Following the Supreme Court’s orders, the Insurance Regulatory and Development Authority of India (IRDAI) asked all general insurance companies to offer long-term third-party motor covers to all existing policyholders. Additionally, the customer will have to bear a higher cost in the first year, because as per the directive, a portion of the third- party amount for three years needs to be borne in the first year itself.
This means that new car owners will now have to cough up more money for their Third party car insurance policies in the first year itself. As per rules, no vehicle is supposed to be running on the roads without a Third party (TP) insurance cover. This new rule is applicable to all cars bought after 1st September 2018
For those of you who have just bought a new car, you have three options to choose from.
- Buy a long term package
- Buy a bundled package
- Adhere to a standalone Third party car insurance
Let us look at each option in more detail:
- Long term package cover.
Such a package will include third party car insurance and own damage insurance for a span of three to five years. So those of you who are looking out to pay the insurance amount in one-go, this option sounds to be a fair one.
But the con that follows this is that if you intend to switch to a different insurer later, on account of lower own-damage premium they offer, then that would not be possible.
- Buying bundled cover.
Such a cover would offer you with three years or will offer you five years term for the third party component of the insurance, and also give one year term to cover own damage. This works for those who wish to keep their premium outflow regulated, should opt for the bundled cover option.
For buyers who find paying the insurance amount in one-go to be a burden can opt for the bundled cover.
- Standalone TP coverage.
This includes three years of third party coverage, without having to opt for any Own Damage coverage. With the new rules in, the only thing that changes here is that now the buyer has to purchase Third party coverage for three or five years.
In such a policy, it will save one a considerable amount of premium, but you will end up without any insurance cover for your vehicle damage. This may eventually turn out to be a big loss, if at all there is a major accidental damage or if the vehicle has been robbed.
The inclusion of newer guidelines on third party car insurance covers will make insurance agencies push long-term policies far more aggressively now. Not just that, these policies will be pushed at higher costs that would be available to a customer in an open market.
This is why consumers have to make informed decisions while buying insurance covers in order to avoid being scammed. As a consumer, you need to make a comparative analysis of all the deals you come across, and only then proceed with the one that suits your budget the best.