Insurance Regulatory and Development Authority (IRDA) has introduced three years third-party insurance for two wheelers to enable long term motor insurance for these vehicles. Regulator has decided that the premium charged for the third-party coverage would be thrice the annual premium of third party cover for two-wheelers. The third party premium rates are finalized by IRDA and are being revised every year by the regulator depending upon the claim experienced. In India, third-party motor insurance is mandatory.
During the period of the policy, there would not be any revision in the premium rates whether upward or downward, as informed by the insurance regulator. Since there would not be any premium fluctuations for three years, the two-wheeler owners are likely to opt for these, as per the assumptions of insurance industry executives. As per the sector officials, there won’t be yearly renewals which would save cost of the firms. This benefit would be carried forward in the form of discounts on own-damage feature
But the customers will have the option of either staying with their one-year policy or selecting the 3 year policy.
Third-party motor insurance has two parts- own damage and third party cover where the later is compulsory while the earlier is optional. Own damage safeguards the driver from accidents while the third party covers liability from third party accidents.
General insurance companies are all set to launch this product. TAT AIG General Insurance is to file a product in tandem with the guidelines set by IRDA, as informed by the company’s national head (personal lines) Madhukar Sinha. He also mentioned that if IRDA approves, the company would offer add-ons. The product pricing would be decided after the analyses of the past trends. The two-wheeler’s third party premium has seen a rise by 9-10% from 1st April 2014.
According to the head of underwriting and claims at ICICI Lombard, Sanjay Datta informed that the company is about to launch third party policy for two wheelers once done with filing of product with IRDA. Later, ICICI will be filing a comprehensive plan also.
As per the terms and conditions laid by IRDA, the entire premium of standalone third-party cover needs to be paid in one installment that cannot be cancelled in any circumstances except for total loss. During total loss, the owner will be refunded full premium for the unexpired years. A letter of intent is to be submitted to IRDA if any non-life insurance company is willing to introduce these policies.
Understanding the need of comprehensive cover, IRDA is ready to welcome 3 year comprehensive policy for two-wheelers that includes own-damage and third party covers. In this, the third party covers liability caused by vehicle owner during an accident to the third party and own damage covers losses to self during accidents.
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