Following a recent supreme court order, long-term third-party insurance policy has been made mandatory for new cars and two-wheelers, starting from September 1, 2018.
Buying a car insurance or two-wheeler insurance is set to cost more from September 1, 2018 as the Insurance Regulatory and Development Authority of India has made long-term third-party insurance policy mandatory. The new rule, which follows a supreme court order dated July 20, is expected to raise premium rates as insurance for new cars and two-wheelers can now only be availed for a longer duration. Third-party insurance covers for new cars and two-wheelers have been mandatory for at least 3 years and 5 years, respectively.
The premium rates for a 3-year third-party insurance cover will amount to Rs. 5,286 for cars with engine capacity of less than 1,000cc, Rs. 9,534 for cars with engine capacity of 1,000cc to 1,500cc and Rs. 24,305 for cars with engine capacity of 1,500cc and more. For two-wheelers, the 5-year third-party insurance will cost Rs. 1,045 for vehicles with engine capacity below 75 cc, Rs. 3,285 for vehicles with engine capacity from 75cc to 150cc, Rs. 5,453 for vehicles with engine capacity from 150cc to 350cc and Rs. 13,034 for vehicles with engine capacity exceeding 350cc.
Currently, in the motor segment, two kinds of policies are issued - standalone motor third party policy and comprehensive motor insurance. With the new ruling, general insurance companies will now offer 3-year third party insurance cover for new cars and 5-year third party insurance cover for new two-wheelers as a separate product (standalone motor third party policy) or in its comprehensive insurance product. Having at least a third-party insurance cover for vehicles is mandatory by the Indian law. According to news reports, the insurance regulator has suggested that following the implementation of the new order, an insured should be given two options - long-term package policy which covers both motor third party insurance and own damage insurance for 3 or 5 years (whichever the case may be) or a bundled cover with a 3 or 5-year term for the third-party component and a 1-year term in case of own damage.
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