What are the few costs apart from the price of the vehicle when buying a new car? Registration, insurance, road tax, and other accessories for your car.
But, the festive season for all you auto enthusiasts is starting early this year. The regulator, Insurance Regulatory and Development Authority of India (IRDAI) has scrapped the option of long-term comprehensive motor insurance policies. Now you may wonder how does this affect you? This makes your overall cost cheaper as your car insurance policy is about to be inexpensive and economical.
Let us look at the rules that were in force earlier.
In August 2018, the Hon’ble Supreme Court, in its order, made it mandatory for every vehicle to have a long-term motor insurance policy. The buyer had three insurance options for their car –
|Type of Policy||Tenure|
|Long-term comprehensive plan (own damage along with third-party cover)||3 years|
|Third-party and own damage cover for different tenures||3 year third-party cover and 1 year of comprehensive coverage.|
|Only third-party insurance cover||3 years|
Now with effect from 1st August 2020, the option of a long term comprehensive plan stands withdrawn. This makes your car effectively cheaper. Thus, you will now mandatorily be required to purchase from the other two options, i.e. long term third-party car insurance for three years or a combination long term third-party plan and one year of comprehensive cover.
What is the impact of this amendment on you as a consumer?
Naturally, now that the on-road prices of cars will see a decline and shall attract more buyers. The upfront vehicle insurance for new cars is reduced due to annual own damage cover bundled with three-year third-party policy. This move is in favour of vehicle buyers.
Any dissatisfaction as a consumer can be addressed within the first policy-year. Also, you can look for own-damage cover for your car with other insurance companies too. In some cases, if your car is used infrequently, you can skip buying own-damage policy altogether. This way, it is an effective way to keep the car insurance premiums in check by only buying a third party liability insurance. A convenient point to note is that you can avail all covers online, including comprehensive as well as third party car insurance online.
What is the reason for discontinuing long-term own damage cover?
Earlier, with the bundling of own-damage cover for a longer duration, there was a burden on the buyers by way of additional insurance cost, thereby increasing the price of the cars. This was a deterrent at times in buying new cars too. To correct this, the regulator took feedback and decided to suspend the sale of comprehensive long term policies. Also, as the tenure increases, the policies started getting dearer. In case you want to change or switch the policy, you have to wait for longer durations. Added to it, the no claim bonus under such long-term policy was confusing.
To conclude, since the amendment removes the long-term option, it is your choice to make a careful selection of your insurance policy. You have the choice to select your insurer and the plan they offer annually. Topping it up with necessary add-ons like zero depreciation, engine protector, NCB protector, and more will help you increase the coverage and take advantage of these comprehensive plans to the fullest.