What are the Benefits of Long-Term Car Insurance Policy?
Though a valid third-party insurance policy is mandatory for all vehicles in India, compliance to this law was found to be very low in 2018. As per a Supreme Court Committee’s report of March 2018, only one out of three vehicles in India was found to have a third-party liability cover. The report also mentioned that about 40% of cars that are more than three years old remain uninsured in India.
In order to reduce the number of uninsured vehicles on road, the Honorable Supreme Court of India gave a landmark order in July 2018, making it mandatory for all cars and two-wheelers sold on or after 1st September 2019 to have a long-term third-party motor insurance cover. The duration for this mandatory long-term coverage was 5 years for two-wheelers and 3 years for four-wheelers.
In August 2018, the Insurance Regulatory and Development Authority of India (IRDAI) directed the motor insurance companies to comply with the Supreme Court’s order and start offering long-term insurance plans for all vehicles sold after 31st August 2019. Also, it asked the insurers to offer bundled plans that can provide long-term coverage for both – third-party liability as well as own damage.
As a result, vehicle buyers were offered three choices –
- 3-year third-party cover
- 3-year third-party and 1-year own damage cover
- 3-year third-party with 3-year own damage cover