New Delhi: If you are planning to buy a new car or a bike in the near future then be ready to shell out more. From Saturday (September 1), insurance regulator IRDAI has made it compulsory for insurance companies to offer three-year policies for new cars and five-year policies for new two-wheelers, which will make the purchase of new cars, bikes costlier, the Times of India reported.
In order to avoid the situation of uninsured vehicles on the road, the IRDAI following a Supreme Court directive last month has issued a circular asking insurance companies to issue only long-term third-party cover policies for new cars and two-wheelers from September 1, the daily said.
Although buyers have to pay more at the time of purchasing a new car/two-wheeler for the insurance, they will be able to lock in long-term policies at cheaper prices as third-party premium charges increase every year.
The ToI report, citing ICICI Lombard General Insurance head (underwriting and claims) Sanjay Datta said the IRDAI’s order to offer three-year insurance on new cars is only for third-party cover and not for comprehensive cover. The rates for third-party covers have been fixed by the regulator and insurance companies have to provide cover at those rates.
So far as premiums for longterm own-damage is concerned, the daily said that insurance companies are free to apply their own underwriting principles and price premiums accordingly.
“For the own-damage part, it is too early to comment. The premium needs to be worked out, taking into consideration inflation on labour and spare parts over future of the policy period. The industry needs to gather more data points and decide on the pricing approach,” the ToI report quoted Rakesh Jain CEO of Reliance General Insurance as saying.
According to Jain, this is a positive development as many owners forget to renew their policies after the first year, the daily further said.