Car Insurance: Know the new rules that will impact your car insurance premium in 2019

Published: March 16, 2019 1:57:24 PM

Two major announcements by IRDAI has changed the way car insurance is to be bought by every car owner. Here is how they may impact your car premium.

car insurance, long term insurance cover, personal accident policy, Motor insurance in India, Motor insurance in India 2019, Long Term Motor InsuranceKnow the new rules for personal accident cover and bundled long-term car insurance in 2019 that will have impact on your car cover premiums.

Motor insurance in India in 2019 is different as there were some major changes in the industry in the calendar year 2018. The Insurance Regulatory and Development Authority of India (IRDAI) made two major announcements which have made the year very important for the growth of the insurance industry.

The IRDAI increased the Compulsory Personal Accident (CPA) Cover and also announced long term insurance cover. Let us talk about the changes and how they will impact you:

The Changes

The IRDAI announced that with effect from 1st September, 2018, all general insurance companies will offer long term motor insurance for all vehicles on the road. Apart from this, IRDAI also gave instructions to general insurance to increase the sum insured to Rs.15 lakh under compulsory accident cover.

Personal Accident Cover

The IRDAI announced that the sum insured for personal accident cover should be increased to Rs. 15 lakh. Before the announcement, the cover for CPA for two wheelers was Rs. 1 lakh and it was Rs. 2 lakh for four wheelers. The premium for the same was increased from Rs. 100 for four wheelers and Rs. 50 for two wheelers to Rs. 750 for all segments.

All general insurance companies adopted the change and this is a compulsory cover for the first year of the policy. The intention behind this change was to provide financial support and a proper cover in case of death or disablement due to an accident.

The Authority also issued directions that all the general insurance companies have to offer the policy owners all option to buy the CPA cover for one year or more. This notice received a lot of feedback as there are many insured who have a standalone personal accident cover policy from another insurance companies. Also, it was seen that there are some owner drivers who own more than one vehicle and thus the compulsory cover with each policy is not required.

Long Term Motor Insurance

The Supreme Court of India on July 6, 2018 passed an order after which the regulator issued instructions making it compulsory for new cars to have a three-year third-party insurance and five years for two wheelers. This change was done to avoid the hassle to issue the policy every year. Many people forget to renew the policy on time which results in loss of no claim bonus and also breaks the policy.

The Solution

After analyzing the problems, the IRDAI for the benefit of the customers, issued a new circular, in which with effect from 1st January, 2019, the Personal Accident component was unbundled from motor insurance policy. This implies that Motor Insurance in India in 2019 enabled the insured to buy their motor insurance policy with CPA or buy a separate policy from the insurance company. An individual should have one CPA policy which will be valid for all the vehicles. This implies that the cover has become optional for an individual when taking a motor insurance policy.

Motor Insurance in India in 2019 has seen many changes and now the IRDAI has given the permission to insurance companies to do the pricing of the products as per the individual pricing method. The regulator has also added that they have the authority to issue directions if they did not find the pricing approach being as per the principles set by them.

Now the CPA option has become optional and a stand-alone CPA is valid for one year and for all the vehicles owned by an individual. The coverage under the CPA policy with motor insurance will be only permanent disability (total and partial) and death.

On the other hand, in a regular personal accident policy there is cover against a motor accident and if an individual has this policy, the individual does not need to buy a separate CPA cover with his motor insurance. The changes in motor insurance have been made keeping in mind the benefit of the customer and hopefully they will achieve the same.

(By Balachander Sekhar, CEO, )

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