Vehicle insurance is something that you will need if you are focusing on buying a new one. Even if you do not know about the specific car you are buying, you should check out various car insurance options available in the market. You need to know the new vehicle insurance rules.
Before you shop, you should know about the insurance. It is advised to start your policy the same day you take your new car to your home.
So, if you do not have an existing car insurance policy while shopping for a new car, you should focus on opting for one. Even if you have just bought a new vehicle, you must have car insurance beforehand.
Policy starts from the same day you drive your new car to your home.
But, in this regard, you should know everything about the new vehicle insurance rules as discussed in the below-mentioned section.
Are you well aware of the new vehicle insurance rules? If not, then this section will prove to be very helpful for you.
If you are focusing on purchasing a new SUV, motorbike, or car, these new vehicle insurance rules will prove to be a boon for you. As a part of this, you can expect the price of the vehicle to be much lower than before.
Recently, the IRDA has issued a new notice to take out the long-term insurance for both two-wheeler vehicles, i.e., bikes and cars, which came into effect from Aug 1, 2020. Subsequently, the price of bikes, as well as vehicles, will become lower.
So, this revision in price also came into effect from Aug 1, 2020, as IRDA recently passed a circular for withdrawing the obligatory vehicle insurance (long-term) specifically for the new vehicles.
The Insurance Regulatory and Development Authority of India has made it mandatory for all the insurance services available in India to cease their damage cover specifically for the long term.
This particular thing contributed to adding an extra amount of money to the showroom price of the vehicles.
The overall thing was decided many years back, i.e., in 2018 (September month). During that time, the honorable Supreme Court of India had made the direction to the insurers available in India to provide a 5-year policy for 4-wheel vehicles and a 3-year policy for 2-wheelers.
As per the order provided by the Supreme Court, the insurers started providing two types of insurance coverage to those who have recently bought a new vehicle.
It includes one full year of own damage cover, three years of 3rd party cover, and three years of 3rd party insurance and OD.
In this regard, some of the vehicle dealers provided a misleading statement to the car buyers into buying both their damages and 3rd party insurance policy (long-term). Also, the OD cover was not obligatory in this case.
But the showrooms did not consider providing any other choice to the customers. Instead of giving the option to buy a 3+1 policy, these showrooms pushed them to opt for a 3+3 years policy.
But, this particular decision made by the Supreme Court was misused by the vehicle dealers. They consider raising the price of vehicles.
Due to this reason, the IRDA decided to roll back this decision which was related to the mandatory long-term OD insurance requirements. At the same time, there will be a further continuation of the long-term 3rd party.
Along with that, the insurance service providers experienced many issues while fixing the price in the premium category, specifically for some policies (long-term) that remain unchanged for 3 – 5 years.
Vehicle dealers misused the decision made by the Supreme Court (SC). So, they focused on raising the price of the vehicles.
This particular decision was decided to withdraw by the IRDA due to its obligatory OD insurance requirements (long-term). In this regard, the long-term 3rd party is expected to continue.
Generally, the insurance service providers focused on deciding the pricing based on the claim expectation.
During each of the renewals, they contributed to adjusting the pricing. However, implementing this obligatory policy rule (long-term), the insurers had to put up with this risk for three years. It is because the premium pricing was predetermined for a longer time.
This obligatory insurance policy (long-term) contributes to being added to the pricing of the vehicles.
And this particular thing also includes both the road tax as well as the registration charges. With the implementation of all these new rules, the cost of a car insurance policy that is focused on ensuring the vehicles will significantly reduce along with the coming down of the prices of the car.
Previously, with the insurance rule (long-term), those who bought the insurance were required to stick with the same insurance service provider until the term of the policy had not been ended. With the withdrawal of long-term policies, you will never experience such issues.
So, if you are unhappy with your insurer’s services, you get the option to change your policy to an entirely new insurer, but only after one year has been completed. It is applicable while you focus on renewing your policy.
If you are also focusing on buying vehicles, you should know about the essential benefits of motor insurance. It is something that will effectively lower the upfront cost of the vehicles as compared to before.
According to a recent report, those involved in providing vehicle insurance are now allowed to sell long-term OD or own damage policy cover specifically to the vehicle owners.
Also, as a part of this policy, the customers would not have to pay a higher upfront premium specifically for the insurance policy. However, they have the complete freedom to change the insurance provider after one year.
In this regard, you could either buy a bundled policy that is considered a combination of 1-year own damage cover and long-term 3rd party liability cover.
Another option is that you could buy two separate policies, one of these is known to be the stand-alone long-term TP policy, whereas the other one is the stand-alone own damage policy. Your no-claim bonus will accrue annually in this case.
At the time of the renewal of your damage policy, you can make use of your NCB or no-claim bonus for getting a discount.
So, these are some of the most important things you should know about the new vehicle insurance rules in 2021. It is always recommended to opt for a comprehensive policy if you are focusing on purchasing a new bike or a car.
Again, this comprehensive policy should include an own damage cover for one year and 3rd party cover for about three years compulsory.
As IRDA fixed this particular rule, the 3rd party insurance policy premium remains consistent across all the insurance service providers.
Therefore, to get the best policy at best, you should effectively compare the prices of a comprehensive cover. It is applicable whenever you focus on buying the policy. Otherwise, you would not be able to get the best deals.