New cars, bikes to cost more from Sep 1 as IRDAI makes long-term 3rd party insurance mandatory
Buying a new car or a two-wheeler is set to become expensive from Saturday, September 1 as IRDAI has made long-term third-party insurance policy mandatory for all new vehicles in accordance with the Supreme Court order.
The three-year third-party insurance will cost Rs 5,286 for cars with engine capacity of less than 1,000cc, Rs 9,534 for cars with engine capacity from 1,000cc to 1,500cc and Rs 24,305 for cars with engine capacity of 1,500cc and above.
In case of two-wheelers, the five year-third party insurance will cost Rs 1,045 for vehicles with engine capacity below 75cc, Rs 3,285 for engine capacity between 75cc and 150cc, Rs 5,453 for 150cc to 350cc and Rs 13,034 for vehicles with engine capacity exceeding 350cc.
As per the Motor Vehicles Act, third-party insurance is mandatory.
As regards the comprehensive insurance, which covers theft and damage among others, the vehicle buyer would have the option to buy it for one year or three years in case of cars and five years in case two-wheelers.
As per the court order, it is mandatory for all general insurance companies to issue a three-year third party insurance cover for new cars and five-year third party (TP) insurance cover for new two-wheelers as a separate product or as part of a comprehensive insurance product.
Insurance Regulatory and Development Authority of India (IRDAI) issued a circular in this regard after it was directed to implement the decision on policies sold from September 1, 2018.
The circular said general insurers should “offer only three-year Motor Third-Party Insurance covers for new cars and five-year motor third party insurance policies for new two-wheelers.”
There are two types of policies in the market currently — stand-alone Motor Third-Party policy and Motor Package Insurance policy for two-wheelers and private cars.
IRDAI further said that after the introduction of long-term Motor TP Insurance, an insured should be given two options – long-term package cover offering both Motor TP insurance and own damage insurance for three years or five years as the case may be or a bundled cover with a 3/5 year term for the TP component and a one-year term for the own damage.
Types of insurance new car and bike owners can purchase going forward:
1. Third party insurance only: Owners can opt for this entry-level option, which does not cover the damage done to their vehicle but covers the third party that may be injured in an accident. This type of insurance will be the cheapest to purchase.
2. Third party + one year comprehensive: Under this option, owners can purchase the mandatory long-term third-party insurance for three or five years along with a one-year comprehensive cover. In this case, any damage to the vehicle in the first year will be covered.
3. Third party + comprehensive: In this case, owners will have both third-party and comprehensive insurance cover for the entire three or five year period, which protects both parties in the event of any mishaps. This option provides maximum cover, but is also the most expensive.
With agency inputs