Are you planning to buy a car or a two-wheeler? Then, you should probably wait for a few more days as making the purchase post August 1 will help you save a significant amount. The Insurance Regulatory and Development Authority of India (IRDAI), in June, directed insurance companies to stop selling long-term motor insurance package policy to new vehicle owners from August 1, 2020.
The decision was taken to bring down the on-road price of the new vehicle and will benefit the customers. Simply put, anyone buying a vehicle after August 1 will not have to purchase a long-term insurance policy which included own-damage (OD) cover and third-party insurance for three years for car owners and five years for two-wheeler owners.
From the mentioned date, the comprehensive motor insurance which covers damage to the vehicle and damages (or losses) caused to a third-party person, for three years for cars and five years for two-wheelers will be scrapped.
The forced insurance plans not only added extra weight to customers’ pockets but also left them with no flexibility. These are the reasons which prompted IRDAI to scrap the policy.
From August 1, you will have to buy a long term third party liability insurance for three-year for four-wheelers, and for five-year for two-wheelers. Third-Party policy premiums are the same across all insurers, and the coverage is identical.
The customers will get the option to choose between ‘bundled’ policy or two separate policies. In the first case, you will get a combination of long-term third party liability policy, and one year own damage cover. While the second would include a stand-alone long-term third-party policy, and the other stand-alone own damage policy. Your no-claim bonus will accrue annually.
