After introducing long-term third party insurance for two-wheelers in 2014, insurance companies are now looking to extend the same to cars also. Several general insurers have already approached the Insurance Regulatory and Development Authority of India (IRDAI), to seek an approval for selling these products. Currently, cars do not have the option of long-term insurance.
The Motor Vehicles Act makes it mandatory for all vehicles running on Indian roads to have third-party insurance. IRDAI, the regulatory authority brings about revised rates for motor insurance policies on a yearly basis. It is also important to note here that, rates for long-term insurance are fixed for the period of the policy and will not be affected by this revision. This cost benefit is one of the reasons that insurers feel will urge customers to buy long-term motor policies for cars.
However, the regulator, on its part, has said that the cost of total cover for cars will be three times the annual third party premium for two-wheelers. It has also iterated that the premium would not be revised upwards or downwards during the policy period. This is in contrast to segments like commercial vehicles, in which it’s not feasible to have policy where premiums cannot be revised annually due to high incidences of claims.
It’s not only a three year, third party motor insurance policy that is under consideration. There are also discussions regarding a five-year plan, although it’s still in early stages.
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