- Date : 14/11/2019
- Read: 3 mins
IRDAI has come up with new rules for motor insurance to make the Indian roads safer and the claim process quicker.
The Insurance Regulatory and Development Authority of India IRDAI has come up with renewed rules in an attempt to transform the motor insurance landscape in India. From making Indian roads safer by providing incentives to bettering the claim settlement ratio and bringing in transparency, these regulations are a welcome change.
Here is a look at what the new measures are and what they mean.
A good driver pays lower motor vehicle insurance premiums
The IRDAI order states that drivers that follow traffic rules and avoid traffic violations will have to pay lower motor insurance premiums. On the other hand, insurance premiums of drivers that get into accidents or break rules will be significantly higher. This ruling is an attempt to incentivise drivers to make the Indian roads safer as good driving will result into immediate savings. However, the implementation will not be easy. The government will have to create the right infrastructure, set specific rules as per violations incurred and enable an appropriate insurance premium calculator.
Issuing of long-term motor vehicle insurance
The new diktat states that vehicle owners can buy standalone long-term own damage insurance covers as long as they have third party insurance covers. Earlier, owners were able to buy third party insurance premium that had to be renewed annually. They could either buy just third party cover or comprehensive covers that came bundled with own damage cover. Then last year IRDAI directed insurance companies to sell long-term third party covers – three years for four-wheelers and five years for two-wheelers. With this what happened was owners had three-year third party cover but their own damage cover expired in a year. The new rule allows car owners to get standalone own damage cover after it expires.
Elimination of surveyor report for faster claim settlement
IRDAI has raised the amount for motor insurance companies to settle claims without involving a surveyor from Rs 50,000 to Rs 75,000. This means that insurance companies can settle claims for any amount below Rs 75,000 without having the car inspected by a third party surveyor. As per industry reports, this has been done keeping inflation in mind. This will automate processes and speed up the claims settlement process. As insurance companies move towards digitisation, the new ruling is a step in the right direction.
Compulsory cancellation of a vehicle registration document
Regulations also state that owners will have to compulsorily cancel vehicle registration certificates of vehicles that have been destroyed. This could happen because of accidents, fire or usage over a long period of time. This move will help reduce fraud of documents being attached to other vehicles illegally. Once a vehicle has been declared a total loss, owners will have to get the registration cancelled to be able to claim insurance amount.
Keep these new regulations in mind when you are on the road. Safe driving. Check this 5 Commonly asked questions about motor and car insurance.