IRDAI Guidelines For Car Insurance Plans

Updated IRDAI Guidelines for Car Insurance

The Insurance Regulatory and Development Authority of India (IRDAI) regularly updates its guidelines to make car insurance policies more relevant, fair, and easy to understand. Here’s a summary of the latest changes:

1. Changes in Long-Term Insurance Requirement

• Earlier, new cars needed to have a 3-year long-term car insurance policy.
• As per the new IRDAI guidelines for car insurance, owners can choose to:

  a. Buy a 3-year Third-Party Liability policy, and

  b. Add a 1-year Own Damage (OD) cover separately.

2. Standardisation of No Claim Bonus (NCB)

• Before : Insurers had the freedom to decide NCB rates for long-term policies.
• In Present : A standard NCB rate is applied across all insurance companies, making it easier for policyholders to understand their bonuses.

3. RC Cancellation in Case of Total Loss or Theft

• If a vehicle is lost or stolen, the car owner must:

  a. Submit the Registration Certificate (RC) to the insurance company, as the RC will be cancelled.

4. New Terminology for Deductibles

• The term “Compulsory Deductible” has now been replaced with “Standard Deductible
• The fixed deductibles are:

  ?1,000 for cars with engine capacity up to 1500cc

  ?2,000 for cars with engine capacity above 1500cc

5. Passenger Cover Requirement

• IRDAI's new guidelines for car insurance recommend that each passenger in an insured vehicle should be covered for at least ?25,000.

6. Rules for Car Insurance Renewal

• Car owners must renew their insurance before it expires to ensure continuous coverage.
• If the policy is not renewed within 90 days of expiry:

  Any No Claim Bonus (NCB) will be cancelled.

  Damages during the gap period are not covered by the insurer.

7. IRDAI Rules for Total Loss

• A car is declared a total loss if the cost of repairs is more than 75% of the car’s Insured Declared Value (IDV).
• This usually occurs after major accidents or natural disasters.

General IRDAI Guidelines for Car Insurance Plans

The Insurance Regulatory and Development Authority of India (IRDAI) sets important rules to protect policyholders and ensure fair practices in the insurance industry. These guidelines help both insurance companies and customers clearly understand their rights and responsibilities. Below is a summary of the key IRDAI rules and regulations for car insurance, covering third-party, comprehensive policies, and general exclusions.

IRDAI Guidelines for Third-Party Car Insurance Cover

A Third-party Liability Car Insurance Policy is legally required in India. It protects the car owner from financial and legal liabilities for injury, death, or property damage caused to others. Here are some guidelines given by IRDAI for third-party car insurance cover:

• The insurer must compensate for third-party injury, death, or property damage caused by the insured vehicle.
• In case of death, the compensation is based on the deceased person’s income and is decided by the Motor Accidents Claims Tribunal.
• For property damage, the insurer may pay up to ?7.5 lakhs, based on the damage.
• Legal liabilities from such accidents are also covered.
• If a paid driver suffers death or disability, compensation is provided under the Personal Accident Cover, following IRDAI's new guidelines for car insurance.

IRDAI Guidelines for Comprehensive Car Insurance Cover

While Comprehensive Car Insurance is optional, it offers wide coverage and is recommended for better protection:

• It includes all the benefits of Third-party Liability Insurance.
• The insurer must cover vehicle theft if the claim is approved.
• If the car is damaged in an accident, the insurer must pay for repairs as per the policy terms.
• Coverage must also include damage from natural disasters, man-made events, fires, or explosions, depending on the policy details.
• Like third-party policies, the insurer is liable to pay the Personal Accident Cover amount if the paid driver faces death or disability.

General Exclusions as per IRDAI Guidelines for Motor Vehicle Insurance

According to IRDAI guidelines for car insurance, there are specific cases where an insurance claim will not be accepted:

• Mechanical or electrical breakdowns.
• Normal wear and tear of the vehicle.
• Damage caused intentionally by the policyholder.
• Accidents caused while driving under the influence of alcohol or drugs.
• Any damage that occurs when the insurance policy is not active.
• Participation in illegal street races or criminal activities.
• Damage that occurs outside the geographic limits.
• Accidents or losses due to violations of traffic rules.

Depreciation & IDV Rules as per IRDAI

As per IRDAI guidelines, depreciation is the reduction in a car’s value over time, while IDV (Insured Declared Value) is the car’s current market value used to calculate claims. The rules are:

• Higher depreciation lowers the IDV.
• IDV is the maximum claim amount for total loss or theft.
• IRDAI provides standard rates to calculate both depreciation and IDV.

Here is a table showing the depreciation rate determined by IRDAI:

Timelines Set by IRDAI for Customers

The Insurance Regulatory and Development Authority of India (IRDAI) has set specific timelines to ensure quick and fair service for car insurance policyholders. Here are the key timelines:

• Claim Acknowledgement: Insurers must acknowledge a claim within 3 days of receiving it.
• Claim Survey: A surveyor must be appointed within 72 hours of claim intimation.
• Survey Report Submission: The surveyor must submit the report within 30 days of the date of inspection.
• Claim Settlement: Once all documents are received, the insurer must settle the claim within 30 days.
• Grievance Redressal: Insurers must resolve complaints within 15 days of receipt.

Conclusion

In conclusion, IRDAI guidelines play a key role in ensuring that car insurance in India is fair, transparent, and reliable for all policyholders. By setting clear rules for both insurers and customers, IRDAI helps build trust and protects the interests of vehicle owners. Understanding these guidelines can help you choose the right car insurance plan, avoid confusion during claims, and stay well-informed about your rights and responsibilities.