance that covers damage to the vehicle and damage (or losses) to a third party will be canceled for three years for cars and five years for two-wheelers. This step will help new vehicle buyers as they don’t have to pay huge sums for insurance at the time of purchasing a new vehicle.
According to the insurance regulator, the distribution of long-term third-party policies is challenging because it is unaffordable for vehicle owners. The possibility of being forced to sell or be tied to loans was high and that policyholders would be saddled with long-term products with no flexibility, he said. These are the reasons that prompted IRDAI to scrap the policy.
From 1 August you must take out long-term third-party insurance for three years for four-wheelers and five years for two-wheelers. The premiums for the policy of third parties are the same for all insurers and the cover is identical. The chance of being sold incorrectly is therefore smaller.
You have two options to insure your car against your own damage. First, you can purchase a ‘bundled’ policy that combines a long-term third-party liability policy and one year of self-insurance.
Second, you can buy two separate policies. One is a stand-alone long-term policy for third parties and the other is a stand-alone proprietary claims policy. Your no-claim bonus is accrued annually. You can use your no-claim bonus (NCB) to receive a discount when your own damage policy is renewed.
Owners of new vehicles will be required to take out a three-year or five-year long-term liability insurance for passenger cars and two-wheelers. They also have the option to purchase a standalone annual OD policy separately from each insurer.