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August 15, 2014
The Insurance Regulatory and Development Authority (IRDA) has given approval for general insurance companies to provide third-party motor cover for two-wheelers for three years instead of renewing the cover annually as is the current practice. The new measure could be replicated for four-wheeler and commercial vehicles.
IRDA said the new policy had been introduced following representation from various general insurance companies for long-term motor products, according to local media reports.
IRDA has also spelt out conditions for the new product. The regulator said that the total premium charged for the third-party coverage would be thrice the annual premium for two-wheelers as decided by the regulator. The entire premium would have to be made in one payment.
Insurers will not be able to revise the premiums during the three-year term of the policy. They will also not be allowed to cancel standalone third-party cover, except in the case of total loss where the premium for the unexpired period of the policy will have to be refunded.
IRDA said that insurers can also file a three-year term comprehensive policy for two-wheelers.
General insurers welcome the IRDA move. At present, getting insurance for two-wheelers at the time of purchase is mandatory. The problem arises from the second year onwards when owners often fail or forget to renew their vehicle insurance cover, according to industry players.