Irdai mandates four-tier structure for motor insurance from Dec 15
Mumbai: The Insurance Regulatory and Development Authority of India (Irdai) has mandated a four-tier structure for motor insurance covering private cars and two-wheelers from December 15, allowing customers to choose covers separately.
The four layers comprise mandatory third-party liability cover, optional legal liability towards occupants and pillion riders, personal accident cover, and optional own-damage protection. Insurers must issue a mandatory customer option form and Customer Information Sheet, with premiums disclosed separately for each cover.
Existing third-party policyholders can add occupant liability cover by paying an additional premium without cancelling their existing policy. Irdai rolled out the changes after directions from the Supreme Court in the case of National Insurance Co versus Thungala Dhana Laxmi. The ruling sought a four-layer motor insurance policy structure to help vehicle owners make informed choices.
In a circular issued on Tuesday, the regulator said all general insurers, except standalone health insurers and specialised insurers, must adopt uniform policy wordings and issue a mandatory customer option form and Customer Information Sheet (CIS) at the point of sale. While third-party liability cover will remain mandatory, legal liability towards occupants, including pillion riders and employees of the insured, will be optional. This cover excludes the owner-insured and their immediate family members, including parents, spouse and children.
The number of occupants covered will be restricted to the vehicle's registered seating capacity.
Personal accident cover will include mandatory cover for the owner-insured, while additional cover for occupants, pillion riders and drivers other than the owner-insured will be optional.
The four layers comprise mandatory third-party liability cover, optional legal liability towards occupants and pillion riders, personal accident cover, and optional own-damage protection. Insurers must issue a mandatory customer option form and Customer Information Sheet, with premiums disclosed separately for each cover.
Existing third-party policyholders can add occupant liability cover by paying an additional premium without cancelling their existing policy. Irdai rolled out the changes after directions from the Supreme Court in the case of National Insurance Co versus Thungala Dhana Laxmi. The ruling sought a four-layer motor insurance policy structure to help vehicle owners make informed choices.
In a circular issued on Tuesday, the regulator said all general insurers, except standalone health insurers and specialised insurers, must adopt uniform policy wordings and issue a mandatory customer option form and Customer Information Sheet (CIS) at the point of sale. While third-party liability cover will remain mandatory, legal liability towards occupants, including pillion riders and employees of the insured, will be optional. This cover excludes the owner-insured and their immediate family members, including parents, spouse and children.
The number of occupants covered will be restricted to the vehicle's registered seating capacity.
Personal accident cover will include mandatory cover for the owner-insured, while additional cover for occupants, pillion riders and drivers other than the owner-insured will be optional.
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