The insurance regulatory body Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to introduce three variants of vehicle insurance policies that include a long-term third-party cover, bundled cover with a term of one-year for own damage and a long-term comprehensive cover.
Below are discussed the salient features of each of these policy types:
Standalone long-term third-party insurance cover: In a general case, motor insurance is available for a one-year term. But in view of the low rate of individuals who go for renewing their vehicle insurance, IRDAI in a latest move has made a call for 3-year policy for four-wheelers and 5-year policy for two wheelers. The insurance regulator four years ago allowed 3-year policy for two-wheelers.
The standalone long-term policy issued with 3-year validity for cars and 5-years for bikes will provide for third party losses such as vehicle damage, disability as well as death. The policy also provides financial protection against vehicle owner's disability and death.
For these third-party policies, premium will increase for vehicles with a larger engine while for those with smaller engines premium will go down.
A bundled cover with a one-year term for own damage: This policy provides for four wheeler's third-party cover for 3 years and own damage for up to 1 year. While in case of four-wheeler, third party cover is extended for 5 years and own damage similar to cars is offered for up to 1 year only.
A long-term comprehensive insurance policy: This policy shall be available only in case of new vehicle purchase. Both third party as well as vehicle damage is integrated in the comprehensive plan for 3-years in case of cars and 5-years in case of four-wheelers. Besides, third-party insurance, the policy provides for vehicle damage as a result of different calamities, accident, theft, fire etc.