IRDAI has proposed a new regime for two wheelers and four wheelers. Due to this, the insurance cover for vehicles will be available for a long period. Apart from this, IRDAI has also talked about making changes in the provisions of house fire.
Insurance regulator IRDAI has proposed to introduce insurance cover of three years for cars and five years for two-wheelers with an aim to provide a wider choice of insurance to the customers. The Insurance Regulatory and Development Authority of India has prepared a draft on long term motor insurance covering both ‘third party motor insurance’ and ‘own damage insurance’.
The draft proposes to allow all general insurers to have a 3-year insurance policy in respect of private cars and a 5-year motor third party liability cover for two-wheelers.
What is the proposal of IRDAI
Premium for the entire period of policy coverage will be collected at the time of sale of the insurance. As per the draft, the pricing will be based on the sound principles of the insurance sector, including claim experience and long discount period. The draft states that the cost of add-on and optional cover may be decided on the basis of policy administration. IRDAI has invited comments of all stakeholders by 22 December.
The policy states that the existing No Claim Bonus (NCB) for 1 year motor on damage policy will be applicable for long term policies as well. In case of long term policies, the NCB applicable at the end of the policy term will be the same as would accrue on annual renewal of such policy.
Standalone Own Damage Policy
In case of long term standalone own damage policies, which are issued to be co-terminus with motor third party liability cover, the policy term of nine months may be treated as a full year for recognition of NCB . IRDAI has also proposed to draft a long-term policy on fire and allied hazards.
Such housing includes standalone residential houses, villa complexes as well as apartment blocks managed by housing co-operative societies or resident welfare associations or any other body. Long term fire insurance can be canceled during the term of the policy.
