Even though third-party cover is a mandatory for motor vehicle owners, the compliance to the mandate is low. And for own damage cover the penetration as well as purchase is even lower. And to find a solution to this problem, the Supreme Court, government as well as the IRDAI have come ahead.
Long term TP liability cover was made mandatory in July 2018
But later given the high cost and less affordability, the ruling has now been done away with wherein three year TP cover was mandatory for 4-wheelers and 5 year for two-wheeler owners.
What Changes From August 2020 for Motor Insurance?
The earlier comprehensive long term policy that combined third party as well as own-damage policy shall no longer be available. The reasons for such a withdrawal of the long term cover are cited by the IRDAI and are as follows:
1. Challenge of actuarial pricing
3. forced selling
Now with the change, the impact shall largely be dependent on the fact as to when was your vehicle purchased
Planning to buy vehicle after August 1, 2020
You will be required to buy a long term TP cover for which the premium remains same across insurers. And for the own damage cover you can either buy a bundled plan, a long term TP cover plus one year own damage cover or the second option can be of buying two separate policies, one each for OD and the other for TP insurance cover. And on the accrued NCB, you can ask for discount while renewing your OD cover.