Insurance regulator IRDAI has clarified that the long-term motor insurance products it had permitted general insurers to offer while implementing the Supreme Court’s directions in a case last year, applied only to new private cars and new two-wheelers.
“These products shall not be offered for renewal of existing policies or for old vehicles,” new Member (Non-life) T.L. Alamelu, who joined the authority earlier this month, said in a circular on Thursday.
A senior executive of a private general insurance company, who did not wish to be identified, said the circular cleared the confusion among some intermediaries whether the long-term policies could be issued to old vehicles too.
“It is hereby reiterated that long term motor product permitted under para 2 (i), 5 (i) [in the August 2018 circular issued as part of implementation of the Apex Court order] shall be offered only to new private cars and new two-wheelers,” the circular said.
Last year’s circular had said that with effect from September 1, 2018, insurers will offer only three-year motor third party (TP) insurance cover for new cars and five-year motor TP insurance policies for new two-wheelers.
With regard to (own damage) OD cover, IRDAI had said with the introduction of long term TP cover for new cars and new two-wheelers, two options may be given to the insured.
Two options
One would be in the form of a long-term package cover comprising TP and OD insurance for three years or five years as the case may be; and the other a bundled cover with a three- or five-year term for the TP component and a one-year term for OD.
Coming weeks ahead of the renewal of the one year OD component of the long-term policies issued to new cars and two-wheelers last year, the circular is bound to provide clarity.
For owners of old cars, this means they will able to renew their policy, comprising the mandatory TP and the optional OD for one year at a time.
