3rd party insurance period to be extended to 4 years for cars

The Insurance Regulatory Development Authority of India (IRDAI) has notified all insurance companies to design long-term third party insurance policies for cars and 2-wheelers. The notification stated that the cover period should be 4 years for cars and 5 years for 2-wheelers. At present, motor insurance is issued annually.

According to IRDAI, long-term third party motor insurance policy will reduce the need for renewing the policy every year. It is estimated that just 50% of the vehicles plying on Indian roads are currently insured. This number could increase with the introduction of long-term policies. The move is also expected to bring down the insurance rates.

These long-term policies will be filed under the file-and-use procedure, while the regulator will decide the rates. In March 2018, IRDAI reduced the third party insurance premium for cars with engines smaller than 1,000 cc by 10% to Rs. 1,850. The premium for cars falling in the 1,000-1,500 cc category has been set at Rs. 2,860, while for those with engines larger than 1,500 cc is Rs. 7,890. Third-party insurance premium for 2-wheelers was also reduced.

Source: Economic Times