3-Year Long Term Comprehensive Insurance Policy For New Cars No Longer Available: IRDAI
Say goodbye to pricey, three-year-long comprehensive motor insurance packages starting August 2020
The Insurance Regulatory and Development Authority of India (IRDAI) recently announced that it is withdrawing an earlier ruling that gave general insurance companies the permission to sell long-term comprehensive motor insurance policies for new cars. As per the new directive, such insurers will not be offering long term comprehensive motor insurance from August 1, 2020 onwards.
What’s a comprehensive motor insurance policy you might ask? It refers to a package plan consisting of two broad elements - Third party (TP) cover and Own-Damage (OD) cover. In September 2018, IRDAI had allowed general insurers to offer 3-year third party insurance as well as 3-year OD cover. At the same time, insurers were also allowed to sell a bundled plan comprising 3-year third party coverage and 1-year own damage cover.
| Third Party (TP) |
Own-Damage (OD) |
|
| Old Rules |
3-year |
3-year /1-year (option) |
| New Rules |
3-year |
1-year |
Now, however, IRDAI has withdrawn its 2018 ruling to bar general insurance companies from offering long-term comprehensive motor insurance policies. Instead, they can continue to sell bundled policies which offer 3-year third party cover but only one year of OD coverage, which you will be required to renew on an annual basis. It is important to note that 3-year third-party motor insurance for cars is still mandatory.
Here are some of the main reasons stated by IRDAI for withdrawing long-term comprehensive motor insurance policies:
-
Affordability of long-term policies
-
Potential mis-selling
-
Confinement of policyholders to the same insurer
-
Non-uniformity in the No Claim Bonus (NCB) structure
As a result, customers need not be saddled by pricey comprehensive long-term insurance policies thereby reducing the on-road cost of a new car. In some ways, it offers financial relief to new car buyers and also gives them more flexibility in their insurance coverage options. You can explore insurance options that suit your needs at great prices at InsuranceDekho.