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IRDA Guidelines for Motor Insurance

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The Insurance Regulatory and Development Authority (IRDA) has formulated guidelines that have to be adhered to, by any general insurance company offering motor insurance policies in India. Customers have to avail motor insurance policies only from companies registered with the IRDA. Motor insurance widely encompasses private car insurance, two-wheeler insurance, commercial vehicle insurance and all other types of road transport vehicles. In India, it is mandatory to own a motor insurance policy for any type of vehicle. This is because driving a vehicle without a valid insurance plan is a punishable offence as per the Motor Vehicles Act, 1988. A certificate of insurance will be issued apart from the policy by the insurer according to Rule 141 of Central Motor Vehicle Rules 1989, when a motor insurance policy is availed.

IRDA Guidelines for Motor Insurance

What does Motor Insurance offer?

A Motor Insurance policy offers comprehensive coverage to the policyholder against the following -

  • Damages to the insured vehicle,
  • Compensation for Third Party Liability against the vehicle owner inclusive of Third Party Property Damage

Types of Motor Insurance policies in India:

Insurance companies across the country offer two types of motor insurance covers for vehicle owners -

a) Liability Only Policy - Third Party liability insurance is mandatory for all registered vehicles in India.

If a customer chooses a Liability Only Policy, then vehicle damages will not be covered by the insurer.

b) A Comprehensive Package Policy - Protection against damages to the vehicle plus the Liability Only Policy.

A Package Policy would offer a car owner wider coverage for their insured vehicles.

Coverage under any Motor Insurance policy in India:

Damages occurring on any vehicle due to the following natural and manmade perils are covered -

Natural Disasters/Perils Other types of perils
Fire Theft / Burglary
Lightning Housebreaking
Earthquakes Floods/Cyclones/Storms/Tempests/Hurricanes/ Frost / Hailstorm / Inundation Explosion
Rockslides / Landslides Self-Ignition
Strikes / Riots / Terrorism/Malicious Acts
While the vehicle is in transit through any means of transport
Accidental External Sources

Exclusions under any Motor Insurance policy in India:

A Motor Insurance policy taken from any insurer in India will come with certain exclusions and will not offer coverage for the following -

  • Individuals driving without a valid driving license or under the influence of alcohol, drugs and other intoxicating drinks.
  • If the accident has taken place outside the geographical area covered under the policy
  • Mechanical or Electrical breakdowns in the vehicle and
  • If the insured vehicle has been used for any unlawful reason.

Sum Insured for a Motor Insurance Policy:

The sum insured is determined for Own Damage coverage as given below -

The insurance company will determine the sum insured according to the current value of the vehicle as per the manufacturer and the depreciation value depending on the age of the vehicle. Here, the sum insured is the value for which the vehicle has been insured and is known as the Insured Declared Value (IDV).

The sum insured is determined for Third Party coverage as given below:

For third party coverage the sum insured is determined as per the Motor Vehicles Act, 1988 and also includes a mandatory personal accident cover for the car owner. The motor insurance policy can also be taken with inclusions like workmen’s compensation for the driver, personal accident coverage for co-passengers, etc.

Customer Turnaround Times as approved by the IRDA:

Issuance, processing and Cancellation of policies 15 days
Issuance of proposal copy 30 days
Services after issuance of policy/ Refund of proposal deposits/ Non-claim requests 10 days
Submission of survey report 30 days
Addendum Report for the insurer 15 days
Claims - settlement/rejection after the addendum report has been received 30 days
Acknowledgement of a grievance 3 days
Resolution of a grievance 15 days

Determination of Premium for a Motor Insurance Policy:

There are multiple factors that affect a motor insurance policy premium in India. Different insurers charge different premiums for Own Damage cover. Customers must compare and choose a policy with an affordable premium. The premium will be higher if the customer opts for lower deductibles. Some of the common aspects considered to determine the premium amount for a customer is as follows - Vehicle class, Registration details along with the Engine number, chassis number, seating capacity, cubic capacity, fitness certificate, tax payment details, owner/driver details like gender, age, license validity, qualifications, insurance history, etc. The premium is calculated as per the prevailing rates in the city where the vehicle has been registered.

Premium for Own Damage coverage is decided by the insurance company after approvals from the Insurance Regulatory and Development Authority. Here, the premium will vary based on the following factors - Vehicle Age, Discounts offered by the insurer, loading, past claims, IDV, etc.

Premium for Third Party coverage is determined by the Insurance Regulatory and Development Authority. If there is any insurance breaks, then an inspection has to be conducted and additional charges have to be borne by the policyholder.

