Due to the COVID-19 pandemic, the Indian government has undertaken strict measures to prevent the public's unnecessary movement, be it on foot or vehicle. Most working-class professionals have gone back to their home towns with no precise return date. Work from the home policy has been implemented successfully by most companies in India and across the world.
In light of the situation mentioned above, most vehicles are not utilized regularly as car/bike owners are sitting at home. Therefore, from August 1, 2020, the Insurance Regulatory and Development Authority of India decided to withdraw long-term third-party cover that is generally issued for 3 to 5 years for new motor vehicles and two/four-wheelers.
As per the latest notification made by the IRDAI, 'The Authority reviewed the various options of long term, and annual motor insurance covers now being offered, pertaining to own damage. Further, after a careful examination over the performance of these long-term package covers, they've been withdrawn with effect from August 1, 2020'.
What does this mean? Before August 1, 2020, general insurers were allowed to issue a three-year third-party insurance cover for all new motor vehicles/cars and a five-year, third-party cover for all new two-wheelers/motorbikes. Under this subscription model, motor vehicle owners could either opt for a long-term, three-year, or five-year own damage cover along with the compulsory third-party term motor insurance. The second option consisted of a compulsory third-party motor insurance cover and a one-year own damage premium policy that is renewed annually.
Post-August 1, 2020, general insurers will not be allowed to sell long-term third party own damage cover for motor vehicles. They will be allowed to issue only a single-year own damage premium term policy in combination with a three or five-year mandatory third-party liability motor vehicle insurance.
In short,
- Earlier (from September 1, 2018, to August 1, 2020), general insurers were allowed to sell long term three-year for car and five-year for motorbike OD premium insurance policies.
- Post-August 1, 2020, insurers will only be permitted to offer single-year own damage premium coverage at a time.
Note: There has been no change in compulsory three-year for cars or five-year two-wheelers/motorbike third party liability cover insurance policies.
What is a Third Party Motor Insurance Policy?
A third party motor insurance plan is a type of motor insurance cover that is mandatory to have if you are a car/bike owner. It is compulsory for all vehicles as per the Indian Motor Vehicles Act, 1988. Under a third-party liability insurance cover, you will only be protected from the damages and losses caused to a third person or property. This plan does not cover your own damage; damage to you and your vehicle.
Benefits of a third party liability motor insurance plan,
As mentioned above, a third-party liability motor insurance policy's primary objective is to provide cover against damages to a third person/property involved in an accident with your vehicle. For example, suppose you met with an accident or bumped into another person's car or property. In that case, your third party liability insurance plan will cover the expenses incurred to the other person/property. It is illegal for you to drive on Indian roads without a third party liability insurance cover.
With a third party motor insurance policy, you are protected from hefty traffic fines and penalties.
What is Not Covered?
The following instances are not covered under a third-party liability motor vehicle insurance cover.
- Damage to you, and your vehicle is not covered by your third-party liability motor insurance plan.
- Damages resulting from negligent driving/vehicle owner
- Driving/riding without a valid license
- Driving in geographical areas where the insurance cover is not applicable
- Utilizing private car for commercial purposes
- Instances of Terror, Nuclear, Chemical, BIological, War and Foreign Invasion
- Driving under the influence of alcohol, drugs, narcotics, and substance abuse
- Any damages that could have been avoided - Consequential losses
- Any damage arising out of intentional abuse
- Damages due to oil leakage
- Damage due to normal wear and tear
- Any damage to the vehicle engine
How is Third Party Motor Insurance Different From Comprehensive Motor Insurance?
Here is a list of the key differences between a third party and comprehensive motor vehicle insurance for car and bike:
| Criteria | Third-Party Motor Insurance | Comprehensive Motor Vehicle Insurance |
|---|---|---|
| Definition | This is a liability-only policy that provides coverage against damages caused to a third party or property | This is a 360-degree full-fledged protection policy for your car/motorbike. It covered damages to your own vehicle as well |
| What is Covered? | ||
| Limitations | It is more expensive in comparison to a third party liability cover | |
| Premium Amount | The premium for a third-party motor vehicle insurance plan is less The premium payment amount is determined on an annual basis that is revised by the Insurance Regulatory and Development Authority of India (IRDAI) |
The premium for a comprehensive motor insurance policy is more expensive than a basic third party liability plan The premium payment amount depends on multiple factors such as make, model, type of the vehicle, age of the vehicle, geographical location, depreciation, type of engine (petrol, diesel, or CNG/electric), security system installed, number of rider options, personal factors, type of customization and much more |
| Benefits | It is ideal if you happen to meet with an accident that results in some form of bodily injury to the other person or damage to the third person’s vehicle or property. | It is ideal against all types of damages, including the ones to the third party as well as to your own self and vehicle. |
| Why Buy? | It is mandatory and useful | It will provide you complete coverage and protection against all threats and perils of the road and man. You can claim discounts under an NCB. You can enhance the existing coverage of your comprehensive motor insurance policy with the help of rider options, at the cost of an additional premium amount. |
| Customizations | None | You can avail a wide range of rider options such as personal accident cover, roadside assistance cover, key replacement cover, engine protection cover, pillion rider cover, return to invoice cover, zero depreciation cover, gearbox protection cover, consumables protection cover, breakdown assistance, vehicle replacement cover, rental replacement cover and much more. |
In Simple Words,
A third party, motor insurance policy is your first line of defense against the dangers of getting involved in an accident. What you need to do is make a suitable combination of a third party motor insurance policy and a comprehensive coverage plan. This will make sure that you are protected all the time. Plus, you can get both of these plans on Coverfox!
