In India, the Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory authority. It is an autonomous statutory body which regulates and promotes insurance industry in India. IRDAI, in June 2020, had passed an order making it “non-mandatory” to buy long term vehicle insurance for new vehicle buyers. This rule will come into effect from 1st August, 2020, and will surely save money in buyer’s pocket.
Currently, a four wheeler buyer has to buy a three year comprehensive policy while buying a new car. In case of two wheelers, the mandatory cover is for five years. From 1st August, 2020, the way you may be offered to buy insurance will change. The four wheeler and two wheeler buyer will mandatorily buy third party insurance for three and five years respectively. Just to brief our users, the third party insurance does not cover own-damage or standalone-own-damage.Going ahead, the own damage insurance part will now be limited to just 1 year.
Since the third party insurance premiums are the same across all insurers, you don’t have much to decide on this. The IRDA decision will however provide customers with the flexibility to switch to another insurer for “own damage” insurance. And ofcourse, switching to a new insurer will still allow you the “no-claim bonus”, that will accrue annually.
Making comprehensive policy non mandatory will thus effectively bring down the on-road pricing for both two wheelers as well as four wheelers in the country. More power to the buyers!!