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IRDAI Implements 3 Year Car Insurance Policy on New Car from September 2018 in India

IRDAI Implements 3 Year Car Insurance Policy on New Car from September 2018 in India

Car Insurance Policy Term now Extended to 3 Years basis IRDAI Circular. Know Important Points about Depreciation, No Claim Bonus, Third Party Insurance Premium 

 

Car Insurance Policy now for 3 Years

IRDAI introduced in Long term Car Insurance Policy which is going to be mandate effective 1st September 2018 in India. Its important to note that Long Term Policy is only applicable at time of Sale of New Car. For Used Cars - annual Insurance premium would continue

There are 3 Options for Owners while Selecting Car Insurance

1. Third Party Insurance: Either to go with Third Party Insurance on Longer Term. Below would be the Premium Rates for Third Party Insurance Premium for 3 Years

Car Engine Capacity Third Party Insurance Premium
Engine Under 1 Litre Rs 5286
> 1 Litre but < 1.5 Litre Rs 9234
> 1.5 Litre Rs 24305

Additional would be 18% GST as applicable

2. Comprehensive Policy with 1 Year OD Premium and 3 Year Third Party: Second Choice is under Comprehensive Policy where the owner pays 1 Year OD Premium and 3 Year Third Party Premium at the time of buying New Car. Important to note that Subsequent Premium for 2nd Year and 3rd Year would only be OD Premium and requisite NCB Discounts would be applied on to it

3. Comprehensive Policy for 3 Years: Third is to make Single Payment as All Inclusive of 3 Year OD Premium and 3 Year Third Party Premium at one go. This leads to convenience that Insurance Policy cover is comprehensive cover for 3 Years and ofcourse the Premium would be highest. To give Instance - Hyundai Verna Premium can set to Rs 1 Lakh in this Scenario

In this case, the Insurance Company calculates 3 year insurance Premium and NCB is calculated basis below chart

Total Number of Claim in 3 Years NCB on Renewal of Policy in 4th Year
No Claim in 3 Years 35%
1 Claim in 3 Years 25%
2 Claim in 3 Years 20%
3 or more Claim in 3 Years 0%

Depending on Owner Preference - he can choose any Policy Type from any Insurance Company. 

 

Insured Declared Value in 3 Years Comprehensive Policy: Even though the Car Insured at 95% IDV at time of sale and Insurance premium paid for 3 years, The IDV Value will depreciate year on year in 3 Year Comprehensive Policy even. An Indicative Depreciation would be 15%

For Cancellation and Refund: Policy only allowed to be cancelled and premium subject to be refunded on Pro-rata basis as below

» Vehicle not in use anymore because of Total Loss or Constructive Total Loss

» ln the event the vehicle is sold and/or transferred

All Insurance Companies - ICICI Lombard, Bajaj Allianz, Tata AIG and PSU Players will offer in Long Term Car Insurance from September 2018 in India

Zero Depreciation Cover: For any one looking for add on cover of Zero Depreciation can well take it by paying additional premium

 

What you need to Know about Long Term Motor Insurance - as Crux

1. The government has only made 3 years third party Insurance on brand new vehicles mandatory.

2. You can still buy only 1 year full insurance on your brand new vehicle. Effectively means 1 Year Own Damage Cover and three year of Third Party Cover

3. No changes in Insurance of existing vehicles (means Old Cars). The Insurance of existing Vehicles shall be renewed annually. The Policy applicable only on New Cars

4. You have following three options in Insurance when you purchase a brand new vehicle

   a - Purchase 3 years stand alone Third party Insurance (only third party)

   b - Purchase 3 years full Insurance (very expensive option , not recommended)

   c - Purchase 1 year full insurance plus 3 years Third party Insurance - Highly Recommended as You can still change your insurance company and get the best deal and better coverage as per your requirement at the time of renewals rather than getting stuck with one company and one plan for three years.

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Important: If you seek advise or recommendation, pls raise query in Car Forum instead of posting in comments

 

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