The insurance sector in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). It is the apex body concerning all things insurance. Be it life insurance or general insurance, all regulations are governed by IRDAI. These predefined rules and regulations ensure smooth functioning of insurance practices for both, the insurance company as well as the policyholders. This ensures a streamlined process at both ends. Noncompliance with these regulations attracts fines and penalties. This article mentions the guidelines for car insurance plans as defined by the regulator. You can visit the official website of IRDAI for further details.
Car insurance guidelines are applicable when you buy a policy using the traditional offline channel, as well as when buying car insurance online
. These regulations help to ensure a smoother claim settlement without any hassles, thereby avoiding fraudulent claims, eliminating malpractices, and helping address grievances.
Third-party car insurance plans
Third-party insurance is the minimum required insurance coverage when it comes to car insurance policies. This type of insurance plan helps safeguard the policyholder against any legal liabilities that may become payable to a third person in case of an accident causing bodily injury or damages. Thus, it is also known as a liability-only cover. The Motor Accidents Claims Tribunal is the authority that decides the amount of compensation to be paid for injuries to a person, whereas property damage is capped at ₹7.5 lakhs. With an insurance cover available for third-party losses, this insurance policy is a minimum insurance mandate as per the Motor Vehicles Act. *
Comprehensive car insurance policies
A comprehensive insurance plan is not compulsory by law, but in fact, an upgrade to the above-mentioned third party car insurance
. Since third-party plans offer no insurance cover for the damages to the policyholder’s vehicle, insurance experts recommend buying a comprehensive insurance plan.
A comprehensive plan has three parts—a third-party cover, own-damage cover and personal accident cover—that ensure all-round protection for the owner-driver, the insured vehicle as well as any legal liabilities. When you purchase a comprehensive insurance policy, you need not buy a separate third-party plan as it is included within its scope. In addition, comprehensive plans provide insurance cover for damages to your vehicle not only due to accidents but also natural calamities and man-made perils like vandalism, theft, riots, etc. Further, comprehensive plans can be customised using add-on covers that help to enhance the policy coverage significantly at a nominal increase in price. *
General policy exclusions
Like all insurance policies, vehicle insurance
plans are also limited in their scope. Thus, every car insurance plan specifically mentions what is covered within its scope and what isn't. Thus, you must thoroughly read the fine print to understand the exclusions in the insurance cover. Some examples of these general exclusions are mechanical or electric failures, routine wear and tear, intentional damage to the vehicle, and damages due to the consumption of an intoxicating substance. *
Earlier, car owners were mandatorily required to purchase long-term car insurance plans for a minimum policy period of three years. However, the amended regulations require purchasing only third-party long-term policy, thereby lowering the premium amount. Now you have the option to buy a third-party policy along with an own-damage cover on an annual basis. *
* Standard T&C Apply
These are some guidelines pertaining to car insurance plans that you, as a car owner, must know of. Staying on top of such regulations helps to comply with the law and stay protected at all times. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.