With effect from 1 September, general insurers are to make available to customers annual standalone Own Damage (OD) covers for both new and old cars and two-wheelers, according to a directive issued by the insurance regulator IRDAI.

Consequently, the issuance of bundled policies for cars and two-wheelers will not be compulsory from 1 September, the IRDAI added. Insurers will have the option to offer packaged policies, in addition to standalone OD and third-party policies.

However, long term standalone OD policies will not be permitted for the present.

For the issuance of standalone OD annual cover as well as for the renewal of the OD component of a bundled cover, insurers will have to ensure that the cover is offered only if a motor third-party (TP) cover is already in existence or is taken simultaneously.

Also, the pricing of a stand-alone OD policy should continue to be that being offered for the OD component of a packaged policy (the same was followed for the OD component of a bundled product as well).

Mr Onkar Kothari, company secretary and compliance officer at Bajaj Allianz General Insurance told Press Trust of India that the IRDAI directive provides much needed clarity on standalone motor OD policies, their pricing and duration.

"It's going to be an annual policy. IRDAI has also made it mandatory for insurers to ensure that no vehicle should be insured only for OD cover, and the insurer needs to mention the start and end dates of the third party policy and the name of its issuer while issuing a standalone OD policy," he said.

Customers, who have chosen bundled cover, will have the option to renew their OD cover from an insurer of their choice rather than continuing with the one they have for third party liability cover.