For the revival of the industry during an uncertain situation of the pandemic, the automobile industry demanded a new policy. Therefore, the Insurance Regulator and Development Authority of India (IRDAI) has announced to end the long-term comprehensive motor insurance which was mandatory, earlier. The new regulations are to be followed from August 1, 2020.
Earlier the customers, while buying a new vehicle had to pay for the long-term insurance which resulted in a high on-road price. Now with the simplification of this policy, a buyer will only have to pay for third party insurance compulsorily.
In a nutshell, till now customers on the long-term comprehensive plan need to buy a three-year plan for a 4-wheeler and a five-year plan for a 2-wheeler. Meanwhile, as soon as this new policy will be implemented visible changes on the on-road prices can be experienced. After August 1, the new buyers of the vehicle will have to buy a three-year plan for a 4-wheeler and five-year plan for a 2-wheeler but it will be a third party insurance plan which will reduce the initial year cost for them.
However, the buyers will get an option to buy an Own Damage (OD) insurance which will be a bundle policy that includes both third-party insurance + OD. Also, a standalone own-damage policy option can be considered.
During this revival period, the new motor insurance policy can make a substantial difference while reviving the economy as well. According to the IRDAI, a slight increase in sales after introduction to this policy can also be witnessed.