Long term motor insurance package cover set to return
Long-term motor insurance policy is expected to make a comeback: insurance regulator IRDAI has floated an exposure draft that permits general insurers to sell longterm motor insurance policies along with details on pricing and cancellation.
The regulator has proposed three-year policies for private cars co-terminus with motor third party liability cover and five-year policies for two wheelers, co-terminus with motor third party cover.
The regulator has further proposed long-term own damage cover in the case of renewal of standalone own damage policies such that the long-term own damage cover is co-terminus with third cover.
Earlier, general insurers were allowed to offer a long-term cover for both motor third-party insurance and own damage insurance for three years (new cars) or five years (new two wheelers). Additionally, standalone own damage covers were introduced for cars and two wheelers, both new and old. But the regulator decided to withdraw the long-term covers effective from August 1, 2020.
“The proposed changes will help in taking motor insurance products to smaller cities in the times to come,” said Aftab Chaz, associate director and business head at Elephant.in — Alliance Insurance Brokers.
“For the customers the initiative may bring in additional discounts in terms of their own damage premium. However, this is at the discretion of the insurer. It can also hedge them from any spike in the third party premium during the coverage period,” said Debasish Roy, head PoS business, Anand Rathi Insurance Brokers.