Back in September 2018, the Insurance Regulatory and Development Authority of India (IRDAI) had issued an order allowing all general insurers to offer long-term comprehensive motor insurance policies to new car buyers. After almost two years, the order, which had numerous shortcomings, will see a major change from August 2020.
A comprehensive motor insurance policy mainly consists of two covers: Third Party (TP) and Own Damage (OD). Insurers were allowed to sell a bundled plan with 3-year validity for both the aforementioned covers. Another bundled plan was available consisting of a 1-year OD cover along with the 3-year TP cover.
The IRDAI has now made a change in the ruling which states that while the 3-year third-party cover is still mandatory, insurers can only bundle the plan with a 1-year OD cover. This means that the OD cover will have to be renewed annually. Here are some of the reasons given by the IRDAI for this decision:
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Affordability of long-term policies.
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Potential mis-selling.
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Confinement of policyholders to the same insurer.
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Non-uniformity in the No Claim Bonus (NCB) structure.
With the withdrawal of the long-term comprehensive motor insurance policy, customers can finally breathe a sigh of relief. Customers will no longer have to worry about the piggybacking high cost of insurance while buying a new car. If you need help choosing the right policy, head to for suitable insurance policies at great prices.
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