Published in Economic Times.
The Insurance Regulatory and Development Authority of India (IRDAI), on Monday, proposed a slew of changes that, if implemented, can make long-term motor insurance policy a simpler product.
It also gave much needed clarity regarding buying and renewing own damage motor insurance covers.
Expiry of the OD cover should not be later than third-party cover
Under IRDAI’s new guidelines, that came into effective from September 2019, there was lack of clarity regarding what would if the owner had to buy an OD policy after some time of buying the third-party cover. Further, there was ambiguity on what would happen if someone has not renewed their standalone OD policy upon expiry of their one-year cover, and instead buys a own damage policy after a certain period of time.
According to the latest draft proposal issued by the insurance regulator on Monday, standalone OD cover may be allowed where long-term liability policy is mandated. The expiry of the OD cover should not be later than the expiry of the liability policy.
Sajja Praveen Chowdary, Head- Motor Insurance, Policybazaar.com says that for the third year of a long-term car policy, the assumption as of now is that some policies may be given on a pro-rata basis wherever the liability cover (third-party insurance) is expiring earlier than the 12-month period. He says, “With so much confusion around type of policies and period of insurance, this at least seems to bring in simplicity post third year when the long-term policy will expire.”
Details of third-party insurance to be mentioned in the OD cover
Insurers are required to mention details of third-party insurance in the standalone OD policy if a vehicle owner opts to buy an OD policy separately along with compulsory long-term third-party cover for their vehicles or he/she has to renew their bundled cover with a 3-year third-party cover and a 1-year term for OD cover for cars after a year and so on.
The draft proposal recommends, “All the details of the liability policy (including name, policy number and period) should be captured in the OD policy schedule.”
Kapil Mehta, CEO, SecureNow.in said that this is required to prevent situations where there is own damage insurance but no accompanying third-party liability. “Actually, it is the third party that is mandatory to buy and not the own damage, which is why this provision will improve compliances,” he said.
Chowdary said, “Having the liability policy details on the OD cover makes it easier in case of any claim filing by the third party where the details are available upfront in the latest policy itself.”
Things to take care of when renewing OD cover:
- Check the policy coverage: Make sure that the OD cover offers adequate protection for your vehicle based on its current market value and age. Review the coverage details and exclusions carefully to avoid any surprises during a claim.
- Compare policies: Before renewing your existing policy, shop around for other insurance providers to see if you can get a better deal on premium rates and policy features.
- Renew on time: It’s important to renew your policy before it expires to avoid any lapses in coverage. Some insurance companies may also offer discounts for early renewals.
- Check your No Claim Bonus (NCB): If you haven’t made any claims during the policy period, you may be eligible for a discount on your premium for the next policy term.
- Review add-ons: Consider if any add-ons such as zero depreciation cover, engine protect, and roadside assistance are necessary based on your vehicle’s age and usage.
- Provide accurate information: Ensure that you provide accurate and updated information when renewing your policy, as any discrepancies may lead to claim rejections or delays.
- Read the terms and conditions: Read the policy documents carefully and understand the terms and conditions before renewing your policy.
