Now for the auto companies it is mandatory for companies to offer Long Term Vehicle Insurance three-year policies for buying new cars and five-year policies for new two-wheeler. The insurance regulator has made it with effect from September 1, 2018.
Long Term Vehicle Insurance Offer:
The IRDAI circular follows an SC directive last month asking insurers to issue only long-term third-party cover policies for new cars and two-wheelers from September 1 to avoid a situation of having uninsured vehicles on the road. Small cars (below 1,000cc) and two-wheelers (below 75cc) buyers will be able to lock in long-term policies at cheaper prices and avoid the annual increase in third-party premium that happens every financial year.
According to Reliance General Insurance CEO Rakesh Jain, this is 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 rates for third-party covers have been fixed by the regulator, for long-term own-damage (or comprehensive cover) insurers shall apply their own underwriting principles and start distributing the products from September 1, and file such products with IRDAI before September 15.