If existing motor insurance policyholders add CNG or LPG kits in their vehicles, then the (Road Transport Authority (RTA) office has to be informed to make changes in the registration certificate. The insurer also has to be intimated to include the extra premium that has to be paid for the CNG/LPG kit.

In order to lower their motor insurance premiums, customers can opt for No-Claim Bonus benefits and also get extra discounts for Own Damage and Third Party policies.

Own Damage Premium discounts can be got if -

  • Customers are members of the Automobile Association of India,
  • They own Vintage Cars as certified by the Vintage and Classic Car Club of India
  • They install anti-theft devices in their vehicles as approved by ARAI - Automobile Research Association of India and the Automobile Association of India.
  • Special concessions for modified vehicles for handicapped, blind and mentally challenged individuals.
  • They choose additional voluntary deductibles or excesses.

For the Liability Only Section, insurers will give discounts on the reduction of Third Party Property Damage from Rs. 7.5 lakhs to Rs. 6,000.

No-Claim Bonus (NCB) in Motor Insurance:

Policyholders can enjoy the No-Claim Bonus benefits just as the name suggests, when they have not made any claims for an entire policy year. As per current norms, the NCB varies from 20% for Own Damage premiums and increases to a maximum of up to 50%, if there are consecutive claim-free years. If the customer makes a claim, then the No-claim benefit is lost for the succeeding policy year. This NCB benefit is offered to the insured individual and not on the vehicle and hence cannot be transferred to the new owner when the vehicle is sold. Customers can transfer their No-claim benefits from one insurer to another during renewals by producing the adequate proof showing the entitlement of NCB.

Motor Insurance Policy Tenure in India:

Any Motor insurance policy is generally valid for one year after which it has to be renewed by the due date. Grace periods are not offered on premium payments. If the policy is not renewed on time, then the insurer might conduct an inspection before renewing the policy. Additionally, if renewals are not done for more than 90 days for a comprehensive motor insurance policy, the customer might lose the No-Claim Bonus benefit from the insurer.

Deductibles in Motor Insurance:

A deductible is an amount that is paid over and above the claim amount. Deductibles come in two types - Voluntary and Compulsory Deductibles or Excesses. Compulsory excesses are different based on the type of the vehicle insured, varying from Rs. 50 for two-wheelers and Rs. 500 for commercial vehicles and private cars. This is determined based on the cubic capacity of the insured vehicle. Some insurers might also levy additional excesses depending on the vehicle age or if there are more claims being done.

Documents Required to Be Kept in Insured Vehicles:

  1. Certificate of Insurance
  2. Pollution under Control Certificate
  3. Driving License - photocopy
  4. Registration Certificate - photocopy

Documents to Be Submitted While Making Motor Insurance Claims:

  1. Filled-in Claim Form
  2. RC book of the vehicle
  3. Estimate of Loss - Original
  4. Repair Invoice - Original
  5. Payment Receipt

For cashless settlements - Repair Invoice and FIR (if required)

For theft claims - Non-traceable certificate/ Keys of the stolen vehicle

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

IRDA Guidelines for Motor Insurance Reviews

Page 1 of 50 1 2 3 4 5
  • Tata AIG Car Insurance
    "Satisfied policy"
    0.5 5.0/5 "Blown Away!"
    TATA AIG is the best company to take the car insurance. Since long time i have taken this insurance. The customer care people used to call me to renew the policy and they used to policy renewal letter. I will do payment through online. Several times i have claimed the policy and i have received very good response.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 18, 2019
  • Universal Sompo Car Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this insurance policy a long time back and it has been a good insurance policy. I had been paying the premium online and the payment method has been convenient. There has been a claim made once and the claiming method has been simple.
    Was this review helpful? 0
    , navi mumbai
    Reviewed on Jan 18, 2019
  • New India Car Insurance
    "Comprehensive benefit policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance was taken from New India. I don't speak with their customer care since i don't require it. I had a claim experience which is a easy process without any tension. As per their policy, the maximum claim amount settled. Since they are providing good services i have opted this policy. They have given me a road side assistance and bumper to bumper facility.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • Bajaj Allianz Car Insurance
    "Good to Go with Bajaj"
    0.5 4.0/5 "Great!"
    The conditions and the insured which they are providing is good, I have insured Ford Car with Bajaj Allianz, the premium amount is reasonable but they can reduce it. Its 1.5 year old year but still the insurer providing 24 hours service, cash less garages and they have tie up with many centers, the response is great.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 17, 2019
  • ICICI Lombard Car Insurance
    "Premium should be standard as per market"
    0.5 4.0/5 "Great!"
    I never used the policy if something happen I claim it, I didn't interact with the customer care but I get the reminder message for car renewal. I have insured my maruthi Suzuki riz with ICICI Lombard, The premium is higher but still they are good.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 14, 2019
  • HDFC Ergo Car Insurance
    "Very good"
    0.5 5.0/5 "Blown Away!"
    Even my car was insured with HDFC Ergo. It is a second-end car and have chosen the third party insurance. I have not done any claim so far. The premium is reasonable. It offers bumper to bumper facility and road side assistance. The policy period is 2 years.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 14, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 1
    , tirupur
    Reviewed on Jan 10, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 10, 2019
  • National Insurance Car Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this Insurance policy for my Maruti Car and i had been paying the premium on an annual basis. The premium amount has not been too high and there has been cash less garages available with this insurance policy. Their customer support has also been helpful at times.
    Was this review helpful? 1
    , pune
    Reviewed on Jan 09, 2019
  • ICICI Lombard Car Insurance
    "Nice Policy"
    0.5 4.0/5 "Great!"
    My car was insured with ICICI Lombard. Last year i have purchased this insurance policy. My wife has referred me about this policy. I pay the premium amount of Rs. 13500. They have given me a convenient IDV value. I had no claim experience so far.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Need to improve the service"
    0.5 3.0/5 "Satisfactory"
    I'm not satisfied with the service provided by new India. I have bought the car insurance policy. They closed their branch on every weekends hence its difficult to renew the policy. I have been paying the premium amount of Rs. 14000 which is a competitive price. They have given the IDV value of Rs. 1.50 lakhs.
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Average Car Insurance"
    0.5 3.0/5 "Satisfactory"
    My car insured with the New India Insurance company. I have been renewing the policy with the same company for 3 years. I have paid the premium amount of Rs. 7000 and they have offered me a satisfied coverage value. The documentation process was fine
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • review Car Insurance
    "Its Good"
    0.5 3.5/5 "Pretty good"
    Last year I had car policy with Bharthi axa whenever I try to renew it ask my poliy no, whenever I mention the same, it shows the its incorrect. If I try to reach the customer care its not reachable. I done the claim, some minor damage back side of the car, they have processing fee 1500. Remaining all taken care by the insurer.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Great Policy"
    0.5 4.0/5 "Great!"
    ICICI Lombard has a good brand value hence i have selected the car insurance policy with this card and the dealer has also recommended about this policy. I pay the premium amount of Rs. 9000 and this is a 100% coverage with bumper to bumper facility. I'm not sure about the IDV value. Its easy to renew the policy.
    Was this review helpful? 2
    , new delhi
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Good"
    0.5 5.0/5 "Blown Away!"
    Previously my car was insured was with ICICI Lombard and it was offered by the showroom. I got a call from the representative for the policy renewal as reminder. I got the insurance paper. I have not done done a claim. It is a comprehensive with zero dep. The premium was high so changed my insurer.
    Was this review helpful? 1
    , mumbai
    Reviewed on Jan 08, 2019
  • Future Generali Car Insurance
    "Good"
    0.5 4.0/5 "Great!"
    I have taken a car insurance from Future Generali through online portal. The premium was reasonable and also they have provide bumper to bumper facility. The policy period is one year. There is no interaction between the customer service. I just gave my car for the claim so no experience.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 08, 2019
  • Oriental Insurance Car Insurance
    "Good insurance company"
    0.5 2.0/5 "Expected more"
    Dealer has referred me about this oriental car insurance when i purchase the vehicle. They have rejected the claim since the copy of FIT is not available. They have given me a coverage value upto Rs. 6 lakhs. For the past 3 years i have been renewed the policy with the same company.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Iffco Tokio Car Insurance
    "Good Policy and you can try"
    0.5 4.0/5 "Great!"
    Two months before, i have taken my car insurance policy with Iffco Tokio. Its a PAN India agreement policy for my Maruti Car. I don't remember about the coverage value. This is a zero depreciation policy. I paid the premium amount of Rs. 6500. I have not seen any add on and cashless garage facility.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Its Excellent"
    0.5 4.0/5 "Great!"
    My brother is working with Reliance hence I took my two wheeler policy from this insurance company. I have hyundai accent car, they are providing cash less garages for the damage. I have zero depreciation bumper to bumper policy for the term of one year.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Good Policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance policy was taken with reliance. The dealer has provided me a policy with this policy. This is a 100% coverage value which covers the bumper to bumper facility, They have given me a IDV value of Rs. 11 lakhs. I pay the premium amount of RS. 33000.
    Was this review helpful? 0
    , thane
    Reviewed on Jan 04, 2019
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