Longer duration motor third party insurance cover is all set to become mandatory for new cars and two-wheelers as scheduled from September 1, with the Supreme Court on Friday refusing to extend the deadline.
A bench of Justices Madan B. Lokur and S. Abdul Nazeer dismissed an application filed by the General Insurance Council (GIC) seeking extension of the deadline set by the apex court. On July 20, the court had said that third-party insurance cover for new cars should mandatorily be for a period of three years and for two wheelers, it should be for five years. At present, the MTP cover period is one year. Subsequently, insurance regulator IRDAI had advised general insurers concerned to first design such a longer term MTP cover. More recently, on August 28, issued a circular directing them to comply with the Supreme Court directive from September 1.
Most of the general insurers dealing in motor insurance had filed long MTP cover with the Insurance Regulatory and Development Authority of India (IRDAI) for approval. Sources said most of the companies would have such policies to offer from September 1.
There are two components of motor insurance – the MTP cover that is mandatory under law and the other, own damage cover. According to sources, a few insurers are ready with long term comprehensive motor cover, comprising both MTP and own damage, as well as a bundled product.
Under the latter, they would offer MTP for the stipulated time-frame plus own damage for a year that can be renewed.
‘For existing vehicles’
Puneet Sahni, Head- Product Development, SBI General, said the company had been working on the long-term motor insurance product well in advance and was ready to offer the same from Saturday.
The company was also working on an option to offer the long-term product for existing vehicles as well.
Bajaj Allianz General Insurance sources said the company would be rolling out both comprehensive and bundled motor insurance policies from September 1.
For customers, the lump sum to be paid upfront increased marginally for a long-term policy.
However, this was “negligible when compared to the total amount paid over three years, including increase in TP premium annually, in the case of regular motor insurance cover,” Mr. Sahni explained.
Sources in the insurance industry said the practice of car dealers offering first year insurance free, as part of festive offers and to push sales, is likely to be discontinued.
(With PTI inputs)