This is a must read if you plan on buying a car after 1st Sept, 2018.

1. Car Insurance

2. This is a must read if you plan on buying a car after 1st Sept, 2018.

3. Thinking of buying a new car this year? Well, that’s great and we congratulate you on your purchase in advance. But having said that, you should be prepared to shell out a little more on your purchase due to the IRDAI’s new mandate on car insurance. The insurance regulator has recently made it compulsory for every general insurance company to issue 3-year long-term third party insurance on the purchase of a new 4-wheeler. This mandate follows a Supreme Court ruling making long-term policies compulsory on the purchase of a new car or two-wheeler; a ruling which has been passed considering the fact that only 6 crore out of the total 18 crore vehicles plying on Indian roads has a valid motor insurance policy.

4. But what does this mean for you? Put simply, the ruling, among many other things, will result in higher on-road prices of both cars and bikes. How? Well, if you were to buy a car or bike any time earlier this year, you could have opted for a single year plan but now it’s mandatory to purchase multiple years of cover (3 years) which is bound to drive up the on-road price of your vehicle. Is the mandatory cover your only option? Technically, you have three options. The first is to settle for the mandatory 3-year third party covers that’s now mandatory on the purchase of new 4-wheelers (this will not provide own damage cover). If you want own damage cover, your second option would be to opt for a single year of own damage cover in addition to the mandatory 3-year third party cover. This would require you to renew the own damage component every year. If you want to skip the hassles of early renewals, your third option would be to opt for 3 years of own damage on top of the 3 years of third party insurance that’s been made mandatory.

5. What are the advantages of the new mandate? -No yearly third-party premium hikes: Previously, you could opt for a single year of third party cover and renew it every year. However, since the IRDAI hikes the premium of third-party insurance every year, you’d have to pay an increased premium amount every time you renew the plan. Something you skip with a 3-year third party car insurance. -No need to renew the plan every year: With a single year plan, you’d have to renew the policy every year. However, with the long-term policy that’s now mandatory, you can forget about renewing your policy for three years!

6. So if you’re thinking of buying a new car, it’s important you take into consideration the IRDAI’s new mandate on third party car insurance. Remember that this mandate only means that the upfront premium for 3 years has to be paid only on the third-party liability and not on the own-damage (OD) section. We hope this article has been helpful, good luck and all the best!

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