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ICICI Lombard Expert Blog
 

Regulator Formulating New Vehicle Insurance Policies

March 21 2017
Vehicle Insurance Policies

Despite insurance being made mandatory on all vehicles plying on the road, the on-road situation is quite different. Out of all the vehicles running, 45% of them are without insurance. This number only goes up when we check the statistics for two-wheelers. In this segment, an alarming 60% do not have insurance cover; the problem is exacerbated by the fact that these account for a major chunk of road fatalities in India.

To address this acute concern, Insurance Regulatory and Development Authority (IRDA) along with GIC (General Insurance Corporation) are going to bring forth some new policies. One of these policies will make third party insurance premium payment mandatory for anyone purchasing a new vehicle at the time of registration itself. The only difference here is that the premium amount required to pay will be enough to cover a car for three years and a two-wheeler for five years.

Currently, the dealers push for comprehensive vehicle insurance as it gives them higher commission. The mandatory third party insurance comprises of only one-third of the premium that is paid by the owner for comprehensive vehicle insurance. IRDA and GIC will also be designing separate policies for own damage, third party and comprehensive vehicle insurance. This move bodes well for car owners, as they’ll be able to choose what coverage they want over and above what’s compulsory.

When these measures are introduced, they are expected to increase third party insurance coverage of motor vehicles. Moreover, a GIC panel has also urged the state governments to carry out inspection and identification of uninsured vehicles on a quarterly basis.

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