Cars, bikes, scooters to get cheaper from August 2020: Here’s why

IRDAI will be withdrawing the mandatory long term vehicle insurance policy from August 2020, meaning that the on-road prices for cars, SUV, bikes and scooters will see a reduction soon. The change is expected to take effect from August 1, 2020 but existing policyholders need not worry.

By:Published: July 28, 2020 7:03 PM
Motor Insurance, Motor Third Party Insurance, Own Damage Insurance, Motor Third Party Liability, withdrawal of long-term motor insurance cover, no-claim bonus, NCB, portability, renewal premiumIRDAI has decided to withdraw the long term cover for Motor Own Damage only.

From August 1, 2020, motor vehicles like cars, SUVs, motorcycles and scooters will see a reduction in on-road prices. This is due to the Insurance Regulator and Development Authority of India (IRDAI) withdrawing the mandatory long term motor vehicle insurance package for new vehicles. The policy was introduced in September 2018 after the direction of the Supreme Court of India to insurers to offer a three-year policy for two-wheelers and a five-year policy for four-wheelers. But due to the misuse of the policy, the regulator has decided to scrap the mandatory requirement for new motor vehicles. The circular was issued by the regulatory board in June 2020 and is said to have informed all insurers to withdraw the long-term covers effective of August 1, 2020.

The implications of this will allow the on-road prices of new motor vehicles to see a noticeable drop. More so because the cost of insuring the vehicle is also expected to see a reduction. This will also allow a customer to not be committed to a single insurance provider for a long period of time. So if you’re not happy with the service of your insurance provider, then you can opt for a different provider at the end of the coverage tenure of the vehicle insurance policy.

If you are already committed to an insurance prover for the long term with a policy that covers both third party and own-damage. It is worth noting that the long-term third party policy will continue to be mandatory and your coverage will remain valid. If you wish to switch your insurance provider, you will be allowed to do so for your comprehensive policy that will cover your own damage to the vehicle at the time of renewal.

With the new ruling, the mandatory policy for long term third party policies, and one year for comprehensive coverage remain in place. The No Claim Bonus (NCB) will be retained at the time of renewal even if you change your insurance provider should you do not claim your insurance during the tenure of your coverage controlled under the India Motor Tariff policy.

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