Going by the headline, you must be thinking that in such a time when Covid-19 has taken the Indian auto industry on backfoot and the vehicle prices, especially for two-wheelers are rising, how the on-road figures will be going down. Well, it is likely going to be possible in the coming days. Insurance Regulatory and Development Authority of India (IRDAI) has made an announcement very recently that states the withdrawal of the long-term motor insurance package policy starting 1st August, 2020. A circular that announced this decision noted that the said decision by IRDAI was taken due to a number of factors. Vehicle insurance in India currently comprises third party insurance and own damage insurance out of which the latter is optional. In the year 2018, the Supreme Court had ordered mandatory policies on the purchase of new vehicles. This was three years for new cars and five years for new two-wheelers. After this, the insurance companies started offering long-term policies to the buyers of new vehicles.
In addition to this, the fact that numerous vehicles across India are often purchased with a loan, the lending firms put forward a demand for comprehensive or package insurance cover. That said, with all these factors in place, the new vehicles became expensive. Very recently, IRDAI made the changes in the long-term policy package and one of the prime reasons being, in case a customer finds the insurer’s services not satisfactory, he or she will still be stuck with them, courtesy of the long-term nature of the policy.
Now, with the latest development, as the long-term motor insurance policies have been put out of the picture, the on-road prices for both four-wheelers and two-wheelers is most likely to go down. This eventually will encourage more and more people to buy new vehicles in India. That said, in the current unprecedented times, when the economy is dropping and the automotive industry is on an all-time low, the said decision should certainly contribute a bit in the recovery process.
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