- New vehicle owners need to buy a comprehensive cover for one year
- Third-party insurance is still mandatory for three and five years for car and two-wheelers respectively
Buying new car and two-wheelers in India will become slightly cheaper from the beginning of next month. The on-road prices of these vehicles will witness reduction from August 1 as a result of IRDAI, the insurance regulator of India withdrawing its mandatory long-term insurance package plans.
IRDAI announced to withdraw the long term package policies which were earlier permitted for new cars and two wheelers.
“Effective September 01, the insurers shall make available stand alone annual Own Damage covers (including stand-alone OD cover for fire and/ or theft if opted by the policyholder), for cars and two-wheelers, both new and old,” said the circular issued by IRDAI in June.
The circular also mentioned that the policyholder may renew the own damage component of a bundled cover due on or after September 1, with the same insurer or a different insurer. This eases the presure on the policyholder to stick with the same insurer.
New vehicle owners need to buy a comprehensive cover for one year, while third-party insurance is still mandatory for three and five years for car and two-wheelers respectively.
The long-term insurance cover was introduced in September 2018 which mandated buyers to purchase a combined (own-damage + third-party) insurance for a period of three years and five years in case of cars and two-wheelers respectively.
Recent data of car sales and the auto component industry remained muted due to the lock down on account of Covid19. This small relief from the insurance regulator, at this time when the industry is facing low demand, might help to cheer the buyers to some extent.
