Page 46 - Insurance Times September 2019

Car owners to have more flexibility

in choosing their insurers

C ome September and owners of passenger cars the Supreme Court order of 2018. The apex court in an

order dated July 20, 2018, made it mandatory that the
and two-wheelers will have the option to select
third-party insurance cover for new cars should be made
their insurer while buying or renewing their mo-
available for a period of three years and for two-wheelers
tor insurance policy.
for a period of five years.
A comprehensive motor insurance policy has two parts —
third party liability (TP) and own-damage (OD) cover. Third- “The decision should be implemented from September 1,
party liability does not provide any benefit to the insured. 2018 on all policies sold,” the court had said.
But it covers the insured’s legal liability for death/disabil-
ity of the other individual and loss or damage of property “Customers often forget to renew their policies on time
of that person. The own damage part covers any damage and, hence, all accidental damages become their personal
caused to the vehicle of the insured. liability,” Dhirendra Mahyavanshi, co-founder, Turtlemint,
said while explaining the benefit of having long-term mo-
According to the regulations, it is mandatory for any ve- tor insurance policies.
hicle owner to have a TP insurance. So far, there is a choice
for the vehicle owner to buy a standalone TP liability policy After the Supreme Court order, in August 2018, IRDA came
or a comprehensive policy from the same insurance com- out with a circular where it said that insurance companies
pany. This is set to change. The vehicle owner now has the will have to comply with the court directive.
option to have third-party and own-damage covers from
The regulator, however, allowed insurance companies two
different insurers.
choices — offer a long-term package (3 years TP+3 years OD)
for new cars and (5 years TP+5 years OD) for two-wheelers.
Insurance industry regulator IRDA, in a circular dated June The other choice was a bundled package (3 years TP+1 year
21, 2019, said from September, insurance companies will OD) for new cars and (5 years TP+1 year OD) for two-wheel-
offer standalone annual OD cover for cars and two-wheel-
ers, both new and old.

This means an insurance company will offer three types of
motor insurance policies — a standalone TP policy, a
standalone OD policy and a comprehensive policy bundling
both TP and OD cover.

“Policyholders have the option to renew the own-damage
component of a bundled cover falling due on or after Sep-
tember 1, 2019, with the same insurer or a different in-
surer on an annual basis,” IRDA said in its circular.

The Supreme Court order

The genesis of the IRDA directive could be traced back to

46 The Insurance Times, September 2019