Insurance Cover For Auto Recall Risk Protection

According to the ongoing sessions of the Parliament, the new Motor Vehicle Act is likely to make auto recalls compulsory in the domestic market, thus, auto part firms and car companies are likely to buy insurance policies for protection from risks of product recall. In India, very few firms have opted for such an insurance cover, in comparison to mature auto markets of US and Europe.

Read more

Compare & Save upto 85%* on Car Insurance
Get Car Insurance starting
@ only 2094/year#
  • Renew Policy In2 Minutes

  • 20+ Insurers To Choose From

  • 51 Lakh+ vehicles insured

#TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

Auto expert Abdul Majeed of PricewaterhouseCoopers India informed that till November about 29 million vehicles were recalled globally except from India, because the country does not have any such policy.

In July 2012, the Society of Indian Automobile Manufacturers (SIAM) introduced voluntary code with an intent of enticing vehicle makers for recalling defective cars. This resulted in voluntary recalling of about 600,000 cars and utility vehicles by the auto makers in India.

The auto recall law, to be passed by the Government, will increase the expenses of auto parts suppliers and car makers by penalizing them for manufacturing and selling defective vehicles.

India’s largest car maker by sales, Maruti Suzuki India Ltd, incurred an expense of Rs. 100.9 crore in the financial year 2014 over product recall and warranties, as mentioned in the company’s annual report. It also combined other expenses amounting to Rs. 65 crore. Compared with last year, the company’s sale, including exports slimmed 1.4% to 1.15 million units.

According to the automobile recalls, the repair or replacement cost of parts and sub-systems that might be a risk to car occupant’s safety is taken care by the car manufacturer. General insurers are delighted with the growing opportunities they are likely to experience with the increasing expenses on recall, but surely the companies would enter only after a careful consideration of risk factors.

Chairman and Managing Director of the New India Assurance Co Ltd, G, Srinivasan informed that the company will require to rework on the terms and conditions since the strictness of norms would increase after the legislation is passed. He added that the company would review the quality control, practices and standards of the firm before underwriting the risks of this particular product segment.

Chief Financial Officer of Motherson Sumi System Ltd, G.N. Gauba informed that the company is covered for recall and liability and draws 85% of its revenue from outside India. Chief of underwriting and claims, Sanjay Datta of ICICI Lombard General Insurance Ltd informed that with the growing demand and the introduction of legislation, the share of such insurance is sure to increase from the current 1%. He added the reinsurance approach will be accepted by most of the insurers once the market picks up auto recall.

Vice President of Mahindra and Mahindra Ltd’s customer care at the automotive division said that currently the average online rate of product recall insurance is 2%–3% of AOA (any one accident) which would be reconsidered after the Government announces the policy.

Abdul Majeed of PwC added that it would be better for the vehicle makers and suppliers to opt for insurance cover to alleviate risks that are likely to affect companies with the introduction of the new policy.

(Source: This article has been adapted from the article "Auto firms plan insurance cover against increasing recall costs" that appeared on December 09, 2014 in

Find similar car insurance quotes by body type

Hatchback Sedan SUV MUV
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
 Why buy from policybazaar

Car insurance articles

Recent Articles
Popular Articles
Does Comprehensive Car Insurance Cover Hit and Runs?

09 Jan 2023

Yes, your comprehensive car insurance policy may cover the damages
Read more
The New IRDAI Regulations for KYC in Car Insurance

03 Jan 2023

As per the IRDAI guidelines, all motor insurance sectors including
Read more
How Can We Use Roadside Assistance Cover in Car Insurance?

09 Dec 2022

Roadside Assistance is an add-on cover offered with your
Read more
Is Nut Bolt Covered Under Car Insurance?

06 Dec 2022

No, any damage to the nut bolt or any other consumable of your
Read more
What Happens When You Only Have Third-Party Insurance?

05 Dec 2022

Third-party car insurance is a mandatory cover as per the motor
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Losing your car insurance documents can be daunting. In such a state of affairs, the first thing that comes to your
Read more
Check Car Insurance Status Online on Parivahan Sewa/ RTO?
It doesn’t matter if you are an excellent driver or take your car out only once in a few months, your car must be
Read more
Multiple Ways To Check Your Car Insurance Status Online
With everything going digital, checking vehicle insurance status online has become easier than ever. It not only
Read more
How to Find Car Insurance Details by Registration Number?
As a car owner, it is mandatory to have a car insurance policy under the Motor Vehicles Act, 1988. Sometimes, you
Read more
Transferring Car Insurance from One Person to Another
An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance
Read more