IRDAI has issued a guideline; comprehensive insurance policy will now be for one year
Affordability for a potential buyer and other loopholes has brought about this amendment
Third-party insurance can still be taken for three years
In a recent amendment to the insurance policies issued for new passenger vehicles, The Insurance
Regulatory and Development Authority of India (IRDAI) announced a guideline wherein no new vehicles
purchased on or after August 1, 2020, will need to purchase a three-year comprehensive insurance
policy. The guideline comes in lieu of the loopholes existing in the existing system which have created a
a lot of discrepancy in No Claim Bonus (NCB), transfer of insurance if the vehicle is sold within the
stipulated time, potential mis-spelling, and affordability of long-term insurance policies.
This move will ease the burden on a consumer purchasing a new vehicle, however, this would also
create a repeated yearly process for which the same consumer would have to keep a financial
bandwidth each year. Bundled policies created a lot of confusion especially while the sale of a new vehicle
which had a valid insurance policy as a pre-owned vehicle.
Validating the affordability factor of such insurance policies, our team spoke to a retired government
official who recently purchased a passenger car. To avoid the hassle of renewing insurance every year,
Mr. Harcharanjit Singh went in for a five-year comprehensive insurance policy. He does agree that the
insurance cost almost Rs 50,000, but, it was a one-time cost. However, his apprehension has been
that when the time comes to sell his car, would the insurance be transferred without any hassle to him.
“Being a retired officer from the Government, I am happy that IRDAI has taken out this initiative. It saves
a lot of hassle and worries when selling your vehicle to someone else. As the worry of the vehicle being
involved in a crash and the person coming to me for any signatures as the insurance could not be
transferred will be troublesome, not just for me, but, for anyone,” he asserted.
Third-party insurance can still be taken for a period of three years as opposed to comprehensive
insurance as it involves less paperwork and hassle in transferring. With the advent of this new guideline
which will be implemented from August 2020, a sigh of relief will be there for potential new car buyers